Ikea counting on price cuts to revive falling sales

STOCKHOLM — Swedish furniture giant Ikea said on Thursday it was counting on price drops launched in September to stem two years of falling sales volumes attributed to soaring inflation.

The company reported on Thursday a 6.6 per cent rise in sales for the full-year to 47.6 billion euros ($50.2 billion.)

"This positive result was achieved despite the continued challenge of lower sales quantities," Inter Ikea said in a statement.

The company announced a rare price increase on all markets, of an average nine per cent, in December 2021 due to inflation.

But it began lowering its prices again on September 1 on hundreds or thousands of items, depending on the market, Tolga Oncu, the head of Ikea Retail at the Ingka Group which owns most Ikea franchises, told AFP.

The retailer said it was cutting costs by "improving material development and optimising production."

"Price sensitivity is increasing more than ever," Oncu said.

"In all the markets where we have implemented the start of decreasing prices we have seen a great response," he said.

"There is not a market that stands out with the opposite."

Jon Abrahamsson Ring, chief executive of Inter Ikea, the multinational's main holding company, said in a statement that Ikea "began to see a break in trend resulting in decreasing Ikea retail prices" at the close of the full-year 2023.

Ikea's fiscal year runs from September 1 to August 31.

"In challenging times when inflation is high and many people struggle with the cost of living, the need for home furnishing solutions at affordable prices is high," he said.

The company said it aimed to become "even more affordable".