The furniture retailer IKEA launched a large-scale discount campaign last month, reducing the prices of key menu items in its weekday restaurant by up to 50% and offering free meals to child customers. This is interpreted as a strategic attempt to recover the competitiveness of its offline stores, which have stagnated.
According to related industry sources on the 14th, IKEA Korea enjoyed a boom early in the COVID-19 pandemic. With more time spent at home, demand for home furnishing surged, and "home decorating" became a trend; in 2021, IKEA Korea recorded sales of 687.2 billion won, the highest ever.
However, as the pandemic prolonged, consumer channels shifted online, and e-commerce platforms like Ohouse rapidly grew, IKEA fell behind in competition. In 2022, IKEA Korea's sales decreased to 622.3 billion won, and in 2023, they fell further to 600.7 billion won. During the same period, operating profit decreased from 21.8 billion won to 2.5 billion won. Last year, operating profit rebounded to 18.6 billion won, but the strategic stance remains conservative, including a partial withdrawal from new investments.
In response to this performance slump, IKEA is focusing on Food and Beverage (F&B). Once considered a supplementary service, the restaurant has now emerged as a core strategy for attracting customers and increasing revenue. During the pandemic, food and beverage sales increased by 53% compared to the previous year, and recently, more customers are visiting the stores solely for meals. Providing food and beverage experiences is a strength that offline stores can leverage against e-commerce.
IKEA is prominently featuring its signature items, Swedish meatballs and 1,000 won hot dogs. This strategy draws inspiration from Costco's model of creating symbolism with a 2,000 won hot dog set. By keeping food prices low, IKEA aims to encourage customer visits and increase dwell time in the store, ultimately connecting these visits to purchases of furniture or household goods. In fact, research from Bari University in Italy found that customers who used IKEA restaurants had purchase rates up to four times higher.
IKEA's food strategy influences the overall brand experience, beyond just supplementing sales. It serves as a space for family customers to simultaneously address dining and shopping needs, establishing a store visit as a leisure activity. This leads to increased revisit rates and brand loyalty. To enhance the experiential factor, which is a differentiator for offline stores, IKEA held an event last year offering breakfast to customers visiting in pajamas.
The expansion of urban stores is also aligned with the strategy to strengthen food and beverage offerings. Unlike existing large stores, city center locations, which have space constraints, place food areas prominently at the entrance to attract customers' attention and secure dwell time. They also operate specialized menus by store and implement regional differentiation strategies.
A retail industry official noted, "IKEA lowering food prices to half is not merely a price reduction competition but a strategic attempt to recover the stagnant in-store experience of offline shops" and added, "The perception of going to IKEA to eat is likely the direction the brand actually wants to encourage."