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Ikea warns stock shortage likely to last another year

Ikea has become the latest retailer to warn of supply chain problems, saying on Thursday that the shortage of stocks is likely to last another year.

“In fact, we anticipate that the availability and raw material challenge will continue for most, if not all, of [the financial year to the end of August]. This is here for a longer period than we thought at the beginning of the crisis, ”Jon Abrahamsson Ring, CEO of Inter Ikea, owner of the Ikea brand, told the Financial Times.

Reporting its annual results, the world’s largest furniture retailer also said that the pandemic had helped its business and accelerated its transformation.

Sales in the year to the end of August were up 6 percent from the previous year to a record € 41.9 billion, driven by nearly double online sales.

Jesper Brodin, CEO of Ikea’s largest franchisee, Ingka, said in a separate interview that Ikea had accelerated its shift from selling from large out-of-town stores to more downtown stores and e-commerce sales, which they have increased 7 percent. percent of the total in 2019 and from 18 percent last year to more than 30 percent now.

“This situation has given us an impetus like never before to accelerate our transformation,” he said.

Jesper Brodin, CEO of Ingka: ‘This situation has given us an impetus like never before to accelerate our transformation’ © Wolfgang Rattay / Reuters

Ikea has used trains to transport goods from Asia to Europe and bought and contracted its own containers as it still faces supply chain problems, along with almost all retailers, because shipping prices have skyrocketed and ports have exploded. congested all over the world.

Ring said Ikea was unlikely to make big changes to its global supply chain as a result of the crisis, which occurred as retailers tried to both restock and deal with a large wave of demand after the initial Covid shutdowns in Europe and the United States. United for the last time. year.

“I don’t see a substantial change or shift in the way we do our supply or supply chain. We will continue to work closely with a specific number of suppliers, ”he said.

Ikea, which reports full financial results at the end of the year, was in the midst of the biggest transformation in its 78-year history, aiming to end its reliance on customers collecting and building their own furniture, when it hit the pandemic. He has recently bought companies that make furniture for clients, as well as augmented reality startups to help clients with home planning.

Brodin said Ingka, which accounts for about 90 percent of Ikea’s sales, has invested 2.2 billion euros in recent years in new store formats, including stores that focus only on kitchens or bedrooms, as well as more general stores. small in the center of cities, like those from one to another. will open soon in Stockholm.

“We are still working hard to crack the code around the product range and logistics. But the traffic has been phenomenal and our market share in cities has increased, ”he added.

Ikea has placed a great emphasis on sustainability while trying to lower prices as it enters countries like India, prompting concern from some critics about disposable consumption.

Brodin called it “this classic myth about low prices” and argued that Ikea was showing that “the new economy is about being resource-smart and therefore climate-smart.” It has invested in initiatives such as recovering used mattresses in the Netherlands and turning them into new products, as well as spending on renewable energy and promoting products such as plant-based dumplings and LED lamps.

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