Swedish multinational IKEA is making aggressive price cuts globally, including in key markets like the United States and China, in response to inflation and declining consumer confidence. The company is lowering restaurant prices by up to 50%, offering free kids’ meals, and expanding store presence to boost affordability. Despite higher costs and reduced revenues, IKEA remains committed to serving cost-conscious customers, particularly targeting China’s growing senior demographic and adapting its food menu to local preferences.
Sweden-based global furniture and home goods retailer IKEA is rolling out aggressive price cuts across its international markets, including the United States and China, to support budget-conscious consumers facing economic headwinds. The strategy includes food price reductions of up to 50% and free meals for children at IKEA restaurants, marking a significant move to maintain customer loyalty amid falling consumer confidence.
IKEA’s Chief Operating Officer, Tolga Öncü, stated that the decision was driven by tightening wallets and lower retail activity. “Consumer confidence has decreased. People are holding on to the money that they have in their pockets or in savings,” he noted during a media interaction.
In fiscal year 2024, IKEA reduced wholesale prices by an average of 15%, absorbing an estimated €2.1 billion (USD 2.25 billion) in costs to sustain affordability. However, the move came at a cost — with revenue falling nearly 9% and retail sales dipping by 5.3%.
Despite the financial impact, the Swedish retailer is forging ahead with expansion. It plans to open 58 new stores globally in fiscal year 2025, including its first in Seoul, South Korea. The company’s cost-saving measures and global expansion reflect a contrasting trend compared to other Western retailers like Walmart, Costco, Target, and Nike, all of which are preparing for or have implemented price hikes.
Öncü admitted that while IKEA is not “immune” to import tariffs into the U.S., it has managed to absorb some of the financial strain without passing on full costs to consumers.
In China — one of IKEA’s most competitive markets — price reductions are especially critical. The company operates 39 stores in China, but its market share has been shrinking, now accounting for just 3.5% of global sales in FY 2023–24. With Chinese consumers becoming increasingly cautious, IKEA is adapting its offerings to cater to local trends.
Among these efforts is a strategic push into China’s “silver economy,” which targets citizens aged 50 and above. By 2040, nearly 30% of China’s population is expected to be over 60. IKEA has introduced new bedding and home furnishing solutions tailored to multi-generational households, particularly in response to this demographic shift.
Additionally, IKEA is betting on food as a growth area, not only slashing prices but also revamping its menu to reflect regional tastes. It plans to introduce dishes like falafel and localized Asian recipes to attract an estimated 8 million new customers.
Lorena Lourido Gomez, global food manager at Ingka Group — the franchisee of IKEA stores worldwide — confirmed the food innovation, stating,
We will soon launch our very first falafel, adding this popular food to our restaurants, and later, to our Swedish food markets.”
As economic pressure mounts globally, IKEA’s deep price cuts and region-specific strategies reflect a calculated risk to maintain market share and stay relevant to cost-sensitive consumers, while continuing its long-term expansion.