IKEA Sacks 7,500 Employees to Fund E-Commerce Boom

The Swedish home furniture and homewares specialist says it’s cutting 7,500 jobs as it shifts its focus from large-format stores to smaller, city centre experiences, while also expanding its e-commerce offerings.

To diversify its reach, the company is reportedly opening 30 stores in major cities, while IKEA representatives claim the staff cutbacks will also give the business the scope it needs to focus “on its e-commerce platform, to better meet the needs of its customers and be more convenient and affordable to many people”.

According to the Wall Street Journal, the cutbacks will mostly impact office and communication workers. Despite plans to cut 7,500 jobs from its head office operations, the company says it will most likely employ 11,500 new retail workers to staff its new concept stores.

In a statement, Lars Petersson, IKEA’s manager for US retail operations said the company wants to “create the IKEA of the future”, by embracing technological advancements, making the brand more accessible to a broader consumer-base.

The company seems to be making a bigger e-commerce push since a financial report released last month revealed that IKEA received 2.5 million website visits in the 12-months ending August 31, but only accounted for five percent of its total sales. The report also detailed IKEA’s efforts to focus on smaller, showroom-style stores that are more suitable for city centres and smaller communities.

According to the CEO of Ingka Group, Jesper Brodin, IKEA is seeing a shift in the way customers shop and that it needs to make significant investments if it wants to evolve along with the industry.

“We recognise that the retail landscape is transforming at a scale and pace we’ve never seen before,” he said. “[IKEA needs] to be investing and developing our business to meet their needs in better and new ways.”

IKEA isn’t the first retail business to shift its in-store and online focus, with Target also introducing plans to reduce the size of a large portion of its bricks-and-mortar stores, as it faces the reality of dwindling in-store profits. Target revealed earlier in the year that is would be moving away from stock with poor sales and low margins and instead merchandising its stores with more of its best selling items, like fashion and apparel.

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