IKEA makes money through selling goods, franchise fees, and other sources of revenue. In 2020, IKEA’s total revenue was €23.7 billion. During the coronavirus pandemic, IKEA’s revenue and profit dropped. After the pandemic, IKEA’s revenue and profits are stabilizing.
Revenue Breakdown
- Total Inter IKEA Group revenue in 2022 was €27.6 billion.
- Sales of goods were €26.1 billion.
- Franchise fees totaled €1.3 billion.
- Total revenue grew 7.7% from 2021.
- 2022 net income was €710 million, a 50% decrease from €1.4 billion in 2021.
IKEA can further improve profitability by making products more accessible and improving e-commerce platforms to attract more customers.
Operational Efficiency
- IKEA keeps prices low through high-volume sales, low-cost product designs, and by having customers assemble furniture.
- Flat-packed products save on shipping costs.
- Easy assembly designs attract more customers, driving profit through scale.
The top selling countries for IKEA in 2022 were Germany at 14.4% of sales and the United States at 14%. IKEA targets middle-class people aged 20-34 looking for stylish, quality furniture at low prices. IKEA was the world’s 4th most valuable retailer brand in 2022 at over $48 billion, with over 800 million customer visits yearly. By keeping costs low and products affordable, IKEA continues strong global growth.