Against a backdrop of rising prices and an unstable supply chain, is it time to open an Ikea store?

Ikea customers hoping to furnish an apartment on a shoestring this summer are faced with a reality.

Supply chain issues obsess the company; a store in downtown Toronto opened earlier this week, despite shortages of dozens of products.

A quick scroll through the chain’s website reveals cracks in the international furniture company’s supply chain. Sold out for Toronto are the Holmsund corner sofa, some colors of the Kallax shelf, the Poäng armchair. People living in GTA foster homes may run out of choice for the foreseeable future.

Ikea representative Kristin Newbigging said in an email that Ikea remains “committed to improving [their] global availability at pre-pandemic levels.

“We are actively working to mitigate the effects of global supply chain disruptions by working with our partners to ensure raw material availability, minimize production disruptions and secure logistics capabilities,” she said.

Ikea told customers last summer that prices would not rise amid inflation. But they did, up to 10%.

“Like many retailers, we have had to adjust our prices to mitigate the impact on our business,” Newbigging said.

Supply chain expert and Journal of Commerce editor Mark Szakonyi weighed in, attributing the shortages to a variety of factors.

“The Russian-Ukrainian war is causing shortages of grain and manufacturing components,” he said in an email. “Faulty harvests are observed all over the world. Delays in container shipping don’t help either.

Szakonyi predicts a tough six months ahead for consumer goods in North America.

“When a system is maxed out, small disruptions become big ones. And we’ve already had big ones like the blockade of the Suez Canal and the less reported but more impactful temporary closure of a major Chinese container terminal last year. latest due to previous COVID lockdowns.

Retail analyst and advisor Bruce Winder agrees: Retail is in a tough spot right now. But Ikea is weathering the storm better than most.

“Ikea is a big company,” he said. “But even large companies are having a hard time with the current state of global supply chains.”

“You have supply chain issues, which are multi-faceted. There were the first waves of COVID, then a massive demand for household items for people working from home. Then subsequent waves of COVID have really messed up the supply chain – everything from lack of containers to rising container prices.

It’s not just Ikea, says Winder.

“People got sick – people in factories, driving trucks, in ports. Every element of the supply chain has been broken, and on top of that there is the war in Ukraine. I don’t know of any retailer that hasn’t raised their prices.

Despite those worries, Winder thinks Ikea’s new location in downtown Toronto is a great idea.

“There are so many people living downtown – not everyone has a car, not everyone wants to get to the suburbs by truck. I don’t think these shortages will really hurt the downtown store; they are smart and focus on the 20% of products that represent 80% of their sales, their bestsellers.

“It’s a perfect storm. But it’s not one that will last forever.


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