While almost all everyday products have become extremely expensive lately, Swedish furniture giant Ikea has taken a surprisingly different path. After growth last year, the largest owner of Ikea furniture stores, the Ingka Group, wants to attract customers with price cuts. Storage items in particular, such as drawers, shelves, wardrobes and kitchenware, will cost cheaper in the future.
Ingka boss Jesper Brodin emphasized on Thursday that the group is currently investing heavily in price reductions. The most popular Ikea rack Billy has already become 20 percent cheaper in the 2023 financial year.
Turnover has increased sharply recently
The Ingka Group, which owns the most Ikea stores worldwide, increased its turnover by 5.7 percent to 41.7 billion euros in the 2023 financial year (end of August). Globally, Ikea’s turnover, including brand rights, increased by 6.6 percent to 47.6 billion euros, according to Inter Ikea, which also owns the Ikea brand.
Fewer glasses and napkins sold
Jon Abrahamsson, head of Inter Ikea, told Reuters that the number of products sold had not kept pace with the increase in sales value. As more and more customers ordered more expensive Ikea items online, fewer small household items such as glasses or napkins were purchased. “If you walk into an Ikea store there are a lot more impulse purchases,” he said.
Ikea is looking for its niche
Management also hopes for a boost from the trend that people will spend less money in restaurants due to inflation in the coming months with many holidays and will instead invest in a better quality of life. Olga Oncu, head of Ikea retail at Ingka Group, said Ikea could benefit if people prefer to celebrate holidays such as Thanksgiving, Christmas and New Year at home.
“The families who may have celebrated these events on vacation or at restaurants in the past are now celebrating them at home because they feel it is better for them economically.”
Christmas activities could weaken
According to a survey by consulting firm Deloitte, Americans plan to spend less this holiday season. According to this study, peak sales in the US will grow more slowly than they have in five years. The US is Ingka Group’s second largest market.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
