IKEA franchiser slashes 850 jobs in cost-cutting drive as consumer spending falls

• The job cuts include 300 positions in Sweden and are part of efforts to streamline decision-making and reduce costs to enable lower prices for budget-conscious consumers
• IKEA is strategically shifting from large suburban warehouse stores to smaller city-centre locations to attract shoppers
• Both Inter IKEA and its largest franchisee Ingka Group replaced CEOs in late 2023 following two years of sales declines, with Ingka also cutting 10% of its office workforce in March

Summary

Key Developments:

Inter IKEA, the franchisor of IKEA stores across 63 countries, is eliminating 850 jobs—approximately 3% of its 27,500-person workforce—as part of a cost-cutting initiative driven by declining consumer demand. The cuts include 300 positions in Sweden, including IKEA's founding hub in Almhult.

Financial Context:

IKEA has reported two consecutive years of declining sales, prompting leadership changes at both Inter IKEA and its largest franchisee, Ingka Group, in late 2024. Ingka previously announced plans in March to reduce its office-based workforce.

Market Pressures:

CFO Henrik Elm cited multiple challenges impacting the business:

• The Iran war has "accelerated" declining consumer confidence
• Rising fuel prices from the conflict are squeezing household budgets
• Reduced disposable incomes are limiting spending on non-essential items like furniture and home renovations
• Elevated operational costs pressuring margins

Strategic Response:

Inter IKEA, which manages global product sourcing and supplies 13 franchisees, aims to streamline operations and lower prices to maintain accessibility for budget-conscious consumers. The company is also executing a strategic shift from large suburban warehouse stores to smaller city-center locations to attract customers.

Business Impact:

Elm emphasized the need to "become faster, shorten decision-making processes" and reduce the cost base to enable price reductions—critical for reaching IKEA's target demographic during a period of weakened consumer spending. The restructuring reflects broader challenges facing the retail sector amid geopolitical uncertainty and inflationary pressures.