Inter IKEA, the Swedish furniture brand's global franchiser, announced on Monday it would cut 850 jobs worldwide as falling consumer confidence, the Iran war, and rising costs force the company to reduce its cost base in order to lower prices.

The company, which manages product sourcing from factories worldwide and supplies 13 franchisees operating IKEA stores across 63 countries, has faced a prolonged squeeze from escalating costs and US tariffs. The redundancies represent around 3 per cent of Inter IKEA's 27,500-strong workforce, with 300 of the affected roles based in Almhult, Sweden, where IKEA was founded in 1943.

Inter IKEA chief financial officer Henrik Elm told Reuters the restructuring was driven by the need for greater operational agility. "We need to become faster, shorten the decision-making processes, and simply concentrate our efforts on these priorities," he said.

Elm said a long-running decline in consumer confidence had been "accelerated" by the Iran war, which has pushed fuel prices sharply higher, eroding household budgets and reducing willingness to spend on non-essentials such as home renovation or new furniture. "In times when consumer confidence is very much affected, the disposable incomes are really going down for many, especially the consumers we want to reach," he said.

The CFO made clear the connection between cost reduction and pricing strategy. "Our ability to lower the prices so they can afford IKEA is more essential than ever before, and of course you can't achieve that if you have too high a cost base," Elm added.

The job cuts come after IKEA reported two consecutive years of declining sales, prompting leadership changes at both Inter IKEA and its largest franchisee, Ingka Group, which owns most IKEA outlets worldwide. Both companies appointed new chief executives late last year.

Ingka announced plans in March to cut 800 office-based positions, and has committed more than 5 billion euros in investment between 2024 and 2026 to open new locations and refurbish existing stores. The group is testing whether renting floor space to other brands can increase footfall and generate revenue from its large retail premises.

Inter IKEA is also in the midst of a strategic shift away from its traditional large suburban warehouse format towards smaller city-centre locations, as both companies work to rebuild sales volumes among cost-conscious shoppers.

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