Dive Brief:
- After achieving sales growth, Ikea has cut its prices on hundreds of products and will pay bonuses to its staffers, the retailer announced Thursday.
- Ikea reported a “record year” with over $6.3 billion in total sales, marking 6.6% year over year revenue growth for the 2023 fiscal year. It had a 3.3% bump in e-commerce sales and 6.3% in online visits.
- The retailer reintroduced its New Lower Price initiative in November, which offers discounts on Ikea products at U.S. stores and online. The company will pay $54.5 million to its workers across two-thirds of its Ikea U.S. units as part of its “One Ikea Bonus” performance incentive program.
Dive Insight:
Amid growing sales, Ikea decided to discount its products in response to consumers’ budgetary constraints.
“When times are tough, we view it as our responsibility to provide quality and affordable home furnishing solutions and services that make everyday life at home a little easier,” Javier Quiñones, CEO and chief sustainability officer at Ikea U.S., said in a statement. “Lowering prices is not just a promotion, it is our promise to our customers. Our priority is to remain as affordable as possible and continue reducing prices whenever we can to ensure that our products are accessible to all and that dream homes are within reach for the many.”
Ikea’s sales bump follows its plans for a multibillion dollar investment in its growth strategy. In April, the company announced plans to spend more than $2.2 billion over the next three years to open more physical locations and improve its fulfillment operations. As part of that brick-and-mortar location investment, the retailer will open eight new stores, nine Plan and Order points and 900 pickup locations.
The company also recently announced changes for its loyalty members. Starting Feb. 1, the retailer will no longer provide a 5% discount on in-store purchases to members of its Ikea Family loyalty program. The move was done so Ikea could refocus its pricing strategy to include everyday low pricing, according to a company spokesperson.
