IKEA increases the price of its products by 4% -5%. The price update that will apply to all the thousands of products in the company’s catalog will take effect in August. The company notes that “despite the increase in prices at IKEA Global at the beginning of the year, IKEA Israel kept the prices of the products unchanged. Now, in light of another price increase in the world, a price update will be made in August at a single-digit rate of 4% -5% on average.”
IKEA also notes that the expected increase in product prices is relatively moderate, “thanks to the reduction of tariffs, the reform of imports and the absorption of some of the costs, we were able to bring about a minimal price increase in order to continue to provide our customers with the most affordable prices.”
Reducing the caps should make it cheaper
The reduction in tariffs to which IKEA refers should have led to lower prices and not more prices, according to a plan recently announced by the Ministry of Finance, which includes the abolition of tariffs at a rate of 12% on furniture products imported to Israel, including beds, dressers, sofas, cabinets, chairs, etc.
According to data from the Ministry of Finance, the furniture market in Israel is estimated at an annual volume of NIS 7-8 billion. IKEA imports to Israel all the furniture it sells in its stores, so this reform affects it together with the import reform, which is supposed to make it easier for importers in the depths of bureaucracy, for example in terms of standards.
For consumers, the reform is supposed to encourage competition and facilitate the entry of small and large players into the market in Israel and lead to a reduction in prices or at least a moderation in the rising cost of inputs, fuel and shipping. The concessions that also apply to IKEA, which imports its products, stipulate, among other things, that a product that has an international standard will be able to present the certificate and will not have to submit the product for testing at a standards institute or designated laboratories. With the announcement of the reform, Economy Minister Orna Barbibai stated that she expects the reform to “eventually translate into a price advantage for the consumer.”
Before the increase in prices, IKEA will hold a sale, after a two-year break (July 6 to July 26), after which the prices will increase as stated. IKEA operates in five branches: Netanya, Rishon Lezion, Kiryat Ata, Beer Sheva and Eshtaol (and two other branches for the sale of kitchens only). In Israel, IKEA does not operate its own direct sales website, unlike other countries where it also offers an online sales service. Towards the days of the sale, IKEA will increase its branches and call centers, along with a reinforcement of the trucking and assembly system.