PETALING JAYA: Swedish furniture brand IKEA Malaysia is emphasising affordability and smaller-format expansion as Malaysian consumers pull back on big-ticket spending, even as cost pressures across logistics and supply chains intensify.
Country retail director Malcolm Pruys said the retailer is seeing a clear shift in purchasing behaviour, with shoppers opting for incremental home upgrades instead of major purchases.
“What we are seeing is a bigger uptake in home furnishing accessories; people want to make changes in their home, but smaller changes,” he said, noting customers are increasingly deferring larger buys such as sofas in favour of lower-cost alternatives like replacement covers.
The trend reflects broader cost-of-living pressures, with consumers becoming “a little bit more conservative with their wallets”, reshaping demand across the home furnishing segment.
In response, IKEA Malaysia has intensified its “price investment” strategy, cutting prices on nearly 2,500 items over the past two years, in some cases below pre-Covid-19 pandemic levels.
Pruys said the group has so far absorbed rising costs rather than passing them on to customers.
“We are absorbing it all today, and we will shield the customer from that by just about any means,” he said, adding that maintaining affordability remains central to the brand’s positioning despite a more challenging operating environment.
However, he acknowledged that sustaining this approach is becoming increasingly difficult as external pressures mount.
Logistics costs, particularly transportation, have emerged as the biggest strain on operations.
“Anything that involves moving product around has a cost increase to it today. That’s where most of the pressure lies,” Pruys said.
Beyond logistics, global developments are also feeding into cost structures. Pruys pointed to geopolitical tensions, including disruptions linked to the Middle East, as having wider knock-on effects across supply chains, from fuel to fertiliser, ultimately impacting prices further down the value chain.
Despite this, IKEA Malaysia has opted to hold prices steady for now, even as diesel prices and delivery costs rise.
“It’s too easy to say we have to lift the price because diesel has gone up,” Pruys said, adding that the company prefers to absorb short-term volatility rather than risk burdening consumers.
On operations, the retailer is focusing on internal efficiencies to offset cost pressures, including optimising warehouse usage and reducing reliance on external storage.
Pruys said the group is “leaving no stone unturned” in identifying savings, reflecting a broader push to do more with less.
At the same time, IKEA Malaysia is sharpening its product focus, placing greater emphasis on entry-level offerings to cater to budget-conscious households, while maintaining its core range.
On the digital front, e-commerce continues to play a stable but growing role, accounting for about 16% of total sales.
While stores remain central to the business model, recent trends suggest a renewed shift online.
“Last month in particular, we saw a little bit more shift to e-commerce; people are still shopping, they’re just not driving to the store,” he said, noting online sales exceeded expectations and outpaced physical stores in March.
Looking ahead, expansion plans are being recalibrated to reflect changing consumer dynamics and urban realities.
Rather than rolling out more large-format outlets, IKEA Malaysia is prioritising smaller stores in underserved markets.
“We don’t think you’re going to see a really big IKEA box again, you may see something smaller, but really we will penetrate the market with 3,000 to 3,500 sq m units,” Pruys said, citing potential locations such as Ipoh, Malacca and Kuantan.
The group will also continue to invest in and modernise its existing flagship stores in Damansara (Petaling Jaya), Tebrau (Johor Bahru) and Batu Kawan (Penang), where it still sees growth potential.
On the supply chain side, IKEA is increasingly benefiting from a more regionalised sourcing strategy, supported by its distribution centre in Port Klang, which serves multiple Asian markets.
“I feel like we’re pretty well placed to capitalise on any regional push into supply,” Pruys said, adding that this could help keep manufacturing costs in check and support further price reductions over time.
As IKEA Malaysia marks its 30th anniversary this year, the focus remains firmly on delivering value to “the many Malaysians”, even as external uncertainties persist.
“Our plan is not to raise prices at all, and hopefully our prices will continue to drop over time,” Pruys said.
