Inter IKEA, the company that manages franchising for the Swedish furniture retailer across 63 nations, announced it will eliminate 850 positions worldwide as part of a cost-reduction strategy responding to decreased consumer spending and demand.
The organization oversees product sourcing from manufacturing facilities globally and provides inventory to 13 franchise operators running IKEA locations. The company faces pressure from increased operational expenses and U.S. trade tariffs while implementing a strategic transformation from large suburban warehouse facilities to smaller urban retail spaces in an effort to attract 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.
Leadership changes occurred at both Inter IKEA and Ingka Group, its largest franchisee operating most IKEA locations globally, following two consecutive years of sales declines. Ingka Group separately revealed plans in March to eliminate 800 office positions.
Elm explained that consumer confidence erosion, already occurring over an extended period, had been “accelerated” by the Iran war. The military conflict has caused significant fuel price increases, straining household finances and reducing consumer willingness to purchase discretionary items such as home improvements or furniture.
“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.
The workforce reduction includes 300 positions in Sweden, where Inter IKEA operates a primary hub in Almhult, the location where IKEA was established in 1943. The job cuts represent approximately 3% of Inter IKEA’s total workforce of 27,500 employees.
