BUSINESS

Ikea to hike prices amid supply chain woes, inflation

Your Billy bookcase is about to cost way more.

Ikea will hike prices for the foreseeable future as it contends with supply chain disruptions and higher costs for raw materials, the owner of most of its stores confirmed Thursday.

The beloved affordable furniture retailer’s prices will rise an average of 9 percent at stores around the world, with variations in some markets based on “localized inflationary pressures,” according to Ingka Group. The company said “significant transport and raw material constraints driving up costs” drove the decision to hike prices.

“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.

“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 added.

Empty shelves at an Ikea store.
The price hike is Ikea’s first response to ongoing supply chain woes.

Ikea will aim to continue offering low prices on more than half of its product offerings, the company added. The disruptions and higher costs impacting Ikea’s operations are expected to continue “far into 2022.”

Ikea is taking steps to address the supply chain issues. The retailer previously said it is leasing more vessels and containers as part of its efforts to avoid shipping disruptions.

The company said it will adjust prices if the situation improves, though it warned forecasting was “challenging given current instability and inflation across markets.

A woman browses an Ikea store.
The retailer also said it was leasing more containers and vessels to circumvent supply chain disruptions.

“Our intention is to give back to the customer any decrease in purchase prices we get,” Öncü added.

Ingka Group is the largest owner and operator Ikea stores globally. The Netherlands-based firm operates 392 Ikea stores, according to its website.

Inflation has skyrocketed in amid strong demand for products and global supply chain bottlenecks. As a result, Americans are paying higher prices for everyday staples such as food and gas.

Shoppers at a large Ikea store.
Ikea promised to reduce prices if the situation improves, though the changes are expected to last far into 2022.

The Consumer Price Index rose 6.8 percent in November 2021 compared to the same month one year earlier, marking the largest one-month increase since 1982.

Ikea is one of several retailers to raise prices in recent months. In November, discount retailer Dollar Tree said it would raise prices to $1.25 for most of its product assortment, though company officials claimed it was not a response to market conditions.

Per: NYP

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