In its 2024 financial year, Ikea experienced a 4% decline in sales, reaching €45.1 billion ($49.3 billion). This drop in revenue came despite a 2,000 product price reduction initiative aimed at alleviating the financial burden on customers feeling the effects of inflation. Despite the decrease in sales, Ikea remains committed to its strategy of prioritizing lower prices at all of its global stores. Jesper Brodin, CEO of Ingka Group (Ikea’s largest franchisee), emphasized the importance of supporting customers during challenging economic times, stating that investing in lowering prices is a long-term promise of the company.
The decision to lower prices had a noticeable impact on customer engagement, with a 21% increase in visits to Ikea stores and its website. Popular items like the Billy bookcase saw significant price cuts, contributing to this rise in foot traffic. The company also reported selling 1.2 billion meatballs throughout the year, as well as an increase in meals sold at its cafés. Despite the positive impact on customer engagement, the discount initiative did affect Ikea’s bottom line, resulting in a decrease in overall revenue for the first time in four years.
The rise in material and transport costs due to the Covid-19 pandemic prompted Ikea, along with its competitors, to gradually increase prices since 2020. However, the company’s recent price-cutting initiative aimed to provide relief to customers facing financial challenges as a result of inflation and rising interest rates. Ikea remains committed to its long-term promise of investing in lowering prices, believing that this strategy will continue to benefit both the company and its customers in the future.
Looking ahead, Ikea plans to implement another round of discounts in the upcoming year, although they are not expected to be as significant as the previous year’s reductions. The company recognizes the importance of striking a balance between offering competitive prices to attract customers and maintaining profitability. Despite the challenges faced in the previous financial year, Ikea remains optimistic about its future prospects and is committed to providing value to its customers through a combination of high-quality products and affordable prices.
In conclusion, Ikea’s decision to prioritize lower prices through a significant discount initiative impacted its revenue in the 2024 financial year. However, the company remains steadfast in its commitment to supporting customers during challenging economic times by offering affordable prices. This strategy resulted in increased customer engagement and foot traffic at Ikea stores and online, reflecting the positive reception of the price reductions. As Ikea looks towards the future, it plans to continue offering discounts while seeking to strike a balance between attracting customers and maintaining profitability in an ever-evolving retail landscape.
