Ikea is cutting prices by €1.2bn in Europe this year on popular products like Billy bookshelves and Kallax storage units to counter the cost of living crisis. The world's largest furniture retailer said it would reduce costs of about 1,500 products by 15 to 25 percent across more than 20 European countries. European consumer confidence remains at its lowest level in three years despite a recent uptick.

Juvencio Maeztu, chief executive of Ingka, told the Financial Times the move is timely given rising costs. The price reductions vary by country, including 27 percent off a Bestå TV shelf in Germany, 28 percent off Billy bookshelves in the UK, and up to 29 percent off Kallax storage systems in Italy. Jakub Jankowski, chief executive of Inter Ikea, emphasized this is a long-term commitment, not a one-off action.

He noted Ikea's integrated supply chain makes price reductions easier in Europe, though the retailer will use €70mn to cut prices in the Americas and Asia as well. The initiative follows a similar move in 2023 that led to a revenue drop and halved profits. Maeztu acknowledged the cuts would hurt profitability but stated it is necessary to side with customers.

Ikea plans to report full-year revenue figures after its financial year ends in August, with effects appearing in next year's figures.