IKEA announced on Thursday that it will raise its prices by an average of 9 percent across its global markets after being hit with supply chain issues that are currently wreaking havoc across the world, prompting businesses to increase costs for customers.
“Like many other retailers, Ingka Group has faced an unprecedented demand for products. And while IKEA has shipped more than ever before, it was still not possible to meet the needs of all customers,” the statement read.
In an effort to meet soaring demand and customer needs, Ingka Group made “significant investments in physical and online retail operations”, totaling 3.2 billion euros, which it said allowed IKEA to “continue to deliver on its promise to offer a large variety of products for all parts of the home to customers all at once.”
“During the pandemic, despite rising costs all around us, Ingka Group kept prices stable with the aim to keep prices as low as possible for customers,” Tolga Öncü, retail operations manager at IKEA Retail (Ingka Group), said. “It was the right thing to do.”
IKEA franchisor Inter IKEA Group has been absorbing supply chain-related costs this year, which totaled 250 million euros, in an effort to keep costs low for customers and they plan to do so in 2022, too.
However, like hundreds of other industries across the United States and indeed the globe, IKEA is battling significant supply chain issues which are driving up costs, and the company said it expects to face further disruptions in 2022.
The biggest cost increase is currently being felt in North America and Europe, the company said.
As a result, the Swedish furniture giant will raise its prices by an average of 9 percent across its global markets to reflect the changing economic conditions and localized inflation.
“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,” Öncü said. “However, affordability will always be a cornerstone for us.”
IKEA warned earlier this year that prices would increase, citing the global transport crisis and a rise in raw material prices, among other factors.
Throughout the globe, industries are facing acute bottlenecks in supply chains, such as material and worker shortages as well as the skyrocketing prices of materials, driven by pandemic lockdown measures.
Meanwhile, inflation levels have risen in a number of countries. In the United States, the rate of inflation hit a multi-decade high of 6.8 percent in the 12 months through November.
Some economists have warned that they expect a shortage in goods and price increases to persist into the middle of 2022 amid the ongoing supply chain crisis.
