How IKEA Balances Renewable Energy and Affordability
In the face of global energy challenges, Ingka Group, the largest retailer of IKEA products, has reaffirmed its commitment to renewable energy while maintaining affordability.
The company reported US$44.1bn in revenue for fiscal year 2024 (FY24), a 5.5% decline from the previous year. This decrease is attributed to a strategic decision to invest over US$2.2bn in price reductions, ensuring that IKEA products remain accessible during economically uncertain times.
"It was a year of courageously investing in the future to make IKEA more affordable, accessible and sustainable," says Juvencio Maeztu, Deputy CEO and CFO of Ingka Group.
"For us, it has never been more important to side with the many people."
IKEA's commitment to renewable energy
While navigating immediate market challenges, sustainability remains at the heart of Ingka’s strategy for the future.
The company has set ambitious targets, including an 85% reduction in operational emissions by 2030 and achieving net zero emissions across its value chain by 2050.
Ingka has committed US$7.9bn towards renewable energy initiatives, with US$4.4bn already allocated.
These investments position Ingka not just as a significant retail player but also as a mid-sized renewable energy producer.
This supports not only their operations but also contributes to the wider energy transition.
In fiscal year 2024, Ingka retrofitted 11 IKEA stores across seven countries with renewable heating and cooling systems, setting a standard for all future outlets."Our unique business structure and financial independence enable us to make choices and invest for decades to come," says Juvencio.
"This makes us more resilient to global and economic events, allowing us to remain focused on our business and our customers for the long term."
Balancing economic success with positive impact
Ingka’s distinctive ownership model sees 85% of net profits reinvested back into the business, while the remaining 15% supports the Stichting INGKA Foundation.
This foundation fuels the philanthropic efforts of the IKEA Foundation, which focuses on climate change and poverty alleviation.
By the end of 2023, the IKEA Foundation had distributed US$2.1bn to various initiatives tackling these grave issues.
"Our profit is very meaningful: it gives us the resources necessary to make us a better company, both now and in the future," Juvencio says.
Ingka is not just investing in renewable energy but is also enhancing sustainable forestry practices and exploring circular business models to fulfill IKEA’s commitment to sourcing all wood from sustainable origins and promoting a circular product lifecycle.CEO Jesper Brodin adds: "Our everyday purpose is to deliver to the vision of IKEA — creating a better everyday life for the many people.
"We have invested US$2.2bn in lowering our prices to make IKEA more affordable and accessible for people with big dreams and needs in life at home, no matter the size of the wallet."
Expanding Through Strategic Investments and Innovation
Beyond retail, Ingka Group has diversified its economic activities to bolster resilience.
Ingka Centres, which oversees shopping centres in 13 markets, expanded with notable acquisitions like the Churchill Square complex in Brighton, UK.
Additionally, it launched innovative concepts such as Saluhall, a plant-forward food hall in San Francisco and Livat, a community hub in Xi'an, China.
Ingka also invested US$3.7bn in enhancing customer experiences, fulfillment capabilities and real estate development.
These investments are critical in future-proofing the IKEA brand, ensuring its relevance and competitiveness in a changing global marketplace.
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