IKEA: “Lowering prices brought shoppers back to stores”

Price reductions at Ikea and sales promotion campaigns that are not usually characteristic of the furniture giant helped to increase the number of shoppers in the stores and sales, said Jesper Brodin, CEO of Ingeka, which owns most of Ikea’s stores, in an interview with the Reuters news agency.

In November, IKEA lowered prices and launched marketing campaigns, this in view of the high inflation and fears of a recession that caused many households to tighten their belts and kept shoppers away from the stores. Thus, according to Brodin, Continuing these efforts will be essential to customer retention this year. According to him, the number of visitors to the stores and sales volumes are so far on an upward trend in the fiscal year ending in August 2023.

“We are now seeing an increase in the number of visitors and growth in sales … it started towards the end of the spring, the beginning of the summer and continued,” Brodin said. However, he added that he hopes that turning to marketing campaigns to attract customers will be only a temporary initiative. “This is not a new marketing strategy. My expectation is that in a year or two we will again look at medium and long-term investments in prices.” However, he refused to say whether on average prices are increasing or decreasing in the current fiscal year, and claimed that pricing varies in each market and according to the products.

Nevertheless, Brodin said that at this stage the company has not noticed a slowdown in demand, or seen signs that the markets in which the chain operates are on the way to experiencing a deep recession this year. In his estimation, the inventory will gradually return to normal levels in the coming months, this after last year the company was unable to meet demand due to the crisis in the global supply chains. “At this point we are optimistic that it will be a good year for us… We are forecasting growth this year,” Brodin said last month at the World Economic Forum in Davos.

For the fiscal year that ended in August, Inga Group reported a 9% increase in operating profit to 2.04 billion euros thanks to a 6% growth in sales. However, the net profit fell by 82% to 287 million euros, due to the higher interest rates and the cessation of operations in Russia following the invasion of Ukraine. During the period in question, IKEA raised prices to help offset the rising costs of materials and supply chains. The chain began to lower some of the prices, as mentioned, in November after the inventory levels increased and there was an improvement in the supply chains.

At the same time, IKEA announced today that its annual carbon emissions fell by 5% in the last fiscal year, due to the efforts it made to encourage renewable energy consumption and make its products more environmentally friendly. The company has set itself a goal of zero greenhouse gas emissions by 2030.