Inter IKEA, which franchises the Swedish furniture brand, is laying off 850 workers as part of a cost-cutting move. This comes amid a fall in consumer demand, and the retailer is working to become more efficient, and bringing down prices.
Inter IKEA manages the sourcing of IKEA products from factories around the world and supplies 13 franchisees operating IKEA stores. Rising costs and U.S. tariffs have had a significant impact on the company of late. It is also in the midst of a strategic shift from big suburban warehouse stores to smaller city-center locations as it tries to draw shoppers back in.
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“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.
Inter IKEA’s biggest franchisee Ingka Group also announced plans to cut 800 jobs from its office-based workforce. Both Inter IKEA and Ingka Group changed CEOs late last year after IKEA reported its second consecutive year of declining sales.
Elm said that declines in consumer confidence, already falling for a long time, 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.
Elm also said that today affordability is “more relevant than ever.”
“This is not new for IKEA. It is at the core of who we are. We need to focus on what matters most to customers. With clear goals and fewer priorities, a more simplified organization will enable faster decision-making, lower costs, improving our ability to offer lower prices for customers. This will help us stay true to our vision and keep IKEA competitive for many years to come,” Helm said.
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“Decisions like these are never easy, and we are handling the process with care, respect, and transparency. Guided by our IKEA culture and values,” he added.
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. Around 3% of Inter IKEA’s 27,500 employees will be affected by these job cuts.