{"id":17399,"date":"2024-05-02T20:00:18","date_gmt":"2024-05-02T10:00:18","guid":{"rendered":"https:\/\/woodcentral.com.au\/?p=17399"},"modified":"2024-10-21T20:19:30","modified_gmt":"2024-10-21T10:19:30","slug":"ikeas-plan-to-tackle-cost-of-living-price-cuts-drive-sales","status":"publish","type":"post","link":"https:\/\/woodcentral.com.au\/ikeas-plan-to-tackle-cost-of-living-price-cuts-drive-sales\/","title":{"rendered":"Retail Squeeze: IKEA Cuts Prices Despite Rising Material Costs"},"content":{"rendered":"\n

The world’s largest furniture retailer is cutting prices on thousands of products across more than 350 “blue box stores” worldwide as the cost of living crisis, sky-high inflation, and interest rates decimate retail spending.<\/p>\n\n\n\n

Yesterday, IKEA’s parent company, Ingka Group, announced a new round of price cuts\u2014the second so far this year<\/a>\u2014comes at a time when accumulated inflation on furniture products has spiked at 30%.<\/p>\n\n\n\n

According to Tolga \u00d6nc\u00fc, IKEA’s head of retail, “this fiscal year is about lowering prices long-term and becoming even more affordable for our customers. It is not about optimising profits.”<\/p>\n\n\n\n

In an interview with Fortune Magazine<\/a>, Mr \u00d6nc\u00fc stressed that the price cuts are “not a promotion, but a promise”, adding that “our founder (the late Swedish billionaire Feodor Ingvar Kamprad) was obsessed (with) supporting people with all kinds of wallets.”<\/p>\n\n\n\n

Wood Central understands that the price cuts\u2014starting in Canada, France, and South Korea\u2014will eventually reach all Ingka Group-owned stores and potentially include Australia, the UK, the US, India, China, and the EU. <\/a><\/p>\n\n\n\n

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The recent Red Sea crisis, sparked by attacks by Yemen’s Houthi militants on ships in the area, has significantly disrupted maritime trade through the Suez Canal. This disruption has had implications for furniture supply chains, especially in the Asia Pacific markets. (Photo Credit: Supply Chain Spotlight via LinkedIn)<\/figcaption><\/figure>\n\n\n\n

IKEA is the undisputed power player in the global furniture market,\u00a0with more than 11% of furniture sold coming from retail outlets<\/a>. Last year, Ingka Group set aside US $1.1 billion to absorb material price rises. However, this predated the Gaza Conflict,\u00a0which has caused companies to ramp up prices on imports after global shipping had to redirect cargo around the Cape of Good Hope.<\/a><\/p>\n\n\n\n

“That allows Ikea to operate “against the flow” and consider further rounds of price reductions,” Mr \u00d6nc\u00fc said, adding that, “historically, we’ve always been lowering prices. I look forward to next year and the years to come to continue finding ways to lower our cost of operation \u2026 and not necessarily focus on our profit to be higher every year.” <\/p>\n\n\n\n

IKEA is the world’s third-largest timber consumer by volume. In 2023, it\u00a0used 14 million cubic metres of timber in its retail products\u2014about 1% of global lumber production.\u00a0<\/a>More than 70% of wood comes from the European Union – with more than 50% coming from Poland (32%), Lithuania (10%) and Sweden (10%) alone.\u00a0<\/p>\n\n\n\n

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\ud83d\udc4f A unit of @IKEA<\/a> store operator IngkaGroup has\u00a0agreed\u00a0to sell 14 "Mega" shopping centers in Russia. While the IKEA furniture chain halted all retail and production operations in the country soon after its full-scale invasion of Ukraine, Ingka kept the separate "Mega" shopping\u2026 pic.twitter.com\/9ldIMMJWNG<\/a><\/p>— B4Ukraine (@B4Ukraine) September 30, 2023<\/a><\/blockquote>