IKEA is launching in its biggest ever price cutting initiative, investing 1.2 billion euros to cut prices on over 1500 products across Europe. Starting from 1 Sept, this initiative is to help battle the on-going crisis due to elevated living costs which has led to people staying away from splurging on furniture and home improvements.
The Swedish retailer has experienced two years of declining sales as higher housing costs and the increasing prices of everyday items have prevented consumers from moving or redecorating. Juvencio Maeztu, CEO of Ingka Group, the largest operator of Ikea stores in Europe, summed up the issue rather simply. The cost of living continues to rise and life is becoming more difficult for many.
Now a lot of people live in rented, shared accommodation with one room and good practical storage/organisation solutions become increasingly vital. Price reductions average 15-25 percent; some items are reduced by as much as 28 or 29 percent given the country. The discount include world favourites. In German Ikea the biggest market of all, the Pong chair has been cut from 179 euros to 119 euros, and the Best TV benches is reduced by 27 percent. In the UK the Kallax storage unit has gone down from 60 pounds to 49 pounds and the Billy bookcase experienced a 28 percent reduction.
Italian buyers can find Kallax shelves, and storage units up to 29 percent cheaper in Italy and Best frames down on average 26 percent. Irish and other European buyers can expect the same – ranging from kitchens and storage systems to daybeds and global accessories. The company insists the discounts are not just a marketing ploy.
Maeztu added: ‘Ikea is actually prepared to take the margin hit, to still be affordable where people need it most.’ Inter Ikea Group, the brand owner and primary supplier, has shaved costs by redesigning from scratch, drastically reducing packaging in some lines, boosting automation and firing up more renewable energy. Jakub Jankowski, chief executive of Inter Ikea, said: ‘It’s not just a quick sales plug.
‘ Outside of Europe, Ingka is also investing an additional 70m euros in countering inflationary and currency fluctuations in North America and Asia-pacific to stabilize prices for north-american and Asian shoppers. Ingka is exploring diverse formats of smaller city-centre stores along the more traditional large-scale warehouses outside the city to make more accessible for customers some furniture items. The real world get the benefit. Having products that enable small homes to be more functional at a time when consumers budgets continue to be squeezed is a tangible benefit. It is yet to be seen if this lower price point will rekindle dwindling sales but Ikea is clearly betting the house on it.
