Ikea to raise prices amid rising costs

Ikea to raise prices amid rising costs

Furniture giant says transport and raw materials are getting more expensive

IKEA said it would increase the prices of its products around the world as the furniture giant grapples with rising transport and raw-materials costs.

Ingka Holding BV, the biggest owner and operator of IKEA stores, said it planned to raise prices across the group by around 9% on average, with variations depending on country and range, amid a global squeeze on supply chains and higher associated costs.

"IKEA continues to face significant transport and raw-material constraints driving up costs, with no anticipated break in the foreseeable future," Ingka said Thursday, adding that it expected disruptions to continue well into 2022.

The Swedish company said the largest cost increases relate to transportation and purchasing prices, and are particularly affecting North America and Europe.

"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," said Tolga Öncü, retail operations manager at Ingka's core IKEA Retail division. He said the company needed to take the pricing action now to safeguard its competitiveness and resilience.

Mr. Öncü said the company planned to give back to customers any decrease in purchase prices it gets, and that IKEA was working to expand its lowest-price ranges as a proportion of its total.

To mitigate the impact of supply-chain disruptions and improve the availability of products, the company said different parts of the family-controlled retail empire had started chartering extra vessels and loaders, while working with partners to secure raw materials and logistics capabilities.

Earlier this year, IKEA said a significant share of its products were missing from store shelves around the world because of transportation strains in many of its biggest markets.

For example, at one point in the U.K. the company estimated that 10% of items -- about 1,000 products among 10,000 -- weren't available in the country.

Still, IKEA has said shortages haven't significantly impacted sales because it has a big enough range to offer shoppers alternatives.

In October, IKEA said revenue rose by 6.3% to 37.4 billion euros, equivalent to around $42.4 billion, in the financial year ended Aug. 31.

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