IKEA Is Passing on Saving to Customers with Price Investments

January 29, 2024  by HFBusiness Staff in Business Strategy, Industry   

Ingka Group, the biggest IKEA retailer, has been through challenging times and, as one of the last companies to do so, two years ago it had to increase prices. It was a tough decision as it’s in the company’s DNA to be as affordable as possible.

“Lately we have seen continued positive economic developments and decreasing prices of raw materials in the supply chain”, says Tolga Öncu, Ingka Retail Manager, Ingka Group.  “At the same, we have been focused a lot on reducing operational costs and improving efficiency – by investing in technology and training for our co-workers, repurposing our stores, and introducing more affordable services.”

As a result, Ingka Group is passing on all the savings onto its customers and making another wave of price investments across markets – the second one in five months.

“Our goal is to restore prices long term and reach their inflation-adjusted pre-pandemic levels by the end of next year. This is the most important job at IKEA right now and going forward we want to lead with price decreases and set an example,” adds Öncu.

In January and over the coming three months, the company is increasing its investment in price reductions. This will affect all sections of its range, making thousands of products of good quality and design even more affordable for the many.

Which and how many products it is varies from market to market, as it’s dependent on local economic conditions such as inflation and currency effects. In Germany, from this month, one fifth of the range or 2,000 products have their price decreased by an average of 20%.

This includes iconic product families such as the KALLAX shelves, the SÖDERHAMN sofas, and the BRIMNES series for bedrooms and living rooms. In Sweden, more than one quarter of the range or 2,500 products have become more affordable, including the MALM bedframes, which are reduced by 16%, or the MICKE desk, which is down by 23%.

Across the pond, in Canada, EUR 55 million is being invested to cut prices for more than 1,500 products, including, for example, our iconic BILLY bookcase with glass doors, which is reduced by 20%. Markets such as Portugal, Japan, and Switzerland have also decreased prices recently, while many others are doing it in the days to come.

In Belgium, in addition to lowering prices of 2,600 products from February 1, IKEA is also lowering prices of parcel deliveries which now cost only EUR 2.99. Another example is India, where hundreds of products will be reduced by 20% in the coming period.

Storage will remain in commercial focus during FY24 – through customer feedback and the most recent Life at Home report, the company sees that the many seek smart storage solutions and ability to declutter their homes at an affordable price.

“Our approach this year is to navigate with thinner margins to provide support to people. It is not to optimize profits. At the same time, IKEA tends to gain market share when consumers face financial pressure. This was the case last year when we globally grew to a record 6% market share. Becoming even more affordable with our products without compromising on quality, form, function, and sustainability, we believe, is also a way to continue this growth trend,” adds Öncu.

Ingka Group will also make sure to offer the lowest possible price on products that allow customers to save money on their bills and have a more sustainable life at home. This includes carpets – which are already lower-priced in many markets – as well as LED bulbs, faucets, and other products that help save energy and water.