Only weeks after the company had to announce massive global job losses and the abandonment of plans to open stores in India, the company’s founder Ingvar Kamprad has warned that Ikea faces yet further cost-cutting as the global economic crisis continues to hurt the Scandinavian furniture giant.
A dearth of credit available to homebuyers has hit Ikea hard, with the flat pack furniture specialist heavily reliant on people moving into, and then furnishing, new houses.
An all time low in the number of mortgages available in the UK market is indicative of the wider economic climate, which poses a particular problem for the chain.
Only last month the Swedish retailer was expecting to open over a dozen new stores globally throughout the year, but with growth in China suddenly slowing to a crawl, and Indian regulations on foreign investment stifling the furniture maker’s plans for expansion into the subcontinent, Ikea is now faced with a very different outlook.
As a private company, Ikea does not publish its sales figures, but they are understood to be a long way below budget. Most of the future job cuts are expected to come from the manufacturing and logistics departments as the company seeks to cut its costs.
Ireland’s first Ikea, in Dublin, is still due to open later this month. It will employ around 500 people.