Ikea Germany has announced further price reductions for parts of its range. “After rising costs in recent years, we are experiencing massive deflation. Prices for raw materials, energy and transportation are falling. We want to convey this to our customers,” said Ikea boss Jesper Brodin in an interview with the German Press Agency. The price reductions also served to “attract people to the stores.”

This year a total of 2,000 products will be permanently reduced. According to the company, this corresponds to around 20 percent of the entire range. According to Ikea, in the future some items will be at the same level or below the price before the pandemic and the war in Ukraine. According to the company's own information, the reduction plans cost around triple digits million.

“We have never seen such a big drop in demand”

It wasn't until 2022 that Ikea significantly increased prices worldwide, by an average of nine percent. The pandemic, the economic crisis and the war in Ukraine had made the furniture business difficult. “We could see in all markets that people had less money in their wallets. Globally, we have never seen such a drop in demand,” Brodin said. Now the situation is normalizing. However, cheaper items are still in high demand.

The furniture trade has been particularly affected lately by the bad mood of consumers. The industry complains of a significant drop in sales. The German Furniture Industry Association expects a sales drop of five to seven percent by 2023. At Ikea Germany business has been much better lately. The furniture retailer posted record sales of €6.4 billion for the 2022/2023 financial year. The number of visitors increased by approximately 11 percent to 81.8 million.

The new mounting system should be faster

“We are developing a new system to assemble our furniture. Our clients should have to work less. “It's a small revolution,” said the head of Ikea in an interview with the newspaper “Bild.” Instead of screwing elements together, there will soon be click connections, similar to a Lego construction set. “Assembly will be much faster, about half the time,” promises Brodin. He himself has already tested the first prototypes. “I am quite skilled at assembling our furniture. Pax takes me 40 minutes, I configure the new version in ten minutes.” The first furniture with the new assembly system will be sold in Germany starting this summer.

New locations in city centers and in the countryside

Ikea has 54 department stores in Germany. In order to continue growing, they now plan to move to the center of the cities. “We want to move more to the center of the cities. It is not possible to buy all the products directly there, but you can, for example, receive advice on decoration and order the products directly,” explains Brodin. There are already two mini Ikea of ​​this type in Munich.

They also want to make it easier for people to access furniture stores in small towns and rural areas. Brodin: “We are also currently looking for ways to be more present there. Collection stations with additional services are possible, where customers can receive help, e.g.
Plan the kitchen.”

Köttbullar remains the same price

Despite the VAT increase in catering, the Ikea boss promises that the popular Köttbullar plate will not increase in price in furniture stores. Brödin in the “Bild” interview: “Despite the increase in VAT in restaurants, we will not raise prices. This will cost us money, but we want customers to continue enjoying eating with us.”

Brodin: one in two people plans to move in the next two years

According to the head of Ikea, the company has an advantage. “With all the changes we are experiencing, people's needs are the same as five or ten years ago. You have your first child, you move into your first apartment and you need the essentials,” Brodin explains to dpa. “We expect that in the next two years more than half of Germany's inhabitants will want to move and create a new home.”

Germany is the group's largest single market worldwide. Ikea operates 54 furniture stores here with almost 19,500 employees. According to Brodin, customers in Germany do not shop much differently than in other countries, but he does see some differences, for example when it comes to food. “In our German branches, 25 percent of customers buy plant-based products, compared to the global average of only 12 or 13,” says Brodin. He was surprised that progress in nutrition was being made in Germany. In general, awareness of the issue of sustainability is much more pronounced in this country than in others.

According to Brodin, in 2024 Ikea will have a special demand for practical things around the world, for example around storage. “That's because life at home has become a focus. “Plus we have so much stuff that the need for storage space is incredibly large.” The department with shelves, boxes and other storage items is now one of the most important in Ikea.