Swedish home-furnishing giant Ikea has announced a €1.2 billion price-reduction programme across Europe as rising housing costs and persistent cost of living pressures force households to rein in spending.
The company is seeking to attract financially constrained customers and boost demand after experiencing two consecutive years of declining revenue.
Juvencio Maeztu, chief executive of Ingka, Ikea’s largest global retail operator, said worsening financial pressures are making it increasingly difficult for consumers to manage their household expenses, driving greater demand for affordable home-furnishing products.
Maeztu said more people are also living in shared accommodation, increasing the need for practical storage and organisational solutions that can help households maximise limited living spaces.
In Germany, Ikea’s top-selling market by revenue, discounts have already been applied to over 1,500 items. The Poang chair now costs €119, down from its previous €179 price.
In Britain, the company has cut the price of its Kallax shelving unit to £49 from £60, while the Alex drawer unit now costs £55, compared with its previous price of £70.
Jakub Jankowski, chief executive of Inter Ikea, said the company is working to lower production costs by redesigning products and improving efficiency from the earliest stages of development.
He cited the Pax wardrobe range as an example, saying design changes had helped reduce its packaging costs by 70%.
Jankowski added that greater automation and increased use of renewable energy were also helping Ikea reduce operating costs.
Europe remains a key manufacturing base for the company, with Poland, Italy, Lithuania and Germany among its major sourcing markets.
Alongside the price reductions, Ikea is expanding its retail presence through smaller-format stores. Seven of these outlets have opened across Europe since January as the company moves beyond its traditional large stores, many of which are located outside major city centres.
Inter Ikea said other franchise partners are likewise moving to lower prices. Those operators include Sarton Group, which serves the Balearic and Canary Islands; Mapa in Turkey; Housemarket across Greece, Cyprus and Bulgaria; Miklatorg Group in Iceland; and Inter Ikea Retail across Estonia, Latvia and Lithuania.
Goodness Anunobi
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