The price cut will cost IKEA 200 million kronor in Sweden alone, but the store said it expects to benefit with increased sales.
“Customers have rewarded us well when we have cut prices. Hence it is our long term plan to continue doing it,” said IKEA’s head of Swedish sales, P-O Jonnerheim.
As usual, the new catalogue has been greeted with a fanfare of media coverage. “The year’s trend bible”, as Stockholm City put it, will be distributed to 3.3 million Swedish households throughout next week – and a total of 160 million around the world.
The big news from those who have had a sneak preview of the catalogue is that there is considerable emphasis on clearing away bedroom clutter, while as far as material is concerned 2006 will be the year of leather.
After 54 years, “Scandinavian functionalism” is still very much the priority – although as your correspondent’s blistered right hand will testify, a functional Scandinavian kitchen table from IKEA can even now prove something of a challenge.
IKEA now has 216 stores globally, with 14 in Sweden. Germany is its largest single market, accounting for 20% of all its sales. The UK is its next biggest market with 12% of sales followed by the US with 11%, France 9% and Sweden 8%.
Production is skewed towards lower cost countries. Of all IKEA’s products, 20% are manufactured in China, 12% in Poland and 8% in Sweden.
Germany and Italy account for a further 13%, with the remaining 47% of production distributed around the world.
IKEA said its new catalogue will be geared towards women who are their key target audience.
“70% of our customers are women and women make 80% of household purchase decisions,” said Jonnerheim.