4 minBusiness
IKEA invests $1.4 billion in price cuts across Europe to win back cost-conscious shoppers
IKEA will invest about $1.4 billion to lower prices on furniture and home goods across Europe, with cuts averaging 15% to 25%, as the retailer responds to squeezed consumer budgets and weak demand. The move aligns with similar affordability efforts by Walmart, Target, and Kroger in the United States.
IKEA is spending about $1.4 billion to cut prices across Europe, betting that sharper discounts will revive demand among shoppers still feeling the sting of years of high inflation. The Swedish furniture giant said Tuesday that the investment will lower prices by an average of 15% to 25% on items including home furnishings, kitchen products, and storage bins.
The company framed the move as a long-term commitment to affordability rather than a short-term promotion. “It’s about making IKEA more affordable when people need it most, even if it means accepting a lower margin,” Juvencio Maeztu, CEO of Ingka Group, IKEA’s largest franchisee, said in a statement. “Keeping prices low is our long-term commitment.” An IKEA spokesperson declined to specify the exact margin sacrifice the company is making.
The price cuts follow a period of steep cost increases across Europe. Euro-area inflation peaked at a record 9.2% in 2022, and furniture prices rose sharply along with it. Eurostat’s harmonized price index for furniture and furnishings across the European Union now sits about 24% above its 2015 level, with far larger increases in markets such as Estonia, where prices are up roughly 58%, and across the Baltics.
IKEA itself raised prices after the COVID-19 pandemic due to pressure on raw materials and logistics, then reversed course. Since 2023, the company has invested between €2 billion and €3 billion to bring prices down by about 10%. The latest round of cuts extends that strategy as demand across the continent remains weak.
IKEA’s most recent full-year results showed retail sales slipping 1% to €44.6 billion, a decline the company attributed to its own price reductions and cautious consumers. Customer visits and volumes rose 3% during the period, but revenue still fell for a second consecutive year. IKEA has pointed to surging housing costs in many European countries as a key drag, curbing people’s ability to move and dampening the “new home, new furniture” spending that drives the category.
European consumer confidence remains near its lowest level in three years, taking a sharp hit after the Iran war began in February. In the Netherlands, the national statistics office recorded confidence falling from -30 to -44 between March and April alone.
While IKEA’s price cuts are limited to Europe, the company joins a broader wave of consumer-facing businesses trying to ease pressure on customers’ wallets. Walmart said it will direct its $3 billion in tariff refunds to lowering prices, and Target said it will use its nearly $1 billion in tariff refunds for the same purpose. Kroger announced price cuts on thousands of products in May, though Sen. Elizabeth Warren last month accused the grocery giant of price-gouging.
“Everyday Americans still struggle to put food on the table because giant corporations, facing little competition, can force customers to pay too much for essential grocery items while they further increase their profits,” Warren wrote in a letter to Kroger’s CEO Rodney McMullen.
Nearly half of Americans are unable to afford the cost of living as expenses outpace wages, according to Urban Institute research. Rising gas prices, now around $4 a gallon nationwide, are also straining household budgets.
IKEA has previously pivoted into the secondhand market, testing an online marketplace for used IKEA furniture in 2024 and rolling it out officially earlier this year in five countries.
