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IKEA raises prices in response to cost pressures

IKEA owner Ingka Group has confirmed that the furniture retailer is raising prices across its markets due to the impact of inflationary pressures and commodity and… View Article

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IKEA raises prices in response to cost pressures

IKEA owner Ingka Group has confirmed that the furniture retailer is raising prices across its markets due to the impact of inflationary pressures and commodity and supply chain issues.

The group said it had tried to keep prices as low as possible during the Covid-19 pandemic despite rising costs as it faced unprecedented demand for products that helped people to work from home.

As a result, Ingka Group made significant investments in physical and online retail operations in its 2021 financial year as it looked to meet customers’ changing needs. This amounted to a spend of €3.2 billion on physical stores, distribution and customer fulfilment networks, omnichannel transformation, digital customer experience, renewable energy, zero emission vehicles and forestry.

Ingka said IKEA continues to face significant transport and raw material constraints which are driving up costs. The biggest cost increases are being seen in North America and Europe.

Tolga Öncü, retail operations manager at IKEA Retail, explained: “Unfortunately, now, for the first time since higher costs have begun to affect the global economy, we have to pass parts of those increased costs onto our customers.

“Prices will go up across Ingka Group markets, reflecting the changing economic conditions affecting all industries. The average of the increase in Ingka Group is around 9% globally, with variations across Ingka Group countries and the range, reflecting localised inflationary pressures, including commodity and supply chain issues.

“We are taking this difficult step right now to ensure we can live up to our purpose to create a better everyday life for the many people, and to safeguard our competitiveness and the resilience of our company. However, affordability will always be a cornerstone for us.”

Heading into 2022, Ingka Group will continue to invest in improving the customer experience by opening more stores and introducing more delivery options such as click and collect in stores and thousands of local pick-up points.

In addition, it will be looking to create more efficiencies to support its omnichannel strategy. This will include shortening lead times and making delivery more sustainable by routing more fulfilment through blue box stores.

The group said: “While longer term visibility of future economic conditions is challenging given current instability and inflation across markets, the group said it will remain responsive to future changes.”

Öncü added: “Our intention is to give back to the customer any decrease in purchase prices we get.“

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