Maintaining consistency and not over-reacting on pricing is key for retailers as customers seek stability, the CEO of the biggest global IKEA franchisee told Reuters on Monday.
Deputy CEO and CFO of Ingka Group Juvencio Maeztu, visits an IKEA store in London, Britain November 28, 2023 – REUTERS/Maja Smiejkowska/File Photo
After hiking prices during the Covid-19 pandemic due to supply chain disruptions, the world’s biggest furniture retailer has cut prices over the past two years as high inflation and weak housing markets dented consumer demand.
“Companies want to have predictability and stability, but consumers also want to have stability in prices,” Ingka Group CEO Juvencio Maeztu said on the side-lines of the World Economic Forum annual meeting in Davos, Switzerland. “You have to secure stability as much as possible in the low prices,” he told the Reuters Global Markets Forum.
IKEA has been forced to increase prices again on some products in the United States, where it depends more on imports than elsewhere, to offset the impact of tariffs. Importers are braced for a Supreme Court ruling on the legality of President Donald Trump‘s sweeping global tariffs.
Asked about the ruling Maeztu, who became CEO in November last year, said he did not want to speculate. “What we are learning is we need to take things as they come, one by one,” he said.
“We cannot over-react, especially in pricing. We need to keep some kind of consistency,” he said, adding it was more important than ever to “zoom out” from short-term disruptions.
Ingka Group, which owns stores in 32 markets and accounts for 87% of IKEA sales, reported its lowest annual sales since 2021 in October, after cutting prices to attract consumers. Consumer sentiment across markets is now a “mix of being cautious and optimistic, both at the same time,” Maeztu said.
