IKEA commits €1.2 billion to European price cuts as sales weaken
IKEA will invest €1.2 billion in lower prices across Europe after two consecutive years of declining revenue. The retailer is funding the initiative through product redesign, automation, logistics efficiencies and renewable energy while expanding its network of smaller stores.
Lower prices target pressured household budgets
IKEA is investing €1.2 billion in a new round of price reductions across Europe as the Swedish furniture group seeks to revive demand after two consecutive years of declining revenue. The initiative responds to rising living and housing costs, which have left consumers with less money for furniture and household goods, Lider Media reported, citing Reuters.
Juvencio Maeztu, chief executive of Ingka, IKEA’s largest retail partner and the operator of stores in most European countries, said rising living costs were making everyday expenses harder to cover. Higher housing costs are also changing what customers need: for some consumers, a home may amount to a bedroom in a shared property, increasing demand for affordable storage and space-organization products.
Germany and Croatia show the scale of reductions
Germany, IKEA’s largest market by revenue, is among the first countries to receive substantial reductions. Prices have been lowered on more than 1,500 products. The Poäng chair now costs €119, down from €179. Večernji List reported that the average reduction is about 20%, while some Kallax shelving products are as much as 40% cheaper.
In the United Kingdom, the price of a Kallax shelving unit fell from £60 to £49, while the Alex drawer unit declined from £70 to £55. The reductions also cover smaller household products, including hangers and storage containers, broadening the campaign beyond major furniture purchases.
More than 330 products in IKEA Croatia’s Zagreb store and online shop carry the “New lower price” label, with cuts reaching 27% in some categories. A one-litre IKEA 365+ glass jug dropped from €5.49 to €3.99, a 27.3% reduction, while a six-piece cookware set fell from €39.99 to €29.99. An Alex drawer unit declined from €80 to €65, and a Hemnes bookcase from €249 to €199.
Redesign and automation finance the campaign
IKEA says the lower prices will be supported by operating savings rather than funded at the expense of the business. Jakub Jankowski, chief executive of brand owner and furniture supplier Inter IKEA, said the company was redesigning products from the outset to optimize costs. A redesign of the Pax wardrobe range cut packaging costs by 70%.
Further savings are coming from increased production automation, more efficient manufacturing and logistics, and greater use of renewable energy. Europe remains a key production region for IKEA, with Poland, Italy, Lithuania and Germany among its most important supplier countries. The approach therefore has implications across the company’s European manufacturing and logistics network, not only at the retail level.
IKEA is also changing how it reaches customers. Since the beginning of the year, it has opened seven smaller stores across Europe, supplementing the large out-of-town locations that remain central to its business. Other franchise partners have adopted the price strategy in the Balearic and Canary Islands, Turkey, Greece, Cyprus, Bulgaria, Iceland, Estonia, Latvia and Lithuania. The combination of lower prices and more accessible formats is intended to reduce two barriers to purchasing: constrained household budgets and inconvenient travel to peripheral stores.
