Ikea, the world’s largest furniture retailer, has said it will cut 7,500 jobs over the next two years in its largest ever restructuring. The layoffs will hit communications, human resources, and administrative roles.
The report comes courtesy of the Wall Street Journal, which points to the primary reasons Ikea is rethinking its business. While the company is the largest furniture retailer in the world, and it’s privately owned–which means it’s immune to the whims of Wall Street–it has experienced two years of slow growth in brick-and-mortar stores. It also has an antiquated online strategy, which for years, really only served as a digital catalog to get you to visit the store. These factors contributed to the company falling short of its goals.
As part of the restructuring, Ikea says it is creating more jobs than it plans to cut. The company will be opening 30 new stores in major cities, with a focus on delivery instead of self-service to support the digital business. Along with these new stores and program expansions will come 11,500 new jobs, the company claims. In other words, the future of Ikea is looking a lot more like the distribution hubs of Amazon, or even Target.
While the job eliminations may come as a surprise given that the company made over $14 billion last year in profits, the rest of Ikea’s strategy does not. Ikea’s leader of digital transformation, Michael Valdsgaard, shared a lot of the company’s thinking with Fast Company earlier this year, saying, “The business model of Ikea having a blue box in a cornfield, and you jump in the car with your family and have an ice cream [at the store], is not the only thing we should offer our customer. For the majority of people in the world, Ikea isn’t accessible. Apps can make Ikea accessible.” Apps, or just a decent website with two-day delivery, too.
