Ingka Group, the largest franchiser of IKEA stores worldwide, has announced plans to cut 850 jobs as part of a cost-cutting drive amid declining consumer spending. The company's chief financial officer cited the Iran war, rising operational costs, and the necessity to lower prices for customers as key reasons behind the restructuring.
Declining Sales and Strategic Shift
IKEA has reported two consecutive years of falling sales, prompting the franchiser to streamline operations. The job cuts will primarily affect back-office and administrative roles, with a focus on reducing overheads while protecting customer-facing positions.
Shift to City-Centre Locations
As part of the broader strategy, Ingka Group is accelerating its shift towards smaller, city-centre store formats. This move aims to adapt to changing consumer habits, with more shoppers preferring urban locations and online shopping over large out-of-town stores. The company plans to invest in digital infrastructure and omnichannel capabilities.
The CFO emphasized that the decision was difficult but necessary to ensure long-term competitiveness. Employees affected will receive support, including severance packages and assistance with finding new roles. The restructuring is expected to be completed by the end of the fiscal year.
