Australia’s head of marketing Kirsten Hasler told Inside Retail that the price reductions were made possible by recent supply chain stabilisation which were previously disrupted by Covid-19 restrictions – in particular, recent impositions in China – and the invasion of Ukraine. With its stock levels improving, she said that Ikea has been in a strong position to lower the price of a number of its best selling products. “The aim is to offer a wide range of well designed and functional home furnishing products, with prices [assisting] as many people as possible to afford them,” she said. Spending and eating more According to Hasler, Ikea was mostly able to absorb additional costs that occurred in 2020.  With additional pressures in the last financial year, the organisation increased prices for some of its products. However, with disruptions easing and stock levels improving, it was well placed to drop prices and sell a higher volume of items. “Once lockdowns eased and supply chain complexities stabilised, we were able to get more products into the country, into our stores, then into customers’ homes,” she said. And while customers have continued to purchase from Ikea’s websites and storefronts, Hasler noted the most significant change in recent months has been an uplift in the number of customers shopping at its in-store restaurants.  Hasler said that Ikea hasn’t changed the price of its hospitality offering, which makes it an attractive proposition amid the rising cost of groceries and dining.  “More of the customers who are coming into our stores are choosing to eat with us as well. By converting more customers to our restaurant, they are spending more – and this is [driven by] affordability. You can feed a family of four for $30 for dinner,” she said. “This is where we’ve seen a change in behaviour.” With more customers dining at the home furnishing retailer, Halser said that they are spending longer in-store, which can lead to an increase in home furnishing purchases. Hasler added that Ikea Australia is re-emphasising its position in the market as an affordable retailer through its pricing, branding and marketing strategy. This positioning, she said, is driving customers to spend and eat more in-store.  “Cost of living is the number one issue for Australia, and our most recent survey showed that 90 per cent of Australians want to feel enjoyment in their home, but only 60 per cent do. There’s a gap between how people feel [and want to feel] at home,” she said.  “We all have this desire to have a better life at home, and our campaign is aimed at connecting with people [on that level].” Not immune to economic challenges With financial pressures continuing to build, Ikea Australia has adjusted its segmentation approach accordingly.  According to Hasler, Ikea is targeting Australians who might have shopped at higher-end home furnishing retailers in the past, but who are now open to the value opportunities. While lowering prices is one prong involved in capturing that audience, another is emphasising the value of its products. For instance, it is working to highlight both the quality, and 10-year warranty, of its Poäng chair.  “That’s a new approach for us, with both campaigns targeting different customer segments. There are customers who are very price sensitive, and those who are more concerned with value,” she said. “In the next few months, we will see that we might be able to lower the prices of even more products.” Long term brand building Hasler said Ikea Australia would continue to focus on its “segmentation approach” over the next 12-18 months. “We’ll be talking to different segments of the market in a slightly different way, depending on who they are, what their growth potential is, and how we can increase our market visibility and share,” she said. “We’re also being flexible with our marketing spend and campaigns depending on where we need it. At the moment we’re seeing different economic challenges in different states, [and] are being intentional about [our spending].” “We’re also making sure that we’re not just driving that short term growth, but our long term brand building.”