Top Ikea retailer says in Davos that tariffs could drive prices higher

FOR budget furniture retailer Ikea, the fewer trade tariffs there are, the better, CEO of Ingka Group, the biggest global Ikea franchisee, told Reuters on Monday (Jan 20) as businesses braced for higher possible US tariffs under President Donald Trump.

“We, and I think probably all international companies thrive from harmonised tariffs, if you like, and actually, the fewer the better, because at the end of the day there is a risk in any country with tariffs that you need to, as a company, pass it on to the customers,” Jesper Brodin said on the sidelines of the World Economic Forum annual meeting in Davos, Switzerland.

Inflation and high interest rates have had a “damaging” impact on consumers over the past few years, Brodin said, adding that he saw demand improving.

“We are quite optimistic about the outlook and we already see a shift where people are returning to, I would say, a normal situation when it comes to consumption,” he said.

“Now we see people returning to bigger investments like wardrobes, kitchens, and so on,” Brodin added.

Ingka Group, which runs Ikea stores in 31 countries and accounts for 90 per cent of global Ikea sales, reported a drop in annual net profit and sales last year after cutting prices to lure inflation-weary shoppers back to its big blue stores.

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Despite weak consumer demand, Brodin said his only real worry was climate change. Pointing to the severe economic impacts of extreme weather events like the Los Angeles fires, he said leaders of Europe, the US, and China must find an aligned approach to combating climate change.

“There is still a myth out there that adapting to mitigate climate change will be an economic loss, in Ikea we have found that is absolutely the opposite,” said Brodin.

“We are here to meet other peers and businesses, government leaders in order to speed up the change because the world is not acting fast enough on this.” REUTERS