Ikea is slashing the price of its Lagkaptens despite shipping problems in the Red Sea
CBC
As many retailers face inflation and raise prices, Ikea says it's doing the opposite even as shipping difficulties ramp up in the Red Sea. The store, known for assemble-it-yourself desks and chairs, is dropping the prices on some popular products in what experts say is an attempt to lure in cost-sensitive shoppers.
The company's Canadian website already features hundreds of items it claims have lower prices, ranging from cookware to lighting to the well-known "Billy" bookcase.
For example, a Billy with glass doors is listed as previously being $249.00 and is now selling for $199.00 on ikea.ca.
Doug Stephens, founder of the Retail Prophet consulting firm in Toronto, pointed out that because Ikea has more ownership of what goes into its products than other companies — it's involved in everything from manufacturing to shipping to the retail stores.
This gives Ikea a greater ability to unilaterally control costs, according to the retail analyst, with "control over virtually every aspect of the supply and value chain," according to Stephens, who pointed out he believes the company would want to leverage that.
Stephens suggested competitors might have difficulty catching up.
"There aren't many companies that would have the kind of leverage and leeway within their operations that Ikea has. And this is a big sword to wield … certainly a very difficult thing for virtually any competitor to match," Stephens said.
Ikea's move comes as furniture prices in Canada have dropped, according to Statistics Canada.
While the consumer price index showed that overall inflation was 3.4 per cent from December 2022 to December 2023, the rate of inflation for furniture over the same amount of time was -2.7 per cent.
This means that furniture prices actually didn't show the effects of inflation, but the opposite — deflation.
That being said, some of Ikea's price decreases are more substantial than that rate of deflation. The dark blue Billy bookcase with glass doors, for example, is dropping in price by about 20 per cent.
But not all bookcases — BIlly or otherwise — are dropping in price, either.
Ikea admitted that "many factors" go into whether a price can be reduced in a statement emailed to CBC News. The company said it's investing $80 million in lowering prices on more than 1,500 products.
"This investment is not a time-limited sale or offer," wrote the company.
