IKEA shoppers will see price cuts of up to 50% at many of the company’s restaurants around the world as the Swedish retail giant aims to attract cost-conscious consumers.

The steep price cuts will be a temporary measure to help consumers “stretch their budgets” at a time of increased economic uncertainty and high cost-of-living pressure, the company said, without specifying when the reductions would take effect. The home and furniture retailer said it will also offer free meals for children.

Efforts to enhance affordability cost the company €2.1 billion in 2023, according to Öncü, even as the reduced prices led to a 9% decline in revenues and a 5.3% drop in retail sales.

IKEA also plans to open 58 new stores globally during the 2025 fiscal year ending in August, with its first store in Seoul – the fifth in South Korea – opening in April.

By significantly lowering prices, IKEA is defying the broader trend, as many Western retail brands have warned of price increases, passing on part of the higher tariff costs to consumers.

Retail giants such as Walmart, Target, Costco, and Nike noted in their most recent quarterly earnings reports that they have already increased prices or plan to do so in the coming weeks.

While global businesses felt some relief after the temporary suspension of sweeping reciprocal tariffs imposed by the Trump administration and the signing of a preliminary deal with China, Walmart CEO Doug McMillon said in May that “we’re not in a position to absorb all the pressure given the realities of retail’s thin margins.”

In contrast, IKEA’s parent company stated that this is the time to invest in pricing rather than profitability.

IKEA is not “immune” to rising tariffs, which are expected to fuel inflation and dent consumer confidence, Öncü noted, although the company has managed to “somewhat absorb the impact and avoid passing the full burden on to U.S. customers.”

However, price cuts are a necessity in China – a key market for IKEA – where local businesses are slashing prices aggressively to stay competitive and attract customers amid sluggish consumer demand.

IKEA operates 39 stores in China, though the country’s share of global sales has been declining in recent years, standing at just 3.5% for the 2023–24 fiscal year.

“Strong demand in China is being held back by weakened consumer confidence,” said John Mercer, Head of Global Research at Coresight Research. He pointed out that consumer “economic optimism” in China fell to its lowest point in more than two years in May.

“There are limits to how much a major retailer can stimulate demand in an uncertain environment,” Mercer added, “but an aggressive pricing strategy is likely to support market share gains as cautious consumers make fewer purchases.”

Retailers in China are also betting heavily on food and beverage as one of the few segments where consumers continue to spend, albeit with less emphasis on value and price, said a marketing firm advising European brands operating in China.

Beyond food, IKEA is also aiming to expand its home furnishing offerings to cater to China’s rapidly aging population.

Öncü emphasized the need to tap into China’s “silver economy” – a market segment that provides goods and services for those over 50.

Economists estimate that by 2040, about 30% of China’s population will be over the age of 60, up from around 15% in 2024. This demographic presents a promising opportunity for the market, as older consumers tend to be more financially secure, having accumulated wealth during China’s economic rise.

The Swedish company also announced plans to introduce new products tailored to Asian cuisine and tastes, which it hopes will attract around 8 million new customers.

“We’re about to launch our first falafel, adding this popular dish to our in-store restaurants and later to our Swedish food markets,” said Lorena Lourido Gomez, Global Food Manager at Ingka Group, the global IKEA franchiser.