IKEA franchiser cuts 850 jobs amid falling consumer spending

Inter IKEA, the company that franchises the globally recognised Swedish furniture giant IKEA across 63 countries, is cutting 850 jobs as part of a sweeping cost-reduction strategy amid weakening consumer demand and mounting economic pressures, as reported by Reuters.

The company, which oversees the sourcing and supply of IKEA products to 13 franchisees worldwide, said the layoffs are aimed at making the organisation leaner, faster and more efficient as shoppers continue to scale back spending on home furnishings and renovations.

Henrik Elm, Chief financial officer, Inter IKEA said the retailer is restructuring decision-making processes while focusing more heavily on affordability.

"We need to become faster, shorten the decision-making processes, and simply concentrate our efforts on these priorities," Elm told Reuters in an interview.

Consumer pressure

The company has been grappling with rising operational costs, US tariffs and prolonged weakness in consumer confidence, factors that have significantly impacted spending on non-essential goods.

According to Elm, geopolitical instability has further intensified the slowdown.

"Iran has ‘accelerated’ consumer confidence decline.”

He said the conflict had driven fuel prices sharply higher, putting additional pressure on household finances and reducing appetite for discretionary purchases such as furniture and home improvements.

"In times when consumer confidence is very much affected, the disposable incomes are really going down for many, especially the consumers we want to reach," said Elm.

"Our ability to lower the ⁠prices so they can afford IKEA is more essential than ever before, and of course you can't achieve that if you have too high a cost base," he added.

Strategic shift

The restructuring comes as IKEA accelerates a broader transformation of its retail model. 

The company is gradually shifting away from its traditional large suburban warehouse outlets towards smaller city-centre stores designed to attract urban shoppers and boost accessibility.

Both Inter IKEA and its largest franchisee, Ingka Group, appointed new chief executives late last year following two consecutive years of declining sales for the furniture brand.

Ingka Group had already announced plans in March to eliminate 800 office-based roles as part of its own efficiency programme.

Sweden hit

Of the 850 positions being removed by Inter IKEA, around 300 jobs will be cut in Sweden, including roles linked to the company’s major operations hub in Almhult, the town where IKEA was founded in 1943.

The layoffs account for roughly 3% of Inter IKEA’s global workforce of 27,500 employees, underscoring the scale of the company’s latest effort to navigate slowing demand while protecting its low-price business model.