Ikea lowers prices – really? – Business

Who offers more? Or rather less. There are price drops and reduced prices everywhere, at least in advertising. Lidl and Kaufland reduced the prices for a hundred sausage products at the end of October. Aldi was a little faster, Norma and Edeka also followed suit. Steel, gasoline and wood had already become cheaper in September, at least year-on-year. On Wednesday, Ikea rushed ahead, for the second time in a month. In October, Ikea boss Jesper Brodin caused a stir with the news that the Billy shelf had become 20 percent cheaper this year. Even the Reuters news agency reported on it.

Ikea’s Germany boss, Walter Kadnar, has now gone one better. That means something: Germany is the most important market for the Swedish furniture retailer, ahead of the USA, France and Great Britain. The manager announced that more than 800 items will be cheaper this year and next. Shelves and cupboards should become cheaper. Ikea has rediscovered kitchens as a family meeting place, a popular place for homework and also a source of revenue.

However, Kadnar could not or did not want to say exactly which prices should fall, by how many percent in comparison and on what basis, despite repeated requests at a press conference. For competitive reasons. This probably means: Other providers could then anticipate the price reductions. In this respect, the nebulous nature of the price reduction promise was understandable. On the other hand, anyone who has ever bought a kitchen may have asked themselves how the price for the total work of art was determined.

The gap between food and overall inflation is slowly closing

It’s just the dealers who set the prices and can use leeway in both directions. Many large retailers are currently undercutting each other with supposedly low prices. Or to put it the other way around: They outdo each other with promises of price reductions. However, it is doubtful whether this will actually make shopping cheaper for customers or whether prices will fall to the level before the pandemic and the war in Ukraine.

A look at the Federal Office’s statistics on food, for example, shows: Last October, consumer prices for food rose by 6.1 percent. The price increase therefore continued to be well above the average inflation rate. At the same time, however, it also fell sharply compared to previous months. On a positive note: the gap between food and overall inflation is slowly closing. Food is no longer the number one driver of inflation. But the pace of inflation has only decreased. Food continues to become more expensive on average – despite loud advertising about “lower prices”.

Although individual items can be cheaper if they were recently. Others become more expensive. Dealers call this mixed calculation. If the bottom line is that there is more sales, then it’s a good thing. At Ikea the logic is slightly different. Customers usually come to the furniture store to buy cabinets or shelves. If the prices for these products fall, Ikea will ensure that even more customers come.

With this, Ikea wants to counteract the stagnation that has been going on for several months. More and more Ikea customers are shopping online. But because they are ordering more online, they are making fewer impulse purchases. However, Ikea generated a significant portion of its sales from them. Customers were walking through the aisles, picking up things left and right. This income is now missing. According to Kadnar, the main sales driver is online trading. The price reductions serve to attract more people to furniture stores again – in the hope, among other things, that they will make more impulse purchases there again.

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