IKEA's Locus Acquisition: AI-Powered Logistics Reshaping Retail's Last-Mile Economics

Takeaways

• IKEA acquires Locus to boost AI-powered logistics optimization.

• Online sales grew 2.5x to 28% of revenue, demanding faster delivery.

• In-house AI enables real-time trade-offs between speed, cost, and vehicle utilization.

• Acquisition shifts IKEA from passive outsourcing to operational control of last-mile.

• Platform optimizes furniture-specific delivery patterns versus generic parcel network economics.

IKEA's acquisition of Locus, an AI-powered logistics management platform, signals the furniture giant’s drive to use AI for competing globally as omnichannel retail. Online sales now represent 28% of IKEA's retail revenue in FY24, up from 11% five years prior. That 2.5x growth creates an operational ask: more digital orders demand faster, more efficient physical delivery networks. IKEA has historically outsourced this critical function to third-party logistics providers. Bringing AI-powered optimization in-house signals a shift from passive dependence to operational control. Tolga Öncü, Head of IKEA Retail (Ingka Group). Image courtesy: Ikea

Integrated Tech Matters

IKEA operates in 31 markets through Ingka Group, which is the largest IKEA franchisee and accounts for 87% of global IKEA retail sales. Through AI-powered route optimization, real-time capacity planning, and vehicle utilization at scale across 31 markets, IKEA stands to gain integrated visibility and decisioning that spans order promise through final delivery. Locus's core capability which includes using AI to optimize routes, predict delivery windows, and minimize empty miles, is to know exactly what inventory exists in which warehouses, what customer demand patterns look like by region, and what your vehicle capacity actually is across your network, helps optimize logistics operations. Nishith Rastogi, Founder & CEO, Locus. Image Credit: Corporate Communications

The AI-Augmented Omnichannel Route

For IKEA specifically, this deal further enables the company to make real-time trade-offs between delivery speed, delivery cost, and vehicle utilization, aspects that it would otherwise negotiate with external service providers. That autonomy compounds across markets. For example, an order in Stockholm can trigger warehouse-to-customer routing decisions that account for vehicle positioning in Berlin. And a surge in London orders can dynamically redistribute van capacity across the southeast. Those micro-decisions, multiplied across millions of deliveries annually, translate to material cost advantages and faster promised delivery windows. Here's the operational tension most retailers face: online order growth forces partnerships with logistics networks designed primarily for B2B distribution. Those networks optimize for different economics than furniture delivery requires. IKEA, on a similar note, relies on external partners to operate their last-mile network according to external providers' cost structures and service level agreements. Parag Parekh, Global CDO for IKEA Retail (Ingka Group). Image Credit: Corporate Communications

The acquisition of Locus gives IKEA the ability to build a delivery network optimized specifically for its order patterns: furniture orders entail larger deliveries to fewer locations, with lower frequency than parcel delivery, and higher customer experience sensitivity around appointment windows and assembly coordination. By controlling that optimization logic directly, IKEA can avoid the friction of fitting its business into someone else's platform constraints.