SINGAPORE: Ikea Singapore announced that it reduced the prices of 144 products in September.
Moreover, it plans to further decrease costs for over 60 additional products by April 2024, as per a statement provided to Singapore state media The Straits Times (ST) on Monday (15 Oct).
Following a year characterized by surging inflation and diminished consumer sentiment across most of its markets, Ikea recently announced a global initiative to reduce prices for specific products.
During the COVID-19 pandemic, Ikea had to deviate from its customary practice of gradual price reduction. Escalating costs for raw materials and transportation compelled the company to transfer the burden to customers, an unprecedented situation for the retailer.
Jon Abrahamsson Ring, the chief executive of Inter Ikea Group, the global franchiser for the brand, noted, “I think 2023 was the year when we turned the corner on prices and started lowering them again.”
He attributed this change to the ongoing global cost-of-living crisis, alongside a reduction in the pressure on costs within its supply chain.
“We came into 2023 with higher prices than we wanted. We have lowered prices at the end of 2023 and into 2024. Supply costs started to come down for us.”
Ikea CEO highlights intensifying competition and strained consumer purchasing power amid global economic challenges
Ring emphasized the simultaneous rise in competition for consumer spending and the dwindling purchasing power of consumers, a consequence of the ongoing cost-of-living crisis affecting retailers worldwide.
Ring highlighted that raw material prices and transportation costs are currently moving in a favourable direction, having initially surged at the beginning of the year.
During the 2023 fiscal year, Ikea recorded retail sales of €47.6 billion (approximately US$50.2 billion), marking a significant increase from the previous year due to price hikes.
For Ikano Retail, the franchisee responsible for bringing Ikea to Singapore, Malaysia, Thailand, Mexico, and the Philippines, the turnover amounted to €1.08 billion.
Notably, its three Singapore stores generated S$384.2 million (approximately US$280.7 million) in sales.
An Ikea Singapore spokesperson clarified that the Inter Ikea Group manages the range and supply for 12 Ikea franchisees globally.
It’s important to understand that Mr Ring’s statements pertain to a projection of wholesale prices, rather than retail prices, which will ultimately vary from market to market for retailers like Ikea Singapore.
According to Gerard Jansen, the retail director of Ikea Singapore, the reduction in prices has been significant, reaching up to 20 per cent for items such as Malm drawers.
Ikea’s website features red tags emphasizing price reductions on selected items
For instance, the Malm chest of six drawers is now available at $199, down from its original price of $249. Similarly, the Kallax shelving unit’s price has been lowered to $89 from $109.
Ikea’s website prominently displays certain items marked with a red tag stating “We lower prices where we can,” accompanied by their previous prices.
In reference to Ikea’s 2022 Life At Home report, Jansen highlighted that 74 per cent of the 1,000 surveyed Singaporeans expressed concerns about their household finances.
He emphasized, “That’s why we work hard to keep prices as low as possible on essential and best-selling items, so these savings count for the many Singaporeans looking to get the most for their home.”
The survey, conducted by the global public opinion and data company YouGov, collected responses from 37,405 individuals across 37 countries.
Jansen reiterated Ikea’s mission, stating, “The Ikea vision is to create a better everyday life for many people by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them,”
He emphasized their commitment to being the most affordable, accessible, and sustainable home furnishing retailer in the country.
Despite the price reductions on furniture, Ikea clarified that the wholesale price projections do not affect the prices of food products and items in its restaurants.
Between September 1, 2022, and August 31, 2023, the three Ikea outlets in Singapore, located in Alexandra, Jurong, and Tampines, collectively welcomed 25.1 million visits.
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