In order to “reach more urban customers,” an Ikea reorganization is in the works for its global businesses.
The change will see the company lay off about 7,500 employees, in order to appease a demographic that doesn’t want to shop in “massive warehouses.”
Ikea Reorganization
Earlier today, Ingka Group—Ikea’s owner and operator—said it will be cutting its global workforce by 5% as it moves towards smaller stores and more online shopping. The current retail landscape has been cited as a major factor for the Ikea reorganization.
CEO of Ingka Group Jesper Brodin said in a statement:
“We recognize that the retail landscape is transforming at a scale and pace we’ve never seen before […] As customer behaviors change rapidly, we are investing in and developing our business to meet their needs in better and newer ways.”
The United States won’t be greatly affected, as only 75 jobs are at risk of being eliminated. Jobs in administration and support are the most likely to go.
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One Ikea Door Closes, Another Opens
It is not all bad news. The company is expecting the Ikea reorganization to create more jobs than it culls. It is estimating the creation of 11,500 new jobs to fill at least “30 new smaller-format stores in cities around the world.”
Brodin continued:
“We will put greater emphasis on making our existing stores even better and taking the opportunity to renew and reinvent our business in a way that is inspired by our history, culture, and value.”
Ikea currently has a global workforce of 208,000 people in 367 stores. The company recently added India to its list, opening its first store in Mumbai in August. The plan is to open 25 more there by 2020.
Ikea is not alone in restructuring its business. Many retail giants have been majorly affected by the changing retail climate. These include House of Fraser, JC Penney, and Sears to name only a handful.
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