Ikea to cut 7,500 jobs by 2020 in push for e-commerce

Shoppers in an Ikea store in Stockholm last month. The job cuts planned by the Swedish furniture giant relate to Ingka, the franchisee that owns and operates stores in the United States, Europe and some parts of Asia.
Shoppers in an Ikea store in Stockholm last month. The job cuts planned by the Swedish furniture giant relate to Ingka, the franchisee that owns and operates stores in the United States, Europe and some parts of Asia.PHOTO: REUTERS

S'pore staff spared, as are those in stores in S-E Asia owned by separate franchisee

STOCKHOLM • Swedish furniture giant Ikea said on Wednesday it plans to cut 7,500 jobs worldwide by 2020, mainly office jobs, as it reorganises to focus its business on e-commerce and smaller shops in city centres.

The job cuts affect almost 5 per cent of staff at Ingka Holding, Ikea's parent group. Ikea is its biggest brand with 367 stores in 30 countries and 160,000 employees.

However, the job cuts do not affect employees in South-east Asia, said Ms Corinna Schuler, head of corporate communication for Ikea South-east Asia, in response to queries from The Straits Times.

Ikea is a franchise with 12 different companies that own and operate retail stores around the world, and the job cuts relate to Ingka, the franchisee that owns and operates stores in the United States, Europe and some parts of Asia, said Ms Schuler.

Ikea South-east Asia is owned by Ikano, which operates stores in Singapore, Malaysia and Thailand.

"Ikea South-east Asia is fortunate to be operating in a region where economies are growing and more and more people are joining the middle class - and improving their lives at home," said Ms Schuler, adding that the firm is hiring as it expands with a new store in Penang next March and another in the Philippines in 2020.

The decision by Ingka to cut jobs was "based on how to lead a more simple, effective and efficient" business, said Ingka retail manager Tolga Oncu. "We have duplicate work throughout the market," he told Agence France-Presse.

  • $55b

  • Ikea parent group Ingka's sales, totalling €34.8 billion , for its 2017-2018 reporting year.

Stores and distribution units will not be affected, he said.

Ikea, via Ingka, will at the same time recruit 11,500 people in the next two years to meet the company's "digital capabilities" and its plans to open around 30 new stores.

The company, famous for its flatpack DIY furniture, has been opening city centre shops in response to changing lifestyles, since fewer people own cars.

"The retail landscape is transforming at a scale and pace we've never seen before. As customer behaviours change rapidly, we are investing and developing our business to meet their needs in better and new ways," Ingka chief executive Jesper Brodin said in a statement on Wednesday.

In October, Ingka reported sales of €34.8 billion (S$54.5 billion) for its 2017-2018 reporting year, up by 2 per cent from the previous year, which it attributed to stronger online sales and store openings.

Ikea stores welcomed 838 million visitors in 30 countries, 3 per cent more than a year earlier.

The company's webpage meanwhile had 2.4 billion visitors, up by 10 per cent.

The group also said its "Click & Collect" service, which enables consumers to order online and pick up their products in stores, and "TaskRabbit", which offers buyers assembly help in the US and Britain, were developing well.

  • Additional reporting by Tiffany Fumiko Tay
A version of this article appeared in the print edition of The Straits Times on November 23, 2018, with the headline 'Ikea to cut 7,500 jobs by 2020 in push for e-commerce'. Print Edition | Subscribe