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While Ikea’s price cuts have brought in more customers, the last 12 months have not been the company’s Bestå, sales-wise. But everyone Kallax, because the budget furniture and homewares brand expects the pieces to come together in 2025.
(Yes, we have assembled a lot of Ikea furniture over the years…why do you ask?)
The holding company for the franchised Swedish stores said Thursday that annual sales fell 5.3% in the 12 months ending on August 31, the Wall Street Journal reported, while its in-person and online store visits jumped 4.5% and 21%, respectively.
We don’t have pictures, but we’ll walk you through the story step by step. In the last year, while home furniture sales were falling across the market, so were the costs of materials and shipping, the Journal reported. Ikea executives began to cut prices to boost store visits.
In fiscal 2023, the company hiked prices and enjoyed its best-ever sales, Bloomberg reported. But the CEO of Ikea’s franchiser knows which side his rye is buttered on. “It’s when we increase prices that there’s a risk for the business model,” Jon Abrahamsson Ring told the outlet. Despite the revenue dip, the company enjoyed “higher market share, more store visits and a rise in web traffic” in the 12 months ending in August.
As goes housing. People buy furniture when they move to a new place, which makes Ikea’s business “highly sensitive to property markets and interest rates,” according to Reuters. Now interest rates are falling and more homes are getting built, incentivizing people to upgrade kitchens and bedrooms, Bloomberg reported. If more people furnish their new places in 2025, Ikea’s sales will likely increase.
Digital transformation, ja? As part of its bid to increase market share, Ikea has been expanding its online operation. A quarter of Ikea’s sales came from online purchases in fiscal 2024, compared to just 5% in 2019, Bloomberg reported. Abrahamsson Ring said the increase was made possible by the company’s investment in more pick-up locations—it built 44 over the past year.