It is well known that IKEA’s furniture retail company offers very affordable prices. As many IKEA products cost about half the price of competing brands, IKEA furniture is popular among customers because it is affordable. Is there a secret to keeping their products cheaper than their competitors or just half the price of their competitors? Well, it is through the use of the following six approaches that IKEA manages to maintain such low prices for its products.

Reverse design process

Design at IKEA revolves around the price, so they decide on price first & then design, which is the exact opposite of most competitors, who manufacture the product and then decide on the price based on the cost incurred. Before designing and manufacturing a product, IKEA picks the price they want to sell it for, and the designers and suppliers work together to make sure that the price is achievable. To put it another way, IKEA chooses what it wants to sell its products for, then works with suppliers to make those products.

Flat packaging innovation

IKEA’s unique selling system differentiates it from its competitors by selling parts instead of whole furniture, which requires/occupies less space and facilitates easier transport to stores, which means lesser transportation costs. Customers can choose from customized options in accordance with their convenience. The flat packing method helps consumers cut costs by letting them purchase furniture in pieces and assemble it themselves, making it easier to store and transport. IKEA also let the customers have the option of hiring someone to assemble their furniture for them as assembling furniture can be challenging.

Unique Construction Techniques

IKEA uses a unique construction technique like a honeycomb base structure. Basically, they build their furniture by layering sheets of wood over a honeycomb structure. Since honeycomb structures require less wood, and as a result, they require less and less raw material. IKEA also maintains low costs while maintaining high quality by using a low wood-based structure. As a result, IKEA is able to lower the price of its furniture by using this type of construction.

IKEA’s self-help stores

Additionally, IKEA is able to keep prices low by selling its products in a cost-effective way. Is independent shopping something you’ve heard of? This involves allowing customers to shop on their own without the need to hire salespeople, which reduces wages and allows them to pass those savings on to their own pocket. Unlike other stores, IKEA doesn’t have many store associates and that is why keeping prices low is possible because IKEA hires fewer people. On top of this, they print all the details about the product on the price tag, such as precautions, installation instructions, processes, etc., making it easier for customers to read the guidelines and buy the products they want without having to seek help from anyone else so the price tag usually contains important information about products instead of hiring more people.

Take it home policy

In IKEA, customers get the option to pick up their own products from the store and take it home. Due to the fact that customers can carry their own products, they won’t be charged for delivery or higher product charges that may facilitate free delivery. This policy reduces a lot of overhead costs. Choosing this option may not be the most convenient, but you won’t be charged a delivery fee. In addition, you won’t pay higher prices in exchange for free delivery.

Bulk Production

Labor and machinery involved in manufacturing furniture aren’t cheap, and that’s one of the biggest costs furniture manufacturers must contend with. Bulk production ensures the lowest cost possible for the whole manufacturing process while producing the highest volume. Due to its bulk production of many components, IKEA is able to keep its prices low for consumers. 

About YRC Consultants

With expertise in Retail Management Consulting, YRC has a proven track record of helping furniture businesses to flourish. Our team of professionals can assist you in streamlining the retail operations of your furniture business. As part of our commitment to making your business successful, we will be focusing on the right strategies and procedures, with a particular focus on the omnichannel business model. If you are interested in developing your furniture business, contact YRC to receive guidance at every step. To know more, visit our YouTube channel:


What is the business model of IKEA?

Ikea operates as a franchise and derives most of its profit from franchise fees. Furthermore, they generate income through the sale of wholesale products and the distribution of retail catalogs to franchisees.

What is the secret to IKEA's success?

IKEA’s approach to design and production differs from the norm in the business world. As opposed to designing and creating the product and then setting the price, the company sets the price first and then reverse engineers the product. A simple, pared-down, minimalistic design is evident in the furniture.

How does IKEA differentiate itself from its competitors?

The cost-effectiveness of IKEA is one of its strongest competitive advantages. It is the combination of economies of scale and technological integration that enables the global furniture retailer to offer low prices.