Ikea cuts prices as customers struggle with rising cost of living

Swedish furniture giant Ikea is cutting prices across hundreds of products in Europe to woo customers struggling with deepening cost-of-living pressures.

Ikea has seen revenue decline over the past two years as the rising cost of living reduces people's ability to invest in new furniture and home renovations.

The company is spending €1.2bn (£1bn) on the price cuts to items including the Billy bookcase and Kallax storage units, with reductions of up to 28% on certain products.

Ikea said it could make the cuts by making savings throughout the supply chain, such as packaging costs, but acknowledged profits may take a hit.

Ingka, the franchisee which operates most of Ikea's European stores, said the cuts were "not an activity or short-term campaign".

"It's about making IKEA more affordable when people need it most, even if it means accepting a lower margin," said Juvencio Maeztu, chief executive of Ingka. "The cost of living is increasing and it's getting tougher and tougher for many people."

He added: "For many people, home is a bedroom in a shared house, and it's even more important to offer storage and organised solutions."

Ikea has reduced its prices several times in recent years, even as it caused a hit to the company's revenue and profit in its most recent earnings report.

The latest specific reductions vary slightly by country. Price cuts for British customers include the Kallax shelving unit going from £60 to £49 and the Billy bookcase being cut by £10 to £25.

Ikea is also trying to attract new customers by opening smaller stores in central areas, such as London's Oxford Street and Churchill Square in Brighton.

In 2024 it launched its own second-hand online marketplace in a bid to rival sites like eBay and Facebook Marketplace.

Despite a recent uptick, consumer confidence in Europe is at its lowest level for almost three years due to concerns about inflation and the cost of living, according to EU figures.

British consumers, meanwhile, are becoming more optimistic about the economy and their own finances, following a truce in the Middle East, but analysts have warned that inflation and the rising cost of living could dent consumer confidence in the coming months.

Ikea operates over 500 stores worldwide under a franchise system.

Many of its minimalist, self-assembled products have become ubiquitous in homes across Europe.

But it has faced criticism from environmentalists for contributing to a culture of disposable furniture and excess packaging.

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