Shoppers may soon see price markdowns for home furnishing goods at IKEA.
The Swedish budget furniture retailer pointed to cooling inflation and the declining cost of raw materials as key drivers that have influenced IKEA’s price markdowns.
Tolga Öncü, head of retail at Ingka Group, the largest IKEA store owner, told CNBC’s “Squawk Box Asia” on Monday that the company is making price cuts “in all the markets where we operate.” The price cutbacks aim to tackle the price hikes IKEA made during the covid-19 pandemic in 2022.
Ingka’s Öncü said that the company has “a very clear vision to create a better everyday life” for customers, especially those with “much thinner wallets.”
“This is the moment for companies like IKEA to invest in pricing rather than profitability,” Öncü said, adding that the price cuts will be implemented using a “staggered approach.” Ingka Group currently owns and operates 400 IKEA stores worldwide.
Price cutbacks have already started, according to Öncü, who said the company began the markdown strategy back in September 2023 at select European locations.
In January, the company moved toward discounted pricing in all of the markets in which it operated, including Asia, Öncü added. That same month, despite Red Sea disruptions that could have prompted production cost increases, IKEA said it would move forward with its pricing cut strategy.
Netherlands-based Ingka has added substantial monetary backing to the strategy. Between September and November of last year, the company contributed an estimated €1 billion ($1.1 billion) toward price cuts.
But now, IKEA must consider what pricing cutbacks will mean for its inventory. According to Öncü, the company is measuring the cut prices themselves. The early results, according to him, are positive overall. He said the company has seen an increase in customers and an increase in items per basket.
“It seems like it’s a big need,” Öncü said. “The dreams and desires of many people to have a better home hasn’t changed due to economical tough challenges, so I’m happy that we can contribute to provide more affordable and more sustainable products to the many people.”