(MENAFN- The Peninsula)
AFP
Stockholm: Ikea reported Thursday that its annual sales fell in value after the world's biggest furniture retailer lowered prices to revive traffic at its online and brick-and-mortar stores.
The Swedish company said sales amounted to 45.1 billion euros ($49.3 billion) in its fiscal year ending in August, down 5.3 percent from the previous 12-month period.
"This is mainly due to lower prices. The result was achieved despite a struggling global Economy and shrinking home furnishing market," Inter Ikea, the group's main holding, said in a statement.
"However, with Ikea continuously investing in lower prices its market share has increased," the statement added.
Ikea announced rare price increases -- averaging nine percent -- in December 2021 as inflation climbed worldwide due to supply chain bottlenecks following the Covid pandemic.
'Right thing to do'
The group began to lower prices in September 2023 to improve sales volume at its stores.
Ikea said physical store visits increased by 4.5 percent following the price drops while online traffic jumped by 21 percent.
"Volumes are up with increasing consumer demands," it added.
In a separate statement, Ingka Group, which owns most Ikea franchises and accounts for more than 90 percent of total revenue, said it invested 2.1 billion euros to lower prices across thousands of products.
"It was just the right thing to do," Tolga Oncu, retail manager at Ingka Group, told AFP.
The 2.1 billion euros took the group "closer to our vision to create a better everyday life for the many people in times where the purchase power was really struck," he said.
Oncu said the company knew that the price drops would have an "impact" on sales.
In addition to more visits to stores, "we also see increases in quantities of pieces sold, which is, of course, very, very important to a growth- and volume-driven company," he added.
"So from an Ikea eye point of view, we look at 24 as a good year," Oncu said, adding that the group was optimistic about 2025.
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