The seemingly everlasting delay in supply chains has affected businesses across the globe. IKEA has started to experience disruptions to its retail product line as it struggles to acquire goods for its stores in North America.
The US-based stores have been hit hard by the shortage as IKEA sources the majority of its product offerings in Europe. As a result—and to alleviate customer dissatisfaction, the firm has decided to remove some products from its range.
While the majority of its products are manufactured in Europe, Jon Abrahamsson, Chief Executive Officer of Inter IKEA says the biggest challenge is getting goods from China, resulting in the company taking several measures to reduce impact to consumers.
The Chief Executive Officer of Ingka Group, Jesper Brodin, says, ‘It is re-steering and re-routing. And on the retail side, we have learned agility like never before because every day you have to work with what you have’. Brodin also says, ‘You have to find ways to solve customer needs with limitations that we have never seen before’.
Despite the impending disruption to its stores, the company had not anticipated the shortages and Brodin believe ‘it’s a perfect storm. [But] I think we are way past being surprised. This is the new normal for us. And when things stabilize we will have learned so much about agility and about sales steering’.
Success in adverse circumstances
During the supply chain adversity, Inter IKEA has reported record annual sales, due to consumers purchasing more goods for their homes during lockdowns. The subsidiary recorded the total sales from stores and e-commerce to be around US$48.7bn in the year leading up to August. E-commerce sales grew by 73% to account for 26% of total sales.
‘All over the world interest in life at home has become bigger’, Brodin says. 'There is no sign of decline in demand in any of our areas as it is right now’.
For more business insights, check out the latest issue of Business Chief Magazine.
- Q&A: China’s ecommerce innovator Jeff Li, CEO of ShoplazzaLeadership & Strategy
- 10 reasons why Amazon is winning despite US$2bn Q2 lossLeadership & Strategy
- Survey and conference tackle supply chain risk & resilienceLeadership & Strategy
- Moderna to Build Factory in Africa Investing up to US$500mnLeadership & Strategy