Ikea UK says low prices remain 'long-term priority' after sales slump revealed
Ikea UK has revealed a slump in sales for the past year as under-pressure shoppers held off buying bigger-ticket items.
The UK arm of the Swedish homeware giant, which has major stores in Sheffield and in Birstall near Leeds as well as a distribution centre in Doncaster, said the fall was also partly driven by price reductions to keep attracting customers hit hard by the higher cost of living.
The company revealed that retail sales dropped by 6.8 per cent to £2.3 billion for the year to August, compared with the previous financial year.
Ikea linked the drop to a “strategic decision to prioritise affordability” as it invested more than £117 million into lowering prices over the year.
Peter Jelkeby, chief executive and chief sustainability officer 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.”
The retailer, which is owned by parent group Ingka, said more than 3,000 products, representing about a third of its range, were reduced in price.
It said there was an “uptick” in demand as the year progressed, supported by more price reductions, which helped improve sales in categories such as kitchens, bedrooms and storage.
Ikea UK said it is also continuing to make progress on its expansion programme, with two new city centre stores: on Oxford Street in London, and in central Brighton, set to open next year.
Mr Jelkeby added: “We continue to dedicate our energy to our UK expansion plans and investing heavily to become more accessible.
“To complement our existing stores, we are laser-focused on continuing to innovate to reach more customers, with a network of new, smaller stores that offer different experiences, as well as new services that meet all of our customers’ needs – no matter where they live.”
On Thursday, Ingka revealed that the global Ikea group saw retail sales drop by 5 per cent to 39.6 billion euros (£33.2 billion) for the year.
The company said it is also making progress on its efforts to become a net zero business and reduce absolute greenhouse gas emissions from its operations by at least 50 per cent by 2030 and 90 per cent by 2050.
A spokesperson said: “The company has accelerated its investments into renewable energy and aims to invest €7.5 billion (£6.3bn) until 2030, where more than €4.2 billion (£3.5bn) has already been invested or committed to accelerating the transition to a net-zero society.”
The retailer said it saw the trend of growing online sales continue, with 41.7 per cent of Ikea UK’s sales made online in the last financial year (up from 38.5 per cent in the preceding 12 month period).
In London, every second order is now coming through its e-commerce business, with share of online sales reaching 51.4 per cent in FY24.
An Ikea spokesperson said: “A key contributor to this increase was the retailer's newly opened distribution centre in Dartford, which processed nearly half a million orders for customers in London and the South East.
"In addition to enhancing delivery capabilities, the new distribution centre has become a springboard for greener deliveries.
"Ikea UK achieved a 40 per cent increase in zero-emission deliveries, now standing at 90 per cent in London and 65 per cent nationwide.
"This progress is powered by strategic investments in EV infrastructure, including a fleet of 270 electric vans and 16-tonne trucks that deliver nearly 3,500 orders daily across the UK.”
Its environmental efforts also include a Buyback scheme, rewarding customers who return used furniture items for resale with store credit.
More than 52,000 products were purchased back through the initiative in the last financial year.
The company said the figure highlights “the popularity of this part of Ikea's plans to enable a more circular economy”.
Mr Jelkeby said: “We want it to be as easy, affordable, and sustainable as possible for customers to shop with Ikea, whether they choose to do so in our Ikea stores, online, through our app, or with personal assistance from their home, and we are making strategic investments with this goal in mind.”