In a reflection of rising raw material, supply chain and transportation costs, the Ingka Group announced that its Ikea subsidiary will raise prices across its global retail network, up an average of 9% on the range of its products.
“During the pandemic, despite rising costs all around us, Ingka Group kept prices stable with the aim to keep prices as low as possible for customers,” says Tolga Öncü, retail operations manager at Ikea Retail. “It was the right thing to do.”
However, Ingka Group has decided that cost increases associated directly and indirectly with the COVID-19 pandemic will stretch through 2022, prompting its decision to raise 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,” Öncü said, adding, “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. However, affordability will always be a cornerstone for us.”
In November, the company announced that it would raise starting wages for U.S. employees to $16 per hour, with some hourly wages starting at $17 or $18 depending on location, as well as enhancing its comprehensive benefits package and providing more inclusive health care support.
In early December, Ikea U.S. announced that it would close the Upper East Side planning studio it opened in the spring of 2021. The store isn’t a conventional store where customers show up and carry away merchandise. Rather, Ikea developed it as a small-format showcase for services and products that Ikea would deliver to customers who select them during location visits. The company noted that it is actively searching for a new Manhattan location for the operation.
“Ikea is continuously looking to create a better customer experience while ensuring our business remains viable and relevant now and in the future,” said Linda Santing, area vp, Ikea U.S. “As we position our business for long-term growth and investments, we had to reevaluate our Upper East Side location due to the high rent and the lower-than-expected foot traffic. We remain committed to the New York City area and look forward to securing a new home for our planning studio.”
