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IKEA embarks on biggest programme of price cuts in history

UK arm of Swedish retailer says it will make 'largest investment into lowering prices we've ever made' as revenues in UK reach £1.4bn.

Ikea says it will make its biggest ever round of price cuts this year as the British arm of the Swedish furniture retailer plans to double sales by 2020.

The retailer said it was spending £27m on reducing prices across its stores, "the largest investment into lowering prices we've ever made in a single year".

The announcement came as it revealed that Britons’ love of flat pack furniture has seen them spend £1.4bn at Ikea in the last year, with demand for energy efficient kitchen appliances and sofa beds boosting UK sales.

Ikea, which opened its first UK store in Cheshire in 1987, is on an aggressive expansion spree under Gillian Drakeford, who took charge of the British arm last summer.

Ms Drakeford said last year she wanted to double sales and market share within seven years, and the company said an 11.3pc increase in revenue in the 12 months to the end of August “shows strong movement towards this reality”.

Ikea has become a favourite among households looking for affordable home furnishings, and the group said much of last year’s increase was down to customers downsizing or looking to cut corners.

Sales of “sustainable life” items such as solar panels, LED lightbulbs and efficient appliances increased by 27pc, and the company said demand for its two-in-one sofa bed reflected more people living in small spaces.

Online sales increased by 27pc and now account for a tenth of revenue, but Ms Drakeford said this had not had a negative impact on its bricks-and-mortar stores, where visitor numbers rose by 5pc.

Ikea is opening stores in Reading, Greenwich, Exeter and Sheffield, and said that “additional sites are being considered as part of our plans”.

“We are continuing to explore expansion opportunities in the UK as we believe our physical stores will be just as important as our digital channels,” Ms Drakeford said.

Source: James Titcomb - Sunday Telegraph

Read the full news article here.

02 November 2014

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