Inter IKEA, the global franchisor of the popular Swedish furniture brand, is set to shed 850 jobs as it grapples with declining consumer demand and aims to streamline operations. The move is part of a broader cost-cutting drive by the company to prevent price rises and maintain affordability for customers.
Restructuring Amid Economic Pressures
Responsible for franchising IKEA in 63 countries and managing product sourcing worldwide, Inter IKEA has been squeezed by escalating costs and US tariffs. This comes amidst a strategic pivot from its traditional large suburban warehouses to more compact city-centre outlets, an effort to entice shoppers back and bring down prices.
Henrik Elm, Inter IKEA's Chief Financial Officer, emphasised the need for agility, stating: "We need to become faster, shorten the decision-making processes, and simply concentrate our efforts on these priorities."
This restructuring follows a period of significant change, with both Inter IKEA and its largest franchisee, Ingka Group, appointing new CEOs late last year after two consecutive years of falling sales. Ingka Group, which operates most IKEA stores globally, also announced plans in March to cut 800 office-based positions.
Impact of Global Conflicts
Mr Elm further noted that a long-term decline in consumer confidence had been "accelerated" by the Iran war. The conflict has driven fuel prices up sharply, hurting household budgets and sapping consumers' willingness to spend on non-essentials like a home renovation or new sofa.
"In times when consumer confidence is very much affected, the disposable incomes are really going down for many, especially the consumers we want to reach," said Elm. "Our ability to lower the prices so they can afford IKEA is more essential than ever before, and of course you can't achieve that if you have too high a cost base," he added.
Job Cuts Details
The 850 affected roles include 300 job cuts in Sweden, home to one of Inter IKEA's main hubs in Almhult, where IKEA was founded in 1943. The cuts represent around 3% of Inter IKEA's 27,500 employees.
Investment and Innovation
The owner of most IKEA outlets worldwide, Ingka, is meanwhile investing more than 5 billion euros ($5.90 billion) during the 2024-2026 period to open new locations and improve existing stores. Ingka is also testing whether renting space to other brands can increase visits and monetise its existing square metres, as it revamps its giant stores for value-driven consumers.
