Ikea warns stock shortages to last into next year

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  • Coronavirus pandemic

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Ikea, the Swedish furniture giant, says it expects the disruption to global supply chains to continue for at least another year.

Chief executive Jesper Brodin said while there had been some improvement, there was still congestion at ports which has led to supply problems.

"We need to live with disturbances for the year to come," he said.

The owner of Poundland has also predicted that pressure from supply chain problems will last into 2022.

Andy Bond, chief executive of PepCo, which owns Poundland, said that its shipping costs had soared. "There are some times where we have had to pay 10 times our normal rates," he said.

"That's not to say every day but that has been the impact."

Mr Bond said the retailer had good levels of stock for Christmas and did not expect to increase prices to cope with rising shipping costs. But he said: "I think that we see the next 12 months remaining challenging."

'No easy fix'

Mr Brodin, chief executive of Ingka, which operates the majority of Ikea's stores, told the BBC that the UK and other countries were suffering with "congestion in ports and disturbances in supply chains".

"There is no easy fix to any of this even if people are working hard across not only Ikea but also across the world," he said.

Last month, Ikea said it was struggling to supply 10% of its stock, or around 1,000 product lines including mattresses, to its 22 stores in the UK and Ireland amid the continuing shortage of HGV drivers.

Meanwhile, earlier this week, it emerged that the key British commercial port of Felixstowe was suffering from logjams of shipping containers because of the busy Christmas period and a deficit of lorry drivers to shift them.

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Ikea has been forced to purchase additional shipping containers and charter vessels to address product shortages.

A spokeswoman for Ikea told the BBC last month: "We have also sent goods by train from China to Europe and we have invested in temporary intermediate warehouses in China, Vietnam, India, Indonesia, and Thailand to support production."

Mr Brodin said: "One thing we have learned is it is difficult to predict. You need to be on it every day and find the best solutions.

"At the same time from a realistic point, we need to live with disturbances for the year to come but things will gradually get better, I'm sure."

Rising sales

Ikea revealed that, over the year to 31 August, sales rose by 6.3% to €37.4bn (£31.6bn).

Mr Brodin said that when the Covid pandemic first hit last year, the group was forced to speed up a plan to invest in a strategy to meet customer needs and take on "the new competition", in particular ramping up its online operation.

He said that what the company had planned as a two-year transformation was rolled out in two months.

Mr Brodin said dealing with the pandemic "is definitely a challenging time in so many ways".

He said the increase in annual sales was the one he was "most proud of" during his 25 years with the company.

"We have experienced the demand on life at home like never before in every market, since, of course, people have been in the same situation – confined to the four walls of their home."

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