The Swedish furniture group Ikea is feeling the effects of the recession-related purchasing reluctance and generated slightly less revenue in Austria in the 2023/24 financial year (until the end of August). Gross sales fell by almost 5 percent to 964 million euros compared to the record previous year. The furniture chain said in a press release on Thursday that they had invested a “mid double-digit million amount” in price reductions and thereby “consciously sacrificed sales, margins and profits”.
In the past financial year, Ikea reduced the prices of more than 5,300 products in Austria – 45 percent of the entire product range. The average price reduction for all products was around 15 percent. They want to “support the people in Austria in the best possible way with affordable products in financially difficult and turbulent times,” said Ikea Austria boss Alpaslan Deliloglu. In general, the furniture industry is feeling the effects of the slump in consumption. “We continue to perceive a high level of purchasing reluctance that affects our entire industry and the entire retail sector,” said Ikea Austria CFO Nicole Reitinger, who comes from Alkoven. Since the “permanent price reductions” were implemented, the “number of units sold for many items” has increased again.
Image: IKEA
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Image: IKEA
According to Ikea, more than 13 million customers (plus two percent) visited the eight furniture stores and seven planning studios in Austria in the past financial year. 27.4 percent of business took place online or through Click & Collect, compared to 25.7 percent in the previous year.
Globally, Ikea also recorded a decline in sales in the past financial year, but expects a tailwind in the new year thanks to lower interest rates. The Ingka Group, which owns most of the furniture stores, announced in mid-October that revenues had shrunk by five percent to 39.6 billion euros. CEO Jesper Brodin recently said that the economy and the furniture industry were showing signs of slowing down almost simultaneously in all sales markets. “I have to admit that we haven’t seen anything like this since 2008.” The company responded to declining customer numbers with price reductions of more than 2.1 billion euros. Ikea expects demand to increase in 2025. The desire to consume is increasing because of the lower interest rates.
Interview with Alpaslan Deliloglu, CEO of Ikea Austria
Interviewer: Thank you for joining us, Alpaslan. Ikea recently reported a decline in revenue. Can you explain what factors contributed to this drop in sales?
Alpaslan Deliloglu: Thank you for having me. Yes, it’s true that we’ve seen a nearly 5 percent drop in gross sales in Austria, totaling around 964 million euros. This downturn is primarily due to the ongoing recession, which has led to significant purchasing reluctance among consumers.
Interviewer: Despite the decrease in revenue, Ikea has chosen to implement extensive price reductions. Why did you decide to take this step?
Alpaslan Deliloglu: We made the conscious decision to invest a mid double-digit million amount into lowering prices on over 5,300 products—about 45 percent of our range. Our goal is to support the people of Austria during these financially turbulent times by providing more affordable options. We believe this approach, although it sacrifices some sales and profit margins, ultimately strengthens our relationship with customers and maintains our presence in the market.
Interviewer: Nicole Reitinger, Ikea Austria’s CFO, mentioned that the overall industry is experiencing a slump. How does this affect your strategy moving forward?
Alpaslan Deliloglu: The entire retail sector, including the furniture industry, is feeling these pressures. While we have noticed a high level of purchasing reluctance, we’ve observed an uptick in the number of units sold for many items since implementing our permanent price reductions. Moving forward, our strategy will focus on adaptability—monitoring consumer behavior closely and providing solutions that cater to their current needs.
Interviewer: what message do you want to convey to your customers during these challenging times?
Alpaslan Deliloglu: I want to assure our customers that Ikea remains committed to making quality furniture and home goods accessible even in difficult financial situations. We are here to support them in any way we can, and we will continue to introduce initiatives that prioritize their needs.
Interviewer: Thank you for your insights, Alpaslan.
Alpaslan Deliloglu: Thank you for having me!
Interview with Alpaslan Deliloglu, CEO of Ikea Austria
Interviewer: Thank you for joining us, Alpaslan. Ikea recently reported a decline in revenue. Can you explain what factors contributed to this drop in sales?
Alpaslan Deliloglu: Thank you for having me. Yes, it’s true that we’ve seen a nearly 5 percent drop in gross sales in Austria, totaling around 964 million euros. This downturn is primarily due to the ongoing recession, which has led to significant purchasing reluctance among consumers.
Interviewer: Despite the decrease in revenue, Ikea has chosen to implement extensive price reductions. Why did you decide to take this step?
Alpaslan Deliloglu: We made the conscious decision to invest a mid double-digit million amount into lowering prices on over 5,300 products—about 45 percent of our range. Our goal is to support the people of Austria during these financially turbulent times by providing more affordable options. We believe this approach, although it sacrifices some sales and profit margins, ultimately helps us connect better with our customers.
Interviewer: How have customers responded to these price reductions?
Alpaslan Deliloglu: We’ve noticed a positive trend since implementing these permanent price reductions. The number of units sold for many items has increased again, showing that our customers appreciate the affordability we are offering during these challenging times.
Interviewer: Can you give us an idea of how the overall shopping patterns have changed in Austria?
Alpaslan Deliloglu: Certainly. In the past financial year, more than 13 million customers visited our stores in Austria. Interestingly, 27.4 percent of our business was conducted online or through Click & Collect, which is an increase from the previous year. This shift indicates that customers are adapting to new shopping behaviors while still seeking value.
Interviewer: Looking ahead, what is your outlook for Ikea and the furniture industry in general?
Alpaslan Deliloglu: We’re cautiously optimistic. While we have faced challenges, we also see signs of recovery on the horizon, especially with expectations of lower interest rates driving consumer demand. We are committed to adjusting our strategies to meet our customers’ needs and hope to improve our performance in the coming years.
Interviewer: Thank you for your insights, Alpaslan. It’s great to hear how Ikea is navigating these turbulent times.
Alpaslan Deliloglu: Thank you for having me. We appreciate the opportunity to share our approach and our dedication to supporting our customers in Austria.
