Ingka Group, the Ikea’s holding company, which owns 90% of its stores, cites higher costs affecting the global economy.
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Almost all Ikea stores will increase their prices by an average of 9% in 2022, due to shortages and expensive transportation issues. “Unfortunately, for the first time since higher costs started to affect the global economy, we are going to have to pass some cost increases on to our customers.”, detailed Ingka Group (in English), Thursday December 30. Based in the Netherlands, this Ikea holding company includes more than 90% of its stores.
“Like many other sectors, Ikea continues to face significant constraints on transportation and raw materials that drive costs, with no break expected in the near future.”, continues Ingka Group. “The disruptions are expected for most of 2022.” By far Ikea’s main franchise network with nearly 400 stores, Ingka differs from another main holding company of the Swedish giant, Inter Ikea, which owns the brand and franchises the brands around the world.
According to Ingka, the main cost increases related to transport and supply prices “felt especially in North America and Europe”. Until now, Ikea had absorbed the significant costs generated by these major logistical tensions, caused in particular by the rebound in demand at the end of the first phase of the pandemic. The average of the next increase, estimated at 9% worldwide, will be subject to “variations according to the countries of the group and the range, reflecting local inflationary pressures”.
This announcement comes against a backdrop of sharp acceleration in inflation across the world, driven by the deep disruption of distribution chains and shortages of products essential to international trade. In the euro zone, inflation thus reached 4.9% over one year in November, a record since the introduction of the single currency in 1999. In the United States, the price increase amounted to 6. 8% last month compared to November 2020, its highest level in thirty-nine years.