Furniture retailer Ikea is investing £31.5 million across its Peterborough and Doncaster customer distribution centres (DCs), introducing new packaging technology from PackSize and regional fulfilment capabilities to improve online order efficiency and reduce delivery emissions.
The largest element of the investment is a £30 million technology upgrade at Peterborough, which includes the deployment of new PackSize technology is helping the retailer package customer orders to fit their contents. The system is designed to prevent waste from oversized cardboard boxes and excess paper filling, reducing packaging material usage by up to 30% and void fill by up to 60%.
The technology is part of a two-year programme of upgrades at the DC, with automation expected to increase from 47% of parcels processed today to 75% in 2027. Orders that cannot be processed automatically would otherwise require colleagues to measure products and manually construct appropriately sized cartons.
Ikea has also introduced three drones and associated nests at Peterborough to support inventory management. The drones scan warehouse aisles in short cycles, helping maintain accurate stock locations and ensure products are available to meet customer demand. The technology upgrades will not affect staffing levels at the site.
The investment comes as online shopping accounts for 43.3% of Ikea’s UK sales in financial year 2026, underlining the importance of efficient fulfilment as customers increasingly shop digitally.
Alongside the Peterborough investment, Ikea is committing £1.5 million to trial a new fulfilment capability at its Doncaster DC, bringing orders closer to customers in northern England and Scotland.
The site now fulfils orders for customers in the Gateshead, Edinburgh and Glasgow areas, with Sheffield planned to follow. By serving these locations from Doncaster rather than Peterborough, Ikea expects to cut delivery emissions by an estimated 280 tonnes of CO2 annually.
The forecast saving is based on 2,361 lorryloads being dispatched from Doncaster during financial year 2027, saving an estimated 212,000 miles of travel compared with deliveries from Peterborough. The new capability has also created 80 additional jobs at Doncaster.
David McCabe, CEO & chief sustainability officer of Ikea UK and Ireland, said the investments would make fulfilment more efficient while reducing the business’s environmental footprint and supporting sustainable growth.
He added that Ikea was empowering colleagues at both sites to make the most of the new technologies as the business develops its operational capabilities.
The announcement follows a wider sustainability leadership change at Ingka Group, the largest Ikea retailer, which has appointed Erika Intiso as its incoming chief sustainability officer, effective 15 November 2026.
Changing of the guard: Ikea appoints new chief sustainability officer
[image credit: Green Retail World]
