Ikea UK has experienced a sales decline attributed to strategic price cuts, marking a notable shift in its financial trajectory.
- Sales fell by 6.8% to £2.3 billion as Ikea prioritized affordability, investing over £117 million in price reductions.
- A third of Ikea’s product range saw an average price reduction of 20%, spurring demand as the year progressed.
- Ikea enhanced accessibility by lowering service costs, such as delivery and click-and-collect services.
- Online sales now represent 41.7% of UK sales, with significant investments planned for new store openings.
In its latest financial year, Ikea UK reported a sales decline of 6.8%, bringing its earnings to £2.3 billion by the end of August. This downturn was primarily caused by a strategic initiative to reduce prices and enhance affordability for consumers. The company allocated over £117 million towards slashing prices, a move described as essential by Ikea to stand by their customer base during economically challenging times.
Focusing on affordability, Ikea implemented price cuts across 33% of its product range, achieving an average reduction of 20%. This tactical approach targeted some of its most popular items, successfully stimulating consumer demand as lower prices were rolled out. Key segments such as kitchens, bedrooms, and storage solutions exhibited noticeable improvements in customer interest, aligning with the retailer’s broader affordability objectives.
In addition to product price cuts, Ikea UK made its services more financially accessible. This included introducing reduced rates for furniture delivery and offering lower-cost options for click-and-collect services. Such measures were part of Ikea’s commitment to enhance consumer experience and maintain loyalty despite the overall slide in sales.
The Swedish retailer’s digital strategy showed substantial success, with online sales now constituting over 41.7% of total UK sales, up from the previous year’s 38.5%. This growth in e-commerce highlights the increasing shift towards digital shopping preferences. Moreover, Ikea plans to expand its physical presence, announcing the opening of two new city stores in prime locations on Oxford Street in London and Brighton’s city center next year.
At a global level, the parent company Ingka Group, which oversees the UK division, announced total retail sales of £33.2 billion, reflecting a 5% decrease. Despite these declines, Ikea UK’s CEO, Peter Jelkeby, reiterated the company’s commitment to maintaining low prices, emphasizing the brand’s focus on supporting customers amidst economic uncertainties. He stated, “In a year of economic uncertainty, our priority was clear: stand with our customers. In spite of our reduced turnover, continuing to lower prices remains our long-term priority. This is true to the Ikea vision.”
Ikea UK remains committed to affordability and consumer support, despite a downturn in sales.
