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To: Johnny Canuck who wrote (42573)	7/26/2005 2:00:22 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70141

Ikea to reduce prices 17% amid fierce competition in home furnishings sector 01:57 PM EDT Jul 26 ROMINA MAURINO TORONTO (CP) - Retailer Ikea is slashing prices by 17 per cent amid fierce competition in the booming home furnishings sector. Ikea Canada president Luc Lauwers says the Swedish-owned company will lower prices on best-selling items, effective Thursday with the delivery of the latest catalogue. The price reduction represents five per cent of the company's annual sales. "We have been decreasing our price for the past five years but not to the extent we did this year," he said in an interview. "It's to be more price-aggressive in one way, but also based upon on our business idea to be able to offer more value to the market." The focus on certain products will allow the company to place larger orders, which will allow Ikea to save by buying at reduced supplier prices, he said. It's a move that analysts like Len Kubas, president of Kubas Consultants, found surprising because Ikea is generally considered to be low-priced already. But according to retail analyst John Winter of John Winter Associates, the price reduction shows demonstrates much competition there is in the home furnishings sector. Stores such as Sears, Leon's and the Brick, he said "have big warehouses and have very sharp prices and compete very strongly with Ikea." "Ikea is somewhat different from these other stores. It has its own way of doing things, but all four of those big companies are all competing against each other," Winter said. The timing of the price reduction is surprising, Winters added, because with the housing market booming, it would follow that a secondary market for more furniture and furnishing would also be very strong. "It is not driven by a lack of demand, therefore, it must be driven by a desire to obtain a higher market share vis-a-vis their competitors, and they've got strong competitors," he said. Lauwers said that while the company wishes to reinforce its "leadership role in the competitive home furnishings sector," Ikea welcomes the competition. "The more players are around, the larger the market gets," he said. "But of course, on the other hand, we will be sharper priced than ever." He added: "We're doing pretty good, but we can do better." Ikea's unique designs and high quality-for-price ratio, he said, will help it stand out, even as low-price retailers like Wal-Mart try for a share of the market. The company will also continue to reduce prices and try to further expand into the more elaborate, mature furniture market. The company is usually seen as a useful shopping stop for younger people furnishing their first home. But Winters said the move might make the market more competitive, as other companies are likely to follow Ikea's lead. "Nobody is going to sit still and do nothing. They're going to react in some way to maintain their clientele and increase their share." [Harry: Indication that the home buyer are stretched to the max by just buying their houses?]