IKEA Hit By Surging Costs; Prices Increase Up to 80 Percent

November 17, 2022  by HFBusiness Staff in Business Strategy, Industry   

Last December, the company forecast that prices at its stores would increase by an average of nine percent around the world in 2022. Heading into Dec. 2022, the numbers are looking higher than their original estimate. IKEA has had to increase their prices of some products across its five main categories by as much as 80 percent.

An investigation by British data and analytics publication, Retail Week found increases on items like IKEA’s JOKKMOKK dining table and chairs, which went from £99 ($114) to £179 ($203) over the last 12 months (which is 80 percent in £), and the BRIMNES chest of drawers, which increased 47 percent to $125.

The MALM chest of drawers increased by 30 percent, the MELLTORP table and chairs set by 22 percent, and the TOMMARYD/TEODORES table and chairs set by 38 percent. The three-seat LANDSKRONA sofa rose 20 percent, the FYRESDAL daybed frame by 46 percent, the SLATTUM upholstered bed frame by 46 percent, and the GLOSTAD 2-seat sofa by 66 percent.

“We offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible are able to afford them,” an IKEA spokesperson told Retail Week.

“This remains our focus today and in the future. However, we are not immune to the macro-economic developments that businesses, retailers, and the public are currently facing, from the increased costs of materials and transportation to the war in Ukraine and inflation.”

“It is critical that we are financially resilient in the long term, to ensure our longevity as a business and employer, and we have had to adjust our prices to reflect this increased cost base.”

Despite all of the challenges it cites, IKEA is doing better than ever. Inter IKEA, franchiser for the brand, reported record annual sales in October, with sales at all IKEA stores and online growing 6.5 percent in the 12 months through August.

The company notes that “sales have grown in money, but sales quantities have not kept up.” Inter IKEA CEO Jon Abrahamsson says the company has not passed on all input cost increases to retailers, absorbing some itself.

Ingka Group, which owns most IKEA stores including those in Europe and the ones that closed in Russia, said that its own sales rose 5.6 percent, growing in most of its markets. Availability of products also improved.

“We currently don’t see any big slowdown tendencies, but we have deep respect for the year that we are in…and we are prepared for a tough winter for people everywhere,” Brodin says.

This information was first posted on dornob.com and yahoolife.com, and there are links to information referenced in Bloomberg.com and RetailWeek.com.