Tuesday, May 28

IKEA warns on increase of price in 2022

IKEA Chief Financial Officer, Martin Van Dam has warned that the price of furniture of the renowned Swedish furniture company would most likely increase in 2022.

This is highly due to the shortage of supply chain and the high demand besides labor shortage that they faced throughout the pandemic. The increase of demand is due to customers worldwide especially throughout the pandemic as people have been working from home to buy necessities for their home office.

“Keeping IKEA stores and warehouses stocked has been a challenge. Supply-chain disruptions led to a substantial drop in the availability of products that we have yet to recover from. We expect this will continue far into FY22,” the company said to Reuters.

“The scarcity and pricing of raw materials, and then the logistical problems — that means it will be difficult to grow in FY22. Of course we plan for growth, we will go for it, but it’s going to be very, very hard work in our supply chain, and with our retailers as well.”

Steep increase of transport is due to limited containers and carriers. Thus, causes delay for store owners worldwide to receive the goods.

“Though we can’t continue to secure fixed prices to the retailers under these challenging conditions, we also plan to absorb part of the increased costs during FY22,” it said.

Their business was good throughout the pandemic but their profit dropped due to increase of raw material cost and transport.

IKEA claims that they have spent 250 million euros to alleviate their supply chain disruptions during fiscal year 2021.

Will the price increase also take effect in Malaysia? As IKEA Malaysia operates under a franchise model, it depends on them whether to pass the increase of price to the customers or not.

Recently, IKEA Malaysia was in the news as they came out with a new limited edition menu on their bistro, Charcoal Chicken Hot Dog and caramel-flavoured Charcoal Soft Serve. They are currently available on their menu until 31st December 2021.

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