Ikea has said price cutting “remains a priority” after sales at its UK business fell last year as hard-pressed shoppers cut spending on furniture and home improvement.
The Swedish group said UK sales fell nearly 7% to £2.3bn in the year to August as the number of items sold slipped back and it lowered prices.
The world’s biggest furniture retailer said it had invested £117m in reducing the price on a third of its UK products by about 20% during the year because it wanted “to side with the many people facing increased cost pressures”.
Peter Jelkeby, the chief executive of Ikea UK, said: “In a year of economic uncertainty, our priority was clear: stand with our customers. In spite of our reduced turnover, continuing to lower prices remains our long-term priority.”
He said online sales had risen by 2% in the year to August, helping to offset a decline in trade at physical stores after Ikea closed one of its 22 UK outlets in August 2022 amid a change in shopping habits. The former store in Tottenham, north London, is now one of the world’s biggest nightclubs.
The group also reported that 52,600 products were returned under a buyback scheme for unwanted Ikea furniture.
The move towards greater working from home since the start of the pandemic – as well as the rise in the cost of household essentials including bills, mortgages and rent – has meant that shopper numbers have yet to return to pre-Covid levels.
Meanwhile, many households have reined in spending on “big-ticket” items such as furniture to prioritise bills or experiences such as holidays.
A boom in spending on the home during the pandemic, when many were forced to stay indoors for long stretches, has also led to a subsequent slowdown in sales of furnishings and DIY.
Sales fell 5% to €39.6bn (£33.2bn) in the year at Ingka Group, which Ikea UK is part of and which operates more than 390 stores globally. The decrease suggests the economic picture is similar worldwide. Ingka is the main franchisee for the Ikea brand, which is owned by Inter Ikea Group, accounting for nearly 90% of sales.
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Sales fell back despite the Ingka Group opening 43 new stores across the world, including in Japan, Switzerland and China. The group said it had held market share by increasing its sales online.
Ikea said it remained committed to expanding its physical presence in the UK despite the sales fall, with plans to open a much-delayed store on Oxford Street in London as well as an outlet in a shopping centre in Brighton next year.
As part of efforts to make the furniture retailer more accessible to those without a car, the group is also planning five new small “plan and order points”, offering kitchen and bedroom design consultations, after opening more than 100 pickup points in Tesco stores in the past year.