Home furniture retail giant Ikea is currently operating in an industry that is battling a growing crisis.
Housing affordability has declined over the past few years, which has had a major domino effect on home sales.
Since 2022, the average 30-year mortgage rate has hovered above 6%, and Americans are buying new homes slowly as prices rise. A recent report from the National Association of Realtors found that the median existing-home sales price climbed by 0.2% year-over-year in July, reaching $422,400.
Also, existing-home sales increased by only 2% month-over-month, while total unsold housing inventory spiked by 0.6%.
“Unless mortgage rates move lower and stay there, the housing market will remain slow and regionally uneven, with locked-in sellers and rising inventory limiting both appreciation and the pace of home sales,” said Ruben Gonzalez, chief economist at Keller Williams, in a statement to TheStreet.
Slow home sales have impacted the sales of home goods retailers such as Lowe’s, Home Depot, Wayfair, etc.
Ikea hopes new partnership will attract more shoppers
Amid this alarming consumer trend, Ikea saw its sales drop by almost 9% year-over-year during fiscal year 2024.
To help boost sales, Ikea announced last month that it has partnered with Best Buy (BBY) to pilot 1,000-square-foot Ikea shop-in-shops later this year in 10 Best Buy Stores throughout Florida and Texas. The shops will “showcase inspirational kitchen and laundry room settings,” according to a press release.
Image source: Zorrakino/Europa Press via Getty Images
In these shop-in-shop locations, customers can order Ikea home furniture and purchase Best Buy products simultaneously.
“By bringing together our home furnishing expertise, products, and services with Best Buy’s leadership in appliances and technology, we’re creating a one-stop destination where customers can design their dream kitchen, storage solutions or laundry space with ease,” said Rob Olson, chief operating officer at Ikea U.S. in the press release.
In a new interview with The Financial Times, Tolga Öncü, a retail manager at Ingka, which operates almost all Ikea stores globally, said that the partnership will bring Ikea “closer to more of the many people” in the U.S.
He also said that the 10 Best Buy stores in which Ikea plans to launch its shop-in-shops are “white spots” where it doesn’t have a presence.
Related: Best Buy announces convenient new service as customers pull back
Öncü said that the partnership could be “yet another component for us to accelerate our reach, especially in big mature countries” as it explores using other retailers’ floor space.
“There are some of us who are succeeding, some of us who are not — this is the [state] of the game in the retail industry,” said Öncü.
He said that partnering with Ikea could benefit struggling retailers by encouraging “physical visits to their stores.”
Best Buy’s Ikea partnership could help it fix a major problem
Best Buy can particularly benefit from its partnership with Ikea since, during the second quarter of 2025, Best Buy’s same-store foot traffic declined by 1.2% year-over-year, according to recent data from Placer.ai.
While Best Buy’s comparable sales increased by 1.6% year-over-year during the quarter, its highest growth in three years, sales in home theater, appliance, tablet and drone categories decreased.
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During an earnings call on Aug. 28, Best Buy CEO Corie Barry said that customers continue to search for deals and are more cautious about making big-ticket purchases.
She also said that low appliance and TV sales are tied to recent headwinds in the U.S. housing market.
“I think probably in appliances the most, I think there’s a strongest correlation with the housing turnover or housing starts coming through the major appliance business, maybe a little bit on the home theater TV side, but mostly on the majors,” said Barry. “And I think as people start to get into new homes or actually want to remodel their homes, we start to see people gravitate maybe towards appliances, versus right now it’s a very depressed market.”
Related: Home Depot seals billion-dollar acquisition to win back shoppers
