Ikea is discontinuing in-store discount for loyalty members

Dive Brief:

Starting this month, Ikea is refocusing its pricing strategy to include everyday low pricing, according to a company spokesperson.
As a result, as of Feb. 1 next year, members of its Ikea Family loyalty program will no longer receive a 5% discount on in-store purchases of furniture and décor, according to a company spokesperson and a notice to customers.
Those who sign up for Ikea Family will continue to get benefits like exclusive offers (designated by blue labels in stores and online); discounts on some delivery options; and a free hot drink when they visit a store, the company said. The program is free to join.

Dive Insight:

Ikea devised its loyalty program decades ago — launching in Sweden in 1984 and expanding to the U.S. in 2011 — but the company just announced the 5% discount for loyalty members a little over a year ago.

The change is part of a wider effort “to create more value for all our customers and IKEA Family members who look to us to help design a life they love at a low price,” an Ikea spokesperson said by email. “Starting in November 2023, we will introduce new lower price offers on hundreds of products across our range with plans to create new, exciting offers for customers in 2024.”

In recent years the retailer has been experimenting with new store formats and catching up on its long-neglected e-commerce. Earlier this year Ikea announced a $2.2 billion investment in its U.S. omnichannel strategy that includes plans for eight new stores, nine Plan and Order points (which specialize in kitchen, bedroom, and living room planning) and 900 pickup locations.

Retailers across various segments continue to tweak their loyalty programs, sometimes turning to tiered systems that include paid versions with special rewards or added benefits based on spending levels. Last year, REI, Saks Off Fifth, Bath & Body Works and Walmart updated their programs, and this year Madison Reed, Victoria’s Secret and Barnes & Noble are among those revamping theirs.

Ikea may benefit from delaying the cancellation of its membership discount until after the holidays. The spokesperson noted that those enrolled in its loyalty program “will have until January 31, 2024, to take advantage of the 5% every day in-store offer on all furniture and décor.” In the U.S. and U.K., 65% of consumers plan to leverage loyalty programs to save money in the coming weeks, according to research from YouGov and Commercetools.

“Given that over half of consumers are relying on loyalty programs this holiday season, the obvious strategy for brands would be to invest more in providing repeat customers with exclusive sales and discounts,” Commercetools Chief Marketing Officer Jen Jones said in a statement. “Meeting consumers wherever they are and however they want is critical to retail sales growth.”

Generally speaking, brands should ground any changes to their loyalty programs in customer data, Jones told Retail Dive.

"Given that consumers are extra cost sensitive right now, Ikea should look for ways to supplement this 5% discount by providing other incentives and experiences like exclusive drops, discounted shopping, etc.," she said.