Why Ikea has had to slash prices in UAE

While competition brings challenges for businesses, it offers opportunities to consumers. Be it a small player or a multinational company, businesses have to come to terms with rivals’ strategies in a competitive market like Dubai by offering price-cuts, discounts or freebies to woo consumers.

The highly competitive home furnishing market in Dubai is always on its toes with offers and price cuts to attract residents.

Earlier this week, Swedish home furnishing retailer Ikea launched its new range of products and also announced price-cuts of up to 20 per cent in bed and bath section.

“The price has to be low because we want to reach out to people from all strata of life who can come here and try our products,” said Adosh Sharma, Store Manager at Ikea Yas Island.

Pooja Dhingra, Ikea Sales and Range Manager, noted that prices in the retailer’s bed and bath section have been slashed by between 5 and 20 per cent, which includes 113 new ranges.

Sharma said overall prices have been cut on average 2 per cent this year in the UAE.

“This year on average our price has been reduced by 2 per cent overall,” added Sharma, who was speaking in Dubai during the launch of Ikea’s annual catalogue.

Sharma said the overall footfall at Ikea’s two stores in the UAE was 6 million between July 2013 and July 2014, an increase of 12 per cent. Dubai store alone accounted for 4.5 million visitors.

“In Abu Dhabi, we have had an increase of 16 per cent in footfall after store underwent revitalisation. Abu Dhabi store has seen 1.5m visitors in the last one year because we went to the people’s home to try to understand how they live and based on that we made some local adaptation in the store also plus the new ranges introduced in the local market,” Sharma said.

Ikea franchise for UAE, Qatar, Egypt and Oman is owned by Dubai-based Al-Futtaim group.

Oman project ground-breaking in 2014

Commenting on the upcoming Ikea store in Oman, Sharma said the project is making progress.

“Ground-breaking should happen this year. In the next 2 years, you should see some positive news about Oman store coming up. Store planning starts well beyond 3-4 years before we open the door… We are in the design process; but I cannot comment now whether it will be smaller or larger than the UAE stores,” Sharma said.

Replying to a query about when the recruitment for the store will begin, he said teams come up around 24 months prior to the store opening. “I cannot say the recruitment will start next year, it may even start earlier,” he added.

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