Sweeping job cuts called for at Ikea

Ikea founder Ingvar Kamprad has given an interview to Swedish newspaper Dagens Industri aiming to put pressure on Ikea to reduce staff and spending dramatically.

The home furnishing group has already announced a massive reduction in jobs as the recession take its toll on consumer spending, with 5,000 positions going at the retail giant over the past year or so. But its billionaire founder and advisor said: "We need to cut staff more mainly within manufacturing and logistics. This is about adapting to sales being far below budget, as well as becoming more efficient."

With sales running seven per cent below targets Kamprad also advised scaling back expansion plans heavily, and he pointed the finger at current management for not reigning in spending quickly enough. The company had been opening 20 new stores evey year until recently, before global spending juddered to a halt as a result of the worldwide recession.

An Ikea spokeswoman responded to Kamprad's interview, saying the company would still be opening stores at a slightly reduced level of 10-15 a year, but also confirming that there could be more job cuts. Charlotte Lindgren said "There might be layoffs, since we have to adjust the organisation to the dampened sales growth."

WHAT THEY ARE SAYING

Daniel Indiviglio in the Atlantic: "With fewer people buying houses, fewer are buying furniture to fill up new homes. And those who might have upgraded their current décor are holding off. Few purchases can be put off as easily as furniture. You can always sit on your old sofa for another year or two. But today's news makes clear that the furniture market's problems can be extended globally. IKEA is the very definition of a global furniture retailer."

Andrew Oswald, professor of economics at Warwick University, in the Scotsman: "This is a sign of how bad the recession is. Ikea is caught in a pincer effect from the dropping housing market and the lack of credit in the British economy and elsewhere. There's nothing they can do to escape, because they're so dependent on housing and that's still dropping fast."