LEIDEN, The Netherlands – The Ingka Group, owner of Ikea, will raise prices this year due to the supply chain issues caused by the pandemic.
“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,” said Tolga Öncü, retail operations manager at Ikea Retail (Ingka Group).
Öncü said the company continues to face significant transport and raw material constraints driving up costs, with no anticipated break in the foreseeable future. Disruptions are expected far into 2022. The biggest cost increases due to transport and purchase prices are being felt most in North America and Europe.
Prices will go up across Ingka Group markets, reflecting the changing economic conditions that are 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 localized 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, and to safeguard our competitiveness and the resilience of our company,” said Öncü. “However, affordability will always be a cornerstone for us.”
Ingka Group has always kept its gross margin as low as possible to keep prices low, according to Öncü. “We invest a large part of our net income back into the business to keep prices as low as possible, particularly for the lowest priced range, ensuring that as many people as possible continue to afford Ikea,” he said.
A representative for Ikea-US said affordability continues to be important for the company, and its focus will always be on ensuring that a competitive offer is available.
“Since the start of the pandemic, Ikea has managed to absorb the significant cost increases experienced across the supply chain while keeping prices as low and stable as we possibly can. Higher costs have affected the global economy, and like many retailers, we have had to raise our prices to mitigate the impact on our business. It is our ambition to continue to offer quality and sustainable home furnishings to our customers at an affordable price,” said the U.S. Ikea spokesperson.
Heading into 2022, Öncü said Ingka Group will continue to invest in improving the customer experience, opening more stores, faster and more affordable and sustainable delivery options, such as click and collect in stores that are around one-fifth the cost of home delivery and thousands of neighborhood pick-up points.
“We’ll open 30 new customer meeting points in various formats in this financial year, from the traditional stores with the full experience to planning studios and inner city stores with same day delivery,” he added.