Swedish flat-pack furniture group IKEA is cutting prices by 15% to 25% across more than 1,500 products, mainly in Europe, in a fresh round of reductions aimed at consumers still under pressure from high living costs.<\/p>\n
Ingka Group, IKEA\u2019s largest retailer; its other franchisees; and brand owner Inter IKEA Group are investing \u20ac1.2 billion ($1.4 billion) to lower prices across European markets, according to a statement Tuesday.<\/p>\n
Products such as Billy, Hemnes and Poang are among offerings included in the reductions, with the size and timing of the cuts varying by country. Ingka Group will also invest \u20ac70 million to help \u201coffset inflationary and currency pressures\u201d in Asia and North America.<\/p>\n
\u201cWe like to reduce the price of the umbrella when it\u2019s raining,\u201d Ingka CEO Juvencio Maeztu said in a joint interview with Jakub Jankowski, CEO of Inter IKEA Group, which oversees the IKEA brand and global supply chain.\u00a0<\/p>\n
The executives see little sign that pressure on household finances has eased, with consumers in many of IKEA\u2019s markets still squeezed by high housing costs and wages that have lagged the rise in prices.<\/p>\n
\u201cIf you take housing, it doesn\u2019t matter which country you live in, almost 40% to 50% of your income goes to housing,\u201d Maeztu said. \u201cThere\u2019s more and more pressure for many people to make it to the end of the month.\u201d<\/p>\n
The latest reductions build on a broader affordability push that began in fiscal 2024, after surging raw-material and transportation costs during 2021 and 2022 forced IKEA to raise prices.\u00a0<\/p>\n
The company has since invested heavily in reversing those increases, lowering prices on thousands of products and cutting wholesale prices to retailers so franchisees can pass the savings on to consumers.\u00a0<\/p>\n
Jankowski said materials, logistics and transportation costs have been rising for about two years, meaning IKEA is cutting prices \u201cagainst the wind.\u201d\u00a0<\/p>\n
Still, the strategy helped IKEA gain market share and boost store visits and sales volumes, though it came at the expense of revenue and profitability.<\/p>\n
Maeztu said IKEA gained market share in Europe during the fiscal year through Aug. 31, while declining to give an early indication of sales before results are reported. Overall, he said, the year \u201cdeveloped as planned.\u201d<\/p>\n
The supply chain is functioning well in Europe, Jankowski said, while the Middle East has become the main trouble spot, with deliveries to stores more difficult compared with six months ago.<\/p>\n
The two executives \u2014 who are both relatively new in their roles \u2014 said they see room to fund further price reductions by cutting costs and simplifying operations.\u00a0<\/p>\n
\u201cYou cannot have low price if you don\u2019t have low cost,\u201d Maeztu said. \u201cHopefully, next year we will meet and we\u2019ll discuss lowering prices even more.\u201d<\/p>\n