Ikea UK’s latest financial year was marked by a notable sales decline due to strategic price reductions.
- Sales dropped by 6.8% to £2.3bn as Ikea focused on affordability.
- Investment of over £117m led to an average 20% price reduction on popular items.
- Despite lower sales, demand increased in areas like kitchens, bedrooms, and storage.
- Ikea’s online sales surged, constituting 41.7% of UK sales, with plans to expand outlets.
Ikea UK’s recent financial results revealed a 6.8% decrease in sales, with the total amounting to £2.3 billion. This decline was attributed to Ikea’s deliberate strategic decision to focus on affordability by investing over £117 million into substantial price cuts. As a result, 33% of the retailer’s range saw an average price reduction of 20%, targeting some of the most popular products.
The investment in price cuts, although leading to lower sales figures initially, resulted in an uptick in customer demand as the year progressed. This increased interest was especially prominent in specific categories such as kitchens, bedrooms, and storage solutions, where the new lower prices made these products more attractive to consumers.
In addition to reducing product prices, Ikea also implemented lower service-related charges, making delivery options more affordable. These changes included reduced pricing for furniture delivery and more cost-effective click-and-collect services, enhancing Ikea’s accessibility to its customer base.
Ikea UK’s CEO and chief sustainability officer, Peter Jelkeby, emphasised the company’s commitment to supporting customers during economically uncertain times. “In a year of economic uncertainty, our priority was clear: stand with our customers. In spite of our reduced turnover, continuing to lower prices remains our long-term priority. This is true to the Ikea vision,” he stated.
Online sales were another highlight for Ikea UK, with digital transactions increasing significantly. They now represent more than 41.7% of the UK sales, up from 38.5% the previous year. To enhance accessibility further, Ikea has announced plans to open two new city stores on Oxford Street in London and central Brighton next year, indicating a strategic expansion in physical retail presence even as digital sales grow.
Ikea UK’s focus on affordability through price cuts has initially resulted in decreased sales but shows potential for long-term growth.
