Amid rising prices and a fickle supply chain, is now the time to be opening an Ikea store? | The Star

2022-05-28 19:53:39 By : Mr. Jack Zhang

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Ikea customers hoping to furnish an apartment on a budget this summer face a reality check.

Supply chain issues are dogging the company; a downtown Toronto location opened its doors earlier this week, despite shortages of dozens of products.

A cursory scroll through the chain’s website reveals cracks in the supply chain of the international furniture company. Sold out for Toronto are the Holmsund corner couch, some colours of the Kallax shelf unit, the Poäng armchair. People in starter homes across the GTA may be wanting for choice for the foreseeable future.

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

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

Ikea told customers last summer that prices would not go up amidst inflation. But they did, by up to 10 per cent.

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

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

“The Russia-Ukraine war is causing shortages of grains and manufacturing components,” he said in an email. “Poor harvests are being seen globally. Delays in container shipping aren’t helping either.”

Szakonyi predicts a rocky next six months for consumer goods in North America.

“When a system is maxed, small disruptions become big ones. And we’ve already had some big ones such as the Suez Canal blockade and the less-reported but more impactful temporary closing of a major Chinese container terminal last year due to earlier COVID lockdowns.”

Retail analyst and adviser Bruce Winder agrees — retail’s in a tough spot at the moment. But Ikea’s weathering the storm better than most.

“Ikea’s a great company,” he said. “But even great companies are having a tough time in the current state of global supply chains.”

“You’ve got the supply chain issues, which are multi-faceted. There were the first waves of COVID, and then a massive demand for home goods for folks working from home. Then subsequent waves of COVID really messed up the supply chain — everything from not enough containers to upped container prices.”

It’s not just Ikea, says Winder.

“People got sick — people in the factories, driving the trucks, at the ports. Every piece of the supply chain has been broken, and then on top of that you have the war in Ukraine. I don’t know any retailer who hasn’t increased pricing.”

Despite these concerns, Winder thinks the new downtown Toronto location of Ikea is a great idea.

“There are so many people living downtown — not everyone has a car, not everyone wants to truck out to the ’burbs. I don’t think these shortages will really harm the downtown store; they’re smart and focusing on the 20 per cent of products that represent 80 per cent of their sales, their bestsellers.”

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

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