The IKEA logo is seen outside an IKEA furniture store in Brussels, Belgium June 13, 2023. REUTERS/Yves Herman
LONDON/STOCKHOLM (Reuters) -IKEA has acquired U.S. logistics technology firm Locus, the two companies said on Tuesday, a deal the Swedish furniture retailer said would make its deliveries to shoppers smoother and faster as it invests to expand online sales.
The takeover is in addition to a $2.2 billion push by Ingka Group, the biggest global IKEA franchisee, in the U.S. where it competes with Wayfair and Walmart and is also contending with higher tariffs on imports that are increasing its costs.
IKEA declined to disclose the value of the deal. Locus was valued at $300 million in its most recent funding round in 2021, according to reports at the time.
IKEA said acquiring Locus would simplify its logistics and reduce its delivery expenses by an estimated 100 million euros ($117.41 million) a year globally.
Locus uses artificial intelligence to group orders and predict routes that minimize the time delivery vehicles spend in traffic, a planning process that is currently done manually by IKEA workers, Parag Parekh, chief digital officer at Ingka Group told Reuters in an interview.
Locus will also enable IKEA to offer customers more delivery windows and options, and give live updates on where their package is, as well as delivering faster, Parekh added. It will likely pilot the technology in the U.S. and UK before using it globally.
"Speed is one aspect of it, but more importantly for us, it will be the flexibility, it will be the ability to track... and more importantly, through all of this, help drive a better customer experience," he said.
Locus' shareholders included Singapore's sovereign wealth fund GIC and private equity firms Alpha Wave, Tiger Global, and Qualcomm Ventures prior to the all-share acquisition by Ingka Investments, the retailer's investment arm.
Under the deal, Locus will operate independently and continue to work with clients beyond IKEA.
IKEA DOUBLES DOWN ON U.S. MARKET DESPITE TARIFFS
Known mostly for its bright blue big-box suburban stores showcasing sofas, beds and bookcases in a labyrinth layout, IKEA has shifted focus onto its online business over the past five years and invested in smaller city-centre stores as it targets younger and more urban shoppers.
Online sales accounted for 28% of total IKEA retail sales in its 2024 financial year, up from 11% in 2019.
The acquisition comes just a week after Ingka Investments bought a building in Manhattan for $213 million, pushing ahead with U.S. expansion despite President Donald Trump imposing higher tariffs on furniture imports.
"In terms of the macroeconomics around us ... probably there's uncertainty on the quarters ahead," Parekh said. "But as a company we remain committed to the U.S."
($1 = 0.8517 euros)
(Reporting by Helen Reid in London and Greta Rosen Fondahn in Stockholm; Editing by Kim Coghill)
