That prediction was made by Jon Abrahamsson Ring, a senior executive at Inter Ikea, the global franchisor of the furniture store group. The company’s biggest challenge is getting goods shipped from China. According to him, the company does not want to pass the additional costs related to transport, among other things, to customers.
Ikea, like other companies, is facing a shortage of shipping containers and problems at ports disrupting logistics. These complications have already given rise to warnings of slowing sales growth and rising costs at several companies, including Swedish clothing store chain Hennes & Mauritz (H&M) and UK online retailer Asos.
To cope with the situation, Ikea had to set priorities, says Abrahamsson Ring. The product line therefore focuses on the most popular products, he said. “I also don’t think we will be out of the woods in the current fiscal year,” he said. Ikea’s financial year runs until next August. “It’s a very big challenge for the entire supply infrastructure,” said the Ikea CEO.
Ikea closed the last financial year with record sales. This recovery follows a year in which sales declined for the first time, mainly due to store closings due to the pandemic.
Soaring prices for transport and raw materials in recent months have pushed up costs. The company plans to absorb these additional costs itself instead of passing them on to Ikea customers. According to Abrahamsson Ring, the challenge is to make Ikea even more affordable. The company plans to derive a greater share of its revenue from low-cost products, he said.
Ikea has also taken other steps to get the products to its stores. For example, the company rents containers and is exploring alternative transportation options such as rail.
The question was also raised on Thursday during the exhibition of Belgian figures. Ikea has also been affected by supply chain disruptions in many sectors of global trade, said Ikea Belgium Managing Director André Schmidtgall. At the time, the company made the decision to reduce its product line in order to keep the situation as stable as possible.