IKEA expects supply chain disruptions into 2022 as it fights ‘perfect storm’

IKEA said the biggest supply challenge currently to get goods out of China, where roughly a quarter of the company's products are made.

IKEA, the world’s biggest furniture brand, is leasing more ships, buying containers and re-routing goods between warehouses as it works hard to mitigate a “perfect storm” of global supply chain disruptions which could last into next year, executives said.

The company, which earlier on Thursday reported record annual sales as locked-down consumers spent more than ever on their homes, is also reducing the number of versions of some products as it struggles with raw materials shortages to ensure its most popular items are available.

“It is re-steering and re-routing. And on the retail side we have learned agility like never before because everyday you have to work with what you have. You have to find ways to solve customer needs with limitations that we have never seen before,” said Jesper Brodin, CEO of Ingka Group which owns most IKEA stores.

Jon Abrahamsson, chief executive at brand owner Inter IKEA, told Reuters he expects the supply chain crisis to continue into 2022, with the biggest challenge currently to get goods out of China, where roughly a quarter of IKEA’s products are made.

IKEA’s stores in North America are the hardest hit by product shortages, followed by Europe. To avoid disappointing shoppers, it is temporarily removing unavailable products from its websites and store showrooms, instead suggesting similar items.

Brodin said no-one at IKEA had anticipated the current global supply chain crisis, and that there would need to be a preparedness in future for unexpected swings in supply.

“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,” he said.