Ikea’s recent strategies aim to adapt to economic challenges and consumer trends.
- The company has notably reduced prices to address the cost-of-living crisis, despite a decrease in sales.
- A new peer-to-peer marketplace for Ikea products is currently being trialled.
- Ikea’s focus on sleep essentials marks a significant pivot in their product strategy.
- Optimism surrounds the potential for economic improvement in the coming months.
Ikea’s global retail head, Tolga Öncü, expressed satisfaction with the recent financial year, highlighting a 4% increase in operating profits to £1.9bn, despite a 9% fall in sales. This uplift is attributed to strategic price cuts aimed at enhancing affordability during the cost-of-living crisis. Öncü emphasised the importance of strengthening Ikea’s value proposition to boost customer numbers, citing one of the largest price reductions in the company’s history.
Öncü explained that future savings will be realised by improving operations, reducing material costs, and refining product design. While acknowledging that market conditions remain challenging due to inflation and high interest rates, he remains hopeful for improved economic conditions in the latter half of the year, beginning in February and March.
A major innovation from Ikea is the creation of a peer-to-peer marketplace for used furniture, which leverages the popularity of its products on platforms like Facebook Marketplace. This new platform, currently tested in Madrid and Oslo, provides resale opportunities with comprehensive product data, assembly instructions, and spare parts. The early response has been highly positive, with plans to potentially expand globally by year-end.
Sleep has become a primary focus for Ikea, underscored by a world record attempt for the largest pyjama gathering. This category is emerging as a key growth area due to increased consumer interest in quality sleep. Ikea is catering to this demand with a variety of products beyond traditional bedding, including sofa beds and window solutions aimed at enhancing sleep quality.
Öncü noted the cultural nuances in sleep preferences, offering diverse solutions such as new sofa bed designs to meet different needs. Ikea is also enhancing its in-store and online presence to better communicate its sleep solutions. The company’s website, contributing nearly a quarter of total revenue, is being increasingly aligned with in-store experiences.
Ikea’s strategic initiatives reflect a proactive approach to evolving market conditions and consumer needs.
