IKEA Vows No Supplier Squeeze Despite 26% Fall in Profits
CEO says selling more will mean suppliers making more, with up to 25 per cent off about 900 products a market.
IKEA's Adelaide store. The 1.2 billion euro price reduction applies in Europe only, with Ingka Group spending a separate 70 million euros to hold prices in Asia and North America. (Photo Credit: © THPStock | Dreamstime.com)
IKEA’s suppliers have been promised they will feel nothing from the €1.2 billion the furniture giant took off its European prices last Tuesday. That is according to Jakub Jankowski, chief executive of Inter IKEA Group, who made the promise in an interview on the day the cuts hit stores.
“Suppliers will not go through any cost pressure because of this,” Jankowski said, insisting there was “a high chance that if we are selling more, the suppliers will produce more.”
Inter IKEA is footing its share by cutting the prices it charges the retailers that trade under the IKEA name, its statement says, and the retailers are adding their own money on top, each deciding which products fall and when. Ingka Group, the biggest of the 13, is spending another 70 million euros to hold prices in Asia and North America.
The pledge comes on thinner earnings
Inter IKEA’s operating profit fell to 1.7 billion euros from 2.3 billion in the year to August 2025, when the group blamed higher sourcing costs and US tariffs, and retail sales across its 63 markets slipped for a second year running.
The 1.2 billion-euro European price reduction alongside Inter IKEA Group’s operating profit for the years to August 2024 and August 2025. The reduction is a cost Inter IKEA shares with Ingka Group and the other franchisees. (Graphic: Wood Central, data from Inter IKEA Group)
The group had already cut 850 roles in May, when Henrik Elm, then its chief financial officer, said it had “grown a bit too complex and too fragmented”, and it has spent between two and three billion euros reducing prices by 10 per cent since 2023.
Design, not suppliers, pays for the cut
“We try to constantly optimise the cost picture by redesigning the products from the beginning,” Jankowski said, citing the Pax wardrobe, whose redesign cut its packaging cost by 70 per cent, along with automation and renewable energy.
It comes as IKEA Industry, the group’s own manufacturer, sheds workers in Poland, where it runs 14 plants and makes up to half of the wood IKEA sells. Its biggest, at Wielbark, told the Szczytno labour office on 10 April that as many as 240 of its 1,500 workers could go, citing lower order volumes, and 160 more followed at Goleniów ten days later.
Flat-pack stock racked in IKEA’s Gdańsk store. Poland is IKEA’s largest wood-sourcing country and its second-largest furniture producer, and IKEA Industry’s Polish factories produce up to half of the company’s wooden furniture. (Photo Credit: © Cuteideasforlife | Dreamstime.com)
Poland, Lithuania, and Sweden are where IKEA buys most of its wood; on the supply map it published in 2023, the year after it stopped buying from Russia and Belarus. Its retail arm has gone a step further by buying the forests, with Ingka Investments now holding more than 355,000 hectares following its Baltic deals with Södra and CapMan.
Jankowski called the cut “not a one-off” and said IKEA’s integrated European supply chain was why it moved first, whilst Juvencio Maeztu, chief executive of Ingka Group, conceded the reductions would lower his company’s results.
“The cost of living is increasing and it’s getting tougher and tougher for many people,” Maeztu said.
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