IKEA cuts prices to boost sales as raw material costs ease

Entrance view of the city-centre Gallerian mall which also houses an IKEA store in Stockholm, Sweden Feb 10, 2023. REUTERS/Anna Ringstrom/File photo

LONDON  – IKEA is investing in price cuts on some products across a range of countries, including Belgium, Canada and India, as the furniture retailer aims to unwind increases it introduced in 2022.

The main IKEA retailer said it has cut costs and sees decreasing raw material prices, enabling it to bring prices down on some products, which will in turn boost sales volumes.

“Every country is sitting and looking at where are the opportunities for us to, by lowering the prices, sell more pieces,” said Tolga Oncu, Ingka Retail Manager at Ingka Group, the biggest owner of IKEA stores. “When you lower the price you also need to see a volume increase.”

READ: IKEA stores owner Ingka confident price cuts will help drive sales

IKEA is already selling more of the cut-price products, like KALLAX storage cubes, in some countries, Oncu said.

The aim is to bring prices back to “inflation-adjusted” pre-pandemic levels by the end of next year, Ingka Group said.

Ingka Group is investing 55 million euros ($59.53 million) to cut prices in Canada on more than 1,500 products, while in Belgium it is lowering prices on 2,600 products from February 1. It also plans price cuts in India on hundreds of products.

In the United States, for example, IKEA‘s BILLY bookcase cost $69 in 2016. The price fell to $59 in 2019 and increased to $89 by 2022, and is now back at $69.

The retailer has already announced price cuts in Germany – its biggest market by sales – as well as Sweden and the UK.

Ingka Group has invested more than 1 billion euros in price reductions across its markets from September to November.

Red Sea disruptions to global freight, which have pushed up shipping rates, are unlikely to impact IKEA‘s plans to cut prices, Oncu said.

READ: Red Sea shipping workarounds add costs, delays for suppliers, retailers

“So far when it comes to the Red Sea disruptions, with the facts we know today it is not impacting the pricing direction that we have at IKEA.”

Ingka Group is the main global franchisee of IKEA. The brand is owned by a separate company, Inter IKEA, which manufactures all IKEA products.

($1 = 0.9240 euros)