Ikea says supply chain disruptions are expected to last until 2022

STOCKHOLM –

Ikea, the world’s largest furniture brand, is renting more ships, buying containers and redirecting goods between warehouses as it works hard to mitigate a “perfect storm” of global supply chain disruptions that could last until next year, executives said.

The company, which reported record annual sales earlier Thursday as confined consumers spend more on their homes than ever before, is also slashing the number of versions of some products as it grapples with raw material shortages for s ‘ensure that its most popular items are available.

“It’s about reorienting and reorienting. And on the retail side, we’ve learned agility like never before, because every day you have to work with what you have. You have to find ways to solve it. customer needs with limits we’ve never seen before, ”said Jesper Brodin, CEO of the Ingka Group, which owns most of the Ikea stores.

Jon Abrahamsson, managing director of brand owner Inter Ikea, told Reuters he expects the supply chain crisis to continue into 2022, with the biggest challenge currently being getting the goods out. from China, where about a quarter of Ikea products are made.

Ikea stores in North America are hardest hit by product shortages, followed by Europe. To avoid disappointing shoppers, it temporarily removes unavailable products from its websites and in-store showrooms, suggesting similar items instead.

Brodin said no one at Ikea anticipated the current crisis in the global supply chain and that one should be prepared for unexpected fluctuations in supply in the future.

“It’s a perfect storm. (But) I think we weren’t surprised anymore. It’s the new normal for us. And when things stabilize we will have learned so much about agility and how to ride. sales, ”he said.

Much of the Ikea range comes relatively close to the retail markets. About 70% of products sold in Europe, where Ikea generates most of the sales, are made on the continent.

Inter Ikea said sales of products and services across all Ikea stores and online totaled 41.9 billion euros ($ 48.7 billion) in the fiscal year ended August, up from 6% from the previous year and 1% from the pre-pandemic fiscal year 2019. E-commerce increased by 73% to represent 26% of total retail sales.

Ingka said separately that its retail sales rose 6% to 37.4 billion euros. It was 2% higher than pre-pandemic levels, Brodin said.

“Around the world, interest in home life has increased,” said Brodin. “There is no sign of declining demand in any of our regions as is currently the case”,

In the current fiscal year, Brodin said he believes demand will remain high. “It’s also about how we manage to be nimble across the value chain… I’m really optimistic, we have a good, solid year ahead of us. “

He added that a new Ikea store, currently under construction, would open this year in a shopping center in central Stockholm.