Ikea achieves record sales and wants to lower prices
Following record sales in the past financial year, Ikea Germany is enticing customers with lower prices. "At the start of the 2024 financial year, we are investing massively in price reductions with the aim of offering around 800 products at lower prices," German CEO Walter Kadnar told Deutsche Presse-Agentur. These include popular wardrobe and shelving systems. The plans affect just under a tenth of the product range - Ikea Germany stocks around 10,000 article numbers in total. Kadnar did not say how much the prices would be reduced. It is about "significant price cuts", he emphasized.
Ikea had announced global price increases of nine percent on average at the end of 2021, citing expensive raw materials and energy. The aim remains to remain affordable for the masses, said Kadnar. "The price reductions are intended to strengthen our attractiveness." People's budgets for furniture and furnishings have shrunk in the face of high inflation. "At the same time, people who previously shopped in a higher price range are now also coming to Ikea."
In the last financial year 2022/2023 (until the end of August), Ikea Germany left sales losses during the coronavirus pandemic far behind. According to figures released on Wednesday, revenue grew by 13.3 percent to a good 6.4 billion euros. The number of visitors to the 54 stores rose by around 11 percent to 81.8 million. However, the record of around 97 million visitors from before the pandemic was missed.
Ikea, Germany's largest furniture retailer with almost 19,500 employees, is undergoing radical change and is expanding its digital business. In the past financial year, 5.6 million people shopped online at Ikea and sales rose by 6.9% to just under 1.4 billion euros. At 23.2 percent, online sales accounted for almost a quarter of sales excluding food - similar to the previous year.
"Our aim is to continue to expand our online business, even if the double-digit growth rates seen during the pandemic are over for the time being," said Kadnar. Ikea Germany is investing heavily in this area, for example in its online planning tool for kitchens and closets. The online ordering and pick-up business is also flourishing.
At the same time, the furniture stores remain the central element, emphasized Kadnar. There, the company benefits from impulse purchases by customers strolling around. Ikea has supplemented its traditional stores with planning studios in major cities such as Berlin and Munich, where customers can get advice on buying kitchens, for example. More of these city stores are planned, said Kadnar.
Germany is the largest single market for the entire group, ahead of the USA, France and the UK. According to Ikea, it most recently had a market share of 9.1 percent in Germany, significantly more than in the 2021/2022 financial year with 8.0 percent.
Ikea's price reductions will extend to popular furniture items such as wardrobes and shelving systems, aiming to attract more customers with tighter budgets. To boost its affordability, Ikea intends to decrease the prices of around 800 products significantly.
Source: www.dpa.com
