Swedish meatballs at an IKEA in Causeway Bay is listed as out of stock after after Czech authorities detected horse meat in the company’s meatballs which are supposed to make up of pork and beef only.
South China Morning Post | Getty Images
Ikea shoppers will see price cuts of up to 50% at many of the company’s restaurants globally, as the Swedish retail giant aims to attract cost-conscious consumers.
The steep price cuts will be a temporary measure to help consumers “stretch their budgets” at a time of heightened economic uncertainty and high cost-of-living pressure, the company said, without specifying when the cuts will come into effect. The home and furniture retailer said it would also offer free meals for children.
“Consumer confidence has decreased. People are holding on to the money that they have in their pockets or in savings,” Tolga Öncü, COO at Ikea Retail, told CNBC’s Emily Tan Wednesday.
The flat-pack furniture seller slashed wholesale prices by an average of 15% last year, allowing retailers to cut prices for consumers.
Efforts to enhance affordability cost 2.1 billion euros to the company last year, according to Öncü, even as lower prices saw revenue drop about 9% and retail sales decline 5.3%.
Ikea also plans to open 58 new stores globally during fiscal year 2025 ending in August, with its first outlet in Seoul — fifth in South Korea — up and running since April.
By cutting prices so deeply, Ikea is bucking the trend as a slew of Western retail brands have warned of price hikes, passing onto consumers part of the higher duty costs importing into the U.S.
Retail giants such as Walmart, Target, Costco and Nike said in their latest quarterly earnings reports that they have already raised prices or plan to do so in the coming weeks.
Although global firms took a sigh of relief after the Trump administration had suspended sweeping “reciprocal” tariffs for three months and struck a preliminary deal with China, Walmart CEO Doug McMillon said in May that “we aren’t able to absorb all the pressure given the reality of narrow retail margins.”
Ikea is not “immune” to the higher tariffs, which are expected to fuel inflation and weigh on consumer confidence, said Öncü, although it has been able to “somewhat absorb the impact and not pass on the total impact to customers in the U.S.”
The price reductions are, however, an urgent need in China — a key market for Ikea — where local businesses are cutting prices aggressively to stay competitive and attract customers amid sluggish consumer demand.
Ikea has 39 stores in China, although the share of its global sales in the country has been sliding in recent years and was at 3.5% in 2023-24 financial year.
“Big-ticket demand in China will be held back by decreased consumer confidence,” said John Mercer, head of global research for Coresight Research. Mercer pointed out that “economic optimism” among China-based consumers fell to its lowest level in well over two years in May.
“There will be limits…
Read More: How Ikea is doubling down on price cuts to attract cost-conscious customers
