ikea china's sales of low-priced products increased by more than 70% in the last fiscal year, and will continue to invest in lower-priced products
2024-08-29
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"the chinese market has always been a very strategic market for ikea."
at the launch conference of ikea china's 2025 fiscal year (september 1, 2024 to august 31, 2025) held on august 28, ikea china chief financial officer li lei said that this year, more customers have continued to return to ikea's offline stores.
li lei introduced that as of the end of july this year, the cumulative customer flow of ikea china's offline stores in fiscal year 2024 (september 1, 2023 to august 31, 2024) increased by 12% year-on-year. in terms of catering, ikea china has improved the cost-effectiveness of some products, and the sales of "one yuan ice cream" also increased by 29% year-on-year, and the sales of classic breakfast increased by 28% year-on-year.
"in fiscal year 2024, rational consumption and the pursuit of high cost-effectiveness have become the mainstream trends in consumption." song yingai, deputy ceo of ikea china, said at the launch meeting that ikea china plans to invest 273 million yuan in fiscal year 2025 to bring more than 500 lower-priced products, focusing on sleep-related categories such as mattresses, bed frames, bedroom textiles, bedroom storage and other products, so that consumers can enjoy more affordable ikea products and services.
in fiscal year 2024, ikea china announced that it would promote a low-price strategy by reducing both raw material and operating costs. after announcing price cuts for more than 300 products at the beginning of fiscal year 2024, it announced that it would invest more than 100 million yuan to expand the scope of price investment, covering furniture and home accessories for various scenarios such as bedrooms, living rooms, kitchens, as well as some ikea foods.
"from the perspective of price investment, the new fiscal year is basically consistent with the 2024 fiscal year." li lei told the pengpai news reporter that in the 2024 fiscal year, ikea china launched more than 500 lower-priced products, and invested more than 400 million yuan in a series of investments including lower-priced products, promotional discounts, and cost-effective brand investments. at the same time, it also saw positive responses from consumers, and the average sales volume of low-priced products increased by more than 70% year-on-year.
song yingai told the paper that low-priced and value-for-money low-priced products currently account for 50% of ikea china's price matrix. "providing meaningful high cost-performance is a long-term strategy that is integrated into ikea's dna. annual investment in lower-priced products will be the direction that ikea china will adhere to in the long run."
ikea china's localization investment plan has been going on for many years. at the beginning of the new fiscal year 2024, ikea china announced that ingka group, to which ikea china belongs, plans to invest 6.3 billion yuan in the next three years, mainly focusing on the three strategic directions of home life experts, outstanding personalized shopping experience, and organically growing omni-channel ecosystem. previously, ikea china invested 5.3 billion yuan in fiscal year 2023, mainly focusing on the continued development of digitalization, the improvement of existing operational capabilities, and the construction of new shopping malls and shopping centers. earlier, ikea china proposed the "future+" strategy and invested 10 billion yuan in china from fiscal year 2020 to fiscal year 2022. the investment direction was mainly focused on channel expansion, business electronicization, customer experience, etc. the 10 billion yuan at that time set a record for the largest annual investment in ikea china's history.
in addition to price investment, ikea china is also examining the development of offline stores and considering how to improve the efficiency of its asset portfolio. li lei said in an interview that every year ikea china will invest in store product display around commercial themes, and recently invested 53 million yuan in multiple themes including bedroom sleep, continuously improving the overall product display.
in terms of channels, ikea china’s management once again emphasized the exploration of new and smaller business formats.
"at present, the interaction between consumers and ikea has the characteristics of multi-platform, multi-channel, and all-weather and all-time." liu rui, vice president of ikea china, said in an interview that ikea china will continue to promote the testing and exploration of new stores and small stores with shenzhen and beijing as the core. offline, ikea china will focus more on designing order centers and small offline touchpoints, getting closer to consumers and entering the community.
"the omni-channel operation makes ikea china more and more solid." at the strategic level, song yingai said that ikea insists on building an organically growing omni-channel ecosystem. so far, ikea china has established offline touchpoints in 29 cities, and through omni-channel operations, it has been able to provide products and services to 306 cities and regions. in the past two years, ikea china's remote service center has also achieved transformation, from a traditional customer service center to a remote sales service center, and has served more than 400,000 customers.
in the 2024 fiscal year, ikea xi'an's second store and ikea shenzhen design and ordering service center were successfully opened, further enriching consumers' diversified experience at ikea.
liu rui also pointed out that in fiscal year 2024, ikea china's online business will account for 1/4. online, ikea china also plans to explore some new channels online and continue to increase brand exposure and shopping experience on digital platforms, including social media and e-commerce platforms.
"complete sleep will become the most important business growth point next year. at the same time, we will continue to deepen our omni-channel operation system and pay more attention to whole-house design and ikea food." liu rui further added that ikea complete sleep currently offers more than 40 categories and nearly 2,800 products, and will provide more than 400 new products in the core sleep category in fiscal 2025.
ikea, a swedish home furnishings retailer, was founded by ingvar kamprad in 1943. since opening its first store in shanghai in 1998, ingka group (formerly known as ikea group) has opened 35 stores, 2 experience stores, 1 design order center and 9 stores in mainland china. it is understood that ikea adopts a "franchising" business model. ingka group is responsible for the retail business of ikea products in specific countries and regions. in addition, ingka group also has its own shopping centers and overseas investment businesses around the world.
the paper reporter shao bingyan and intern guo yichen
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