Ikea invests $1.8 billion in Europe price cuts to lure cautious consumers
The move comes after two consecutive years of falling revenue.
Ikea, the Swedish budget furniture retailer, announced on September 1 a substantial €1.2 billion investment in price cuts across Europe, aiming to stimulate demand despite rising housing costs and shrinking consumer spending. The move comes after two years of declining revenue, as the cost of living continues to rise, making it increasingly difficult for many people to afford home furnishings.
Chief executive of Ingka, the largest Ikea retailer worldwide, Juvencio Maeztu, acknowledged the growing affordability challenges, emphasizing the importance of offering storage solutions for smaller living spaces.
In Germany, Ikea's primary market, the company reduced the price of over 1,500 products, including the Poang chair, from €179 to €119. Similarly, the UK saw price reductions on popular items like the Kallax shelving unit, which dropped from £60 to £49, and the Alex drawer unit, from £70 to £55. Ikea's CEO, Jakub Jankowski, highlighted the company's commitment to optimizing costs through redesigns, automation, and renewable energy sources.
For instance, the redesign of the Pax wardrobe line resulted in packaging cost reductions of up to 70 percent.
To attract new customers, Ikea has also opened seven smaller stores across Europe since January, moving away from its traditional out-of-town big-box model. Additionally, Inter Ikea, the brand owner and furniture supplier, announced that other franchisees in the Balearic and Canary islands, Turkey, Greece, Cyprus, Bulgaria, Iceland, and Estonia, Latvia, and Lithuania had agreed to implement their own price cuts.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
