Consumer Purchasing Power Plummets, IKEA Lays Off 850 Employees Across Various Countries

IKEA is reportedly cutting 850 jobs as part of an efficiency measure amidst weakening global consumer spending and rising operational costs. The redundancies are being implemented by Inter IKEA, the company that manages IKEA franchises in 63 countries. Currently, IKEA is facing pressure due to rising costs, United States import tariffs, and a decline in consumer demand.

The company is also undergoing a strategic business shift, increasing the number of small city-centre stores while reducing reliance on large suburban outlets. Inter IKEA Chief Financial Officer, Henrik Elm, stated that the company needs to move faster and more efficiently. “We need to be faster, shorten decision-making processes, and focus on those priorities,” he said, as quoted by Reuters.

IKEA previously recorded a decline in sales for two consecutive years. At the end of last year, both Inter IKEA and Ingka Group, the largest operator of IKEA stores, replaced their respective CEOs. In March 2026, Ingka Group also announced the redundancy of 800 office workers. According to Elm, the conflict involving Iran has accelerated the decline in global consumer confidence. The rise in fuel prices resulting from the conflict has increased household expenditures, leading people to reduce spending on non-priority items such as furniture and home renovations.

“At a time when consumer confidence is so heavily impacted, disposable income has truly decreased for many people, especially the consumers we aim to reach,” said Elm. He noted that IKEA must now suppress costs to continue offering low prices to consumers. “Our ability to lower prices so that they can afford IKEA is more important than ever, and of course, you cannot achieve that if the cost structure is too high,” he added.

Of the total 850 employees affected by the layoffs, approximately 300 are based in Sweden, including in Älmhult, which serves as one of IKEA’s primary hubs. The number of redundancies represents approximately 3 per cent of Inter IKEA’s total workforce of 27,500 employees worldwide.