Cost Breakdown:

1. Lost Sales:

   • Annual Retail Sales: IKEA's total retail sales for FY24 were €45.1 billion (approximately $49.6 billion USD).

   • Sales Decrease: The reported 5.3% decrease in sales equates to approximately $2.63 billion.

         Lost Sales=Total Sales × Sales Decrease Percentage
     
                      = $49.6 billion × 0.053
     
                = $2.63 billion
     

     Lost Sales = Total Sales × Sales Decrease Percentage

     = 49.6 billion × 0.053

     ≈2.63 billion

   • Per Market Impact: Assuming IKEA operates in 63 markets, the average lost sales per market would be:

     • Calculation:

       Lost Sales per Market=2.63 billion / 63

       ≈$41.7 million

2. Increased Operational Costs:

   • Operational Cost Estimation: According to industry standards, logistics inefficiencies can lead to operational costs increasing by 10-20%. For IKEA, assuming an operational cost baseline of around $5 billion annually (a rough estimate based on industry averages for large retailers), we can calculate the potential increase.
   • Cost Increase Calculation: If we assume a conservative increase of 18%, that would amount to an additional $900 million.

     • Calculation:

       Increased Operational Costs

       = Operational Cost Baseline × 0.18

       = 5 billion × 0.18

       = $900 million

Summary Data:

• Per Market (IKEA operates in 63 markets):
  • Lost Sales: $41.7M
  • Increased Operational Costs: $14.3M (assuming the operational cost increase is distributed evenly across markets)
• Globally:
  • Lost Sales: $2.63B
  • Increased Operational Costs: $900M

Calculations for Lost Sales:

1. IKEA’s Global Revenue: $60 billion annually.

2. Percentage of Lost Sales Due to Stock Shortages: 3%.Lost Sales=Total Revenue×Percentage Lost SalesLost Sales=60 billion×3%=1.8 billion annually.

   Lost Sales=Total Revenue×Percentage Lost Sales

   =60 billion×3%

   =1.8 billion annually

3. Effectiveness Factor: Only 10% of the lost sales are high-demand or impactful.

Adjusted Lost Sales

=Lost Sales×Effectiveness Factor

Adjusted Lost Sales

=1.8 billion×10%=180 million annually.