Why is Ikea cutting prices on its best-sellers?

Even as rising raw material costs, logistics expenses and exchange rate pressures push the furniture industry toward higher prices, Ikea is moving in the opposite direction — cutting prices on its best-selling products.

Ikea Korea said it recently invested about 1.8 billion won ($1.32 million) to introduce "new lower prices" on 161 products, including best-sellers, with an average price reduction of 15 percent. The cuts cover a wide range of everyday items, including storage and organization products, mattresses, lighting and beds.

The broader picture, however, is more nuanced. Of Ikea Korea's 9,104 products, only 240 (2.64 percent) are getting price cuts, while 754 (8.28 percent) will actually cost more. The remaining 8,110 products (89.08 percent) stay at their current prices. Across the full lineup, the average price adjustment works out to a 1.16 percent increase.

What stands out is that Ikea specifically directed its investment toward best-sellers rather than slow-moving stock. The 161 products receiving price cuts are expected to sell about 780,000 units annually — making clear this is not a clearance exercise but a deliberate strategy targeting high-demand items.

The strategy looks even more striking against the backdrop of what other domestic furniture companies are doing. Rising raw material costs, logistics fees and exchange rate pressures this year have prompted several Korean furniture makers to raise prices.

Domus, the premium imported furniture brand under Hanssem, raised prices on 13 product lines — including German brand Koinor and Italian brand Fiam — by an average of 10.8 percent in January, citing higher supply prices from overseas manufacturers and increased import costs driven by the weaker won. Sofa maker Essa also raised prices on some products by up to 10 percent. Office furniture company Fursys similarly lifted consumer prices across its entire lineup by an average of 8 percent in July.

Ikea is not immune to the same cost pressures. The company has raised prices on some products to reflect higher raw material costs, logistics expenses and currency movements. Rather than applying a blanket adjustment across all products, however, it sets prices individually based on each item's cost structure and demand.

Products with strong customer demand are singled out for separate investment to bring prices down. Ikea Korea has committed to price-reduction investments for four consecutive fiscal years since fiscal year 2024, spending a total of about 14.6 billion won over four years to lower prices on 1,664 products.

Ikea's production model is part of what makes targeting best-sellers for price cuts economically viable. Ramping up output on high-demand products allows the company to lower per-unit manufacturing costs through economies of scale.

On the design side, standardizing elements such as screw-hole dimensions and screw sizes has cut the time and cost required for production and assembly. Logistics costs are kept down through the company's signature flat-pack approach, which fits more units into the same storage and transport space.

In some cases, Ikea has redesigned products to manage rising costs. The iconic Billy bookcase, launched in 1979, underwent a 2022 redesign in which the original thin solid wood was replaced with a paper-based material. The change reduced raw material use and production waste while keeping the retail price unchanged after the redesign.

The overall approach is not about making everything cheap, but about concentrating price competitiveness on core products that sell in volume — passing some cost increases through to other items while protecting the best-sellers. By lowering prices on top sellers to draw in customers and simultaneously reducing costs through mass production and product and logistics efficiencies, Ikea builds a self-reinforcing cycle.

"No matter how market conditions change, we will continue working to ease the financial burden on customers and offer meaningfully low prices so that more people can enjoy quality home furnishings," an Ikea Korea spokesperson said.