IKEA franchiser slashes workforce amid falling sales

Inter IKEA, which franchises the Swedish budget home furniture brand across 63 countries, is laying off 850 employees in a cost-cutting drive as consumer demand weakens and the global retailer seeks greater efficiency and lower prices, News.Az reports, citing Reuters.

The company oversees the sourcing of IKEA products from factories worldwide and supplies 13 franchisees operating IKEA stores.

It has faced pressure from rising costs and U.S. tariffs and is undergoing a strategic shift from large suburban warehouse stores toward smaller city-centre locations in an effort to attract more customers.

“We need to become faster, shorten the decision-making processes, and simply concentrate our efforts on these priorities,” Inter IKEA Chief Financial Officer Henrik Elm told Reuters in an interview.

Both Inter IKEA and its largest franchisee Ingka Group, which operates most IKEA stores globally, changed CEOs late last year after IKEA reported its second consecutive year of declining sales. Ingka also announced plans in March to cut 800 office-based jobs.

Elm said declining consumer confidence, which has been weakening for some time, has been “accelerated” by the Iran war. He added that the conflict has pushed fuel prices higher, affecting household budgets and reducing consumers’ willingness to spend on non-essential purchases such as home renovations or new sofas.

“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,” Elm said.

“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.

The 850 affected roles include 300 job cuts in Sweden, home to one of Inter IKEA’s main hubs in Älmhult, where IKEA was founded in 1943. The layoffs represent about 3% of Inter IKEA’s 27,500 employees.

News.Az 

By Nijat Babayev