IKEA Increases Prices by 80%, Is DIY Too Expensive Now?

Ikea prices have risen more than 80% in the last year. The price growth on over a dozen of their products has managed to outstrip inflation by at least twofold since December of last year.

Company Culture

Ikea's goal has always been to provide quality home furnishings at an affordable price point. They offer a “do-it-yourself” experience with their nearly staff-free showrooms and flat-packed furniture.

As commodity and shipping prices have continued to rise, the company has claimed it can no longer absorb the damage to its bottom line. “Unfortunately, now, for the first time since higher costs have begun to affect the global economy, we have to pass parts of those increased costs onto our customers,” Tolga Öncü, retail operations manager at IKEA Retail, said in a statement.

The company reported a surprising amount of demand for home-related products during the pandemic, such as furniture, storage, and home-office-related items.

High demand coupled with supply chain issues meant that the company dealt with shipping delays, and customers' orders were becoming more and more backed up. The company attempted to mitigate this by charting extra ships and loaders.

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Basically Luxury

The Jokkmokk table and four chairs set was $112 but jumped to a staggering $202. Similarly, the two-seater Glostad sofa price increased by two-thirds, going from $102 to $170, and the Slattum double bed frame rose almost 50% from $146 to $214.

Price rises up to 22% were reported across five of its categories: drawers, dining furniture, mattresses, and sofas. The company claims that keeping prices low is still its main focus, but its hands have been tied by rising transport and raw material costs.

Executives at the company admitted to raising prices by around 9% last December, but they claimed earlier this week that they had already started lowering the prices again on select items.

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Supply Chain Crisis

Ikea has been struggling to keep some of its popular items in stock thanks to supply chain issues throughout Europe. The company also sacrificed 5% of its total sales when it closed its Russian business in response to the war with Ukraine.

Despite the troubles with supply and rising prices, the company reported record-high revenue in August ($43.9 billion), which is an increase of 6.5% over the last 12 months.

An Ikea spokesperson had this to say about the recent struggles the company has been having:

“We are not immune to the macro-economic developments that businesses, retailers and the public are currently facing, from the increased cost of materials and transportation to the war in Ukraine and inflation. We have had to adjust our prices to reflect this increased cost base. Our approach during this period has sought to protect the prices of our most-loved and lowest-priced products. Our approach during this period has sought to protect the prices of our most-loved and lowest-priced products and families.”

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This article was produced and syndicated by Wealth of Geeks.

Max Marvelous has coached over 250 Millennials to help take the stress out of money. When Max is not coaching, you'll find him reading financial books, indoor cycling, or visiting local pawn shops looking for swiss-made watches.