Status: 16.01.2024, 10:00 a.m.
By: Amy Walker
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As a result of the Ukraine war and the Corona crisis, Ikea had significantly raised prices on average worldwide in 2022. Now a small part of the products in Germany is to become cheaper again.
Hofheim - Ikea Germany announced further price cuts for parts of its range on Thursday (11 January). "After the cost increases in recent years, we are experiencing massive deflation. Raw material, energy and transport prices are falling. We want to pass this on to our customers," said Ikea CEO Jesper Brodin in an interview with the German Press Agency. According to the report, the price reductions also served to "lure people into the shops".
A total of 2000 products are to be permanently reduced this year. According to the company, this corresponds to about 20 percent of the entire range, 80 percent are not affected. According to Ikea, individual items will be back at or below the price level before the pandemic and the Ukraine war in the future. According to the company, the plans for reductions cost a mid-three-digit million range.
"We have never seen such a drop in demand"
As recently as 2022, Ikea had significantly raised prices worldwide, by an average of nine percent. The pandemic, economic crisis and the war in Ukraine had made the furniture business more difficult. "We could see in all markets that people had less money in their wallets. Globally, we have never seen such a drop in demand," Brodin said. Now the situation is returning to normal. However, lower-priced items are still particularly in demand.
The furniture trade has been particularly affected by the poor consumer sentiment recently. The industry is complaining about a significant drop in sales. The Association of the German Furniture Industry expects sales to drop by five to seven percent in 2023. At Ikea Germany, business has recently been much better again. For the 2022/2023 financial year, the furniture retailer reported record sales of 6.4 billion euros. The number of visitors rose by around 11 percent to 81.8 million.
Ikea is the largest single market in Germany
According to the Ikea boss, the company has an advantage. "With all the changes we're experiencing, people's needs are the same as they were five or ten years ago. You have your first child, you move into your first apartment and you need the necessities of life," Brodin said. "We expect that more than half of the people in Germany will want to move and create a new home in the next two years."
Some products from Ikea Germany are to become cheaper again. © Oliver Berg/dpa
Germany is the Group's largest single market worldwide. Ikea operates 54 stores here with almost 19,500 employees. According to Brodin, customers in Germany do not shop significantly differently than in other countries, but he does see some differences, for example in food. "In our German stores, 25 percent of customers buy plant-based products, compared to the global average of only 12 to 13," said Brodin. He was surprised that people in Germany were leading the way in terms of nutrition. Overall, awareness of the topic of sustainability is much more pronounced in Germany than in other countries.
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According to Brodin, practical things will be particularly in demand at Ikea worldwide in 2024, for example around the topic of storage. "That's because life at home has become so much of a focus. Besides, we have so many things, so the need for storage space is incredibly high." The department with shelves, boxes and other storage items is therefore now one of the most important at Ikea. (wal/dpa)