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Ikea's Scandinavian C-suite has apparently concluded that the US economy is clicking into place like one of its own interlocking build-it-yourself furniture pieces, so it's lowering prices.
On Thursday, the furniture giant/Swedish meatball monger announced that cooling inflation means it can finally return to its customer-friendly ways.
Sweet, Swede Relief
The US inflation rate eased to 3.7% in September compared to last year, continuing a trend of a slow-but-steady cooldown, according to Bureau of Labor Statistics data released Thursday. In those figures, Ikea sees opportunity: costs have fallen enough, particularly along its pandemic-ensnared supply chain, to start lowering prices, while inflation remains persistent enough to breed price-conscious consumers.
The move could help push the company in the right direction amid an up-and-down year:
- The chain's sales hit a record $50.6 billion for fiscal year 2023, marking an increase of over 7% when adjusting for currency impact. But that's solely thanks to inflation-related price hikes, which offset lower sales volume overall.
- Now it's touting a price cut on a range of products, including up to 20% on some popular items. That marks a return to form for a company that's long prided itself on consistently lowering prices over time.
Bigger is Better: It's high time for Ikea. In-person visits to its stores increased 7% last year to nearly 700 million. That's after Ingka, the holding company which controls the vast majority of locations, opened 60 new locations around the world in 2022. We'll call that good news for people who like to mill about model living rooms, and great news for people who simply love a Swedish meatball lunches.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
