IKEA Parent Ingka Says Promotional Strategy Will End

Although IKEA’s recent experiments with promotional campaigns have boosted sales, the company is hoping such measures are temporary.

“We are currently seeing growing visitor numbers and growing sales,” Jesper Brodin, CEO of IKEA stores owner Ingka, told Reuters Tuesday (Feb. 14). “… It started late spring, summer, and has continued.”

“Part of the [increase] … has to do with inflationary impact on prices, but we are doing above index on quantity,” he added.

Brodin said using promotional campaigns would be a temporary move for the world’s largest furniture retailer, per the report.

“They are not a new commercial strategy,” he told Reuters. “My anticipation is that in a year or two we will [again] much more be looking at medium- and long-term investments in price.”

Research by PYMNTS found that budget-conscious shoppers were looking for bargains when deciding where to shop during the holiday season.

Six out of 10 consumers surveyed said they could be swayed by promotions and discounts, including 40% who said that would be the deciding factor, according to “New Reality Check: The Paycheck-to-Paycheck Report: The Holiday Shopping Edition,” a PYMNTS and LendingClub collaboration.

Last year saw IKEA’s business model tested, with the prices for some of its products in the United Kingdom jumping more than 80%. The Swedish company reported in October that while retail sales had increased, inflation had driven up prices, while supply chain hiccups made it harder to get merchandise into stores.

Brodin told Reuters Ingka has not seen indications of slowing demand, or any signs that the company’s markets are facing a deep recession this year. He also projected that supply levels would continue to return to normal over the months ahead.

PYMNTS spoke last month with Anna Pulante, Ingka’s global payments manager, about IKEA using digital payments — specifically mobile payments — to breathe new life into its business model.

“Payments is an enabler,” she said. “Until a customer is able to pay, they’re still a lead in that sense — we haven’t secured them yet as a customer.”

Beyond that, IKEA also must ensure that its range of products are connected to its range of relevant payment methods so customers can make informed purchase decisions that meet their budget, Pulante told PYMNTS.

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