Your favourite Ikea items might not be available till sometime in 2022
Ikea is cutting the number of versions of some products as it struggles with shortages of raw materials, to ensure its most popular items are available
14 October 2021 - 17:48
byAnna Ringstrom
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Stockholm — Ikea, the world's biggest furniture brand, is leasing more ships, buying containers and rerouting goods between warehouses as it works hard to mitigate a “perfect storm” of global supply chain disruptions which could last into next year, executives said.
The company, which reported record annual sales earlier on Thursday as locked-down consumers spent more than ever on their homes, is also reducing the number of versions of some products as it struggles with raw materials shortages to ensure its most popular items are available.
“It is re-steering and rerouting. And on the retail side we have learnt agility like never before because everyday you have to work with what you have. You have to find ways to solve customer needs with limitations that we have never seen before,” said Jesper Brodin, CEO of Ingka Group, which owns most Ikea stores.
Jon Abrahamsson, CEO at brand owner Inter Ikea, told Reuters he expected the supply-chain crisis to continue into 2022, with the biggest challenge currently to get goods out of China, where roughly a quarter of Ikea’s products are made.
Ikea’s stores in North America are the hardest hit by product shortages, followed by Europe. To avoid disappointing shoppers, it is temporarily removing unavailable products from its websites and store showrooms, instead suggesting similar items.
Brodin said no-one at Ikea had anticipated the current global supply chain crisis, and that there would need to be a preparedness in future for unexpected swings in supply.
“It's a perfect storm. [But] I think we are way past being surprised. This is the new normal for us. And when things stabilise we will have learnt so much about agility and about sales steering,” he said.
A large share of Ikea’s range is sourced relatively close to sales markets. About 70% of products sold in Europe, where Ikea has the bulk of turnover, are produced on the continent.
Inter Ikea said sales of products and services at all Ikea stores and online totalled €41.9bn in the financial year to end-August, up 6% from the previous year and 1% from pre-pandemic fiscal 2019. E-commerce grew 73% to account for 26% of total retail sales.
Ingka said separately its retail sales rose 6% to €37.4bn. That was 2% higher than pre-pandemic levels, Brodin said.
“All over the world interest in life at home has become bigger,” Brodin said. “There is no sign of decline in demand in any of our areas as it is right now,”
On the current financial year, Brodin said he believed demand would remain high. “It is also be a matter of how we manage to be agile across the whole value chain ... I'm truly optimistic we have a good, strong year ahead of us.”
He added that a new Ikea store, currently under construction, would open in a central Stockholm shopping mall later in 2021.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Your favourite Ikea items might not be available till sometime in 2022
Ikea is cutting the number of versions of some products as it struggles with shortages of raw materials, to ensure its most popular items are available
Stockholm — Ikea, the world's biggest furniture brand, is leasing more ships, buying containers and rerouting goods between warehouses as it works hard to mitigate a “perfect storm” of global supply chain disruptions which could last into next year, executives said.
The company, which reported record annual sales earlier on Thursday as locked-down consumers spent more than ever on their homes, is also reducing the number of versions of some products as it struggles with raw materials shortages to ensure its most popular items are available.
“It is re-steering and rerouting. And on the retail side we have learnt agility like never before because everyday you have to work with what you have. You have to find ways to solve customer needs with limitations that we have never seen before,” said Jesper Brodin, CEO of Ingka Group, which owns most Ikea stores.
Jon Abrahamsson, CEO at brand owner Inter Ikea, told Reuters he expected the supply-chain crisis to continue into 2022, with the biggest challenge currently to get goods out of China, where roughly a quarter of Ikea’s products are made.
Ikea’s stores in North America are the hardest hit by product shortages, followed by Europe. To avoid disappointing shoppers, it is temporarily removing unavailable products from its websites and store showrooms, instead suggesting similar items.
Brodin said no-one at Ikea had anticipated the current global supply chain crisis, and that there would need to be a preparedness in future for unexpected swings in supply.
“It's a perfect storm. [But] I think we are way past being surprised. This is the new normal for us. And when things stabilise we will have learnt so much about agility and about sales steering,” he said.
A large share of Ikea’s range is sourced relatively close to sales markets. About 70% of products sold in Europe, where Ikea has the bulk of turnover, are produced on the continent.
Inter Ikea said sales of products and services at all Ikea stores and online totalled €41.9bn in the financial year to end-August, up 6% from the previous year and 1% from pre-pandemic fiscal 2019. E-commerce grew 73% to account for 26% of total retail sales.
Ingka said separately its retail sales rose 6% to €37.4bn. That was 2% higher than pre-pandemic levels, Brodin said.
“All over the world interest in life at home has become bigger,” Brodin said. “There is no sign of decline in demand in any of our areas as it is right now,”
On the current financial year, Brodin said he believed demand would remain high. “It is also be a matter of how we manage to be agile across the whole value chain ... I'm truly optimistic we have a good, strong year ahead of us.”
He added that a new Ikea store, currently under construction, would open in a central Stockholm shopping mall later in 2021.
Reuters
IKEA to move more manufacturing to Turkey as shipping costs soar
HSBC bets big on China as pressure mounts in London
IKEA to sell renewable energy to households in Sweden
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Ikea in Serbia raises rainbow flag to support LGBTQ rights
Amazon wins case over $300m tax bill in EU
IKEA owner to spend €4bn on green-energy projects
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.