IKEA’s sales took a 5% hit after the global homeware giant decided to slash prices to attract more shoppers. This move was part of their strategy to keep up with a sluggish housing market, but despite the fall, they expect things to bounce back next year.
A Tough Year for IKEA
IKEA’s parent company, Ingka Group, revealed that sales for the year ending August 31 reached €39.6 billion ($43.3 billion). The company’s CEO, Jesper Brodin, explained that the economic slowdown hit the home furnishing industry hard. He added, “We haven’t seen anything like this since 2008.”
With fewer people visiting stores and buying products, IKEA decided to cut prices. This move worked, bringing more people into their stores and increasing sales, Brodin shared.
Holding On Strong
Even with the drop, IKEA didn’t lose ground in the global market. They spent over €2.1 billion in price reductions across all their markets and maintained their 5.7% share of the home furnishing industry. According to Tolga Oncu, IKEA’s retail manager, the company managed to benefit from customers “trading down” as the housing market weakened.
What’s Coming in 2025?
Looking ahead, IKEA is optimistic. As interest rates are expected to go down, more people will likely move into new homes. And what do people need when they move? Beds, sofas, and bookcases—IKEA’s specialties.
In 2024, store visits increased by 3.3%, but this was a slower growth compared to the previous year’s 7.4%. New store openings also dropped from 60 in 2023 to 41 this year, though Ingka Group plans to open 58 new stores globally in 2025.
Online sales are also growing, with 28% of sales now made online, up from 26% the previous year.
Staying Home for the Holidays
IKEA predicts that people will stay home more this holiday season, just like last year. With inflation still squeezing budgets, many families are expected to spend their holidays hosting at home rather than going out.
Inter IKEA Group, which owns the IKEA brand and handles product manufacturing, reported total sales of €45.1 billion ($49.3 billion) across all franchisees, a drop of 5.3% compared to 2023. This was mainly because they had to cut prices as raw material costs, such as wood, went down.
The CEO of Inter IKEA, Jon Abrahamsson Ring, confirmed that more price cuts are on the horizon for 2025, but they probably won’t be as steep as the ones seen this year.
Will IKEA bounce back stronger in 2025? Only time will tell, but with new store openings, growing online sales, and an expected boost from the housing market, the future looks promising for the home furnishing giant.