Ikea is betting that spending over a billion dollars to slash prices will pay off

Ikea’s operators are betting more than a billion dollars on slashing the prices of some of its most popular products.

Ikea’s largest franchise owner, Ingka Group, said Tuesday it would invest 1.2 billion euros, or about $1.39 billion, with other Ikea franchises and the Inter Ikea Group to lower prices for consumers across Europe.

In Germany, more than 1,500 Ikea products will have their prices lowered by 20%, per the group’s press release. Customers in the UK will see prices for Ikea’s iconic Billy bookcase drop by 28%, and Italian customers will get a 29% price cut on Ikea’s modular Kallax storage units.

“The investment is not an activity or short-term campaign — it’s about making Ikea more affordable when people need it most, even if it means accepting a lower margin,” Ingka Group’s CEO Juvencio Maeztu said in the release.

The group also said in the release that it’s investing 70 million euros to help “offset inflationary and currency pressures in Asia and North America” as well, but did not provide details on whether this would involve price reductions.

Ikea, based in Sweden, has long been known for its affordably priced, DIY furniture, with over 500 stores in 63 markets as of November. Ingka Group is Ikea’s largest retailer, operating Ikea’s stores in 32 markets.

The group’s net revenue fell from 4.8 billion euros in 2024 to 4.5 billion euros in 2025, while annual profit rose from 0.8 billion euros to 1.4 billion euros.

Ikea is the latest retailer to lower prices amid a global affordability crisis.

Walmart executives said on an August earnings call that the company had received about $2.9 billion in tariff refunds from the US government and would channel them toward reducing prices for its customers.

Home Depot is taking a similar route, using tariff refunds to keep its prices stable. Executives of the home improvement chain said on an August earnings call that it used $685 million of its $730 million in tariff refunds to offset higher costs and maintain market value for its customers.