👉 Background: IKEA is the build-it-yourself furniture store that started in Sweden in 1943. Over the years, IKEA has been built into millions of homes around the world - screw by screw (literally), with the occasional existential crisis over a bookshelf.

👉 What happened: But 2024 hit different for IKEA after it announced sales of 39.6 billion euros globally for the last financial year to August - this was a 5.3% decline in revenue compared to 2023. The reason? IKEA reckons there has been a slowdown of the home furnishing industry in all markets simultaneously.

👉 What else: After this decline in store visits, IKEA pulled the ol “strategic price cuts” move, to boost sales through its maze-like stores. And it's also announced that it’s likely to drop even more price cuts in the upcoming year due to lower raw material costs.

What's the key learning?

💡In an era of rising costs, cutting prices is a bold move that defies market norms.

💡In 2022, global inflation hit 8.7%, and in 2023, and was still over 6.5%. Unlike most retailers which used inflation as the perfect excuse to jack up prices, IKEA has taken an unconventional route by reducing prices despite these external pressures.

💡The idea for IKEA is that if it can cut its costs while competitors are increasing, it can appeal to budget-conscious consumers. This may help them play the long-game by focusing on building market share rather than short-term profits.