Ikea’s major reorganization: Smaller stores and 7,500 job cuts

Ikea is reorganizing its global business to reach more urban customers and people who don’t want to shop in its massive warehouses.

Ingka Group, which owns and operates most Ikea stores, said Wednesday it is cutting its global workforce by 5% and shifting toward smaller stores and more online shopping. The company will lay off about 7,500 employees.

“We recognise that the retail landscape is transforming at a scale and pace we’ve never seen before,” CEO of Ingka Group Jesper Brodin said in a statement. “As customer behaviours change rapidly, we are investing and developing our business to meet their needs in better and newer ways.”

The cuts will hit administrative and support jobs. Ikea said that fewer than 75 jobs will be eliminated in the United States.

As Ikea eliminates a huge number of jobs, it also plans on opening up even more positions than it eliminates. The reorganization could lead to the creation of 11,500 new jobs as it expands into 30 new smaller-format stores in cities around the world, Ikea said. Ingka currently owns 367 Ikea stores and employs 160,000 people of Ikea’s 208,000 global workforce.

“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,” Brodin said.

Ikea recently opened its first store in India and plans 25 more there.