On 1 September, IKEA lowered prices on more than 1,500 products across Europe. The Poäng chair went from €179 to €119 in Germany. Billy shelving, Kallax storage, kitchen items, mattresses. Somewhere between 15% and 25% off, depending on the market, and the bill comes to €1.2 billion, shared between Ingka Group, the smaller franchisees and Inter IKEA Group, which owns the brand.

That last detail matters more than the price tags. Franchisors almost never co-fund a discount. The royalty is a percentage of sales, so a price cut takes money off the operator’s line and the brand owner’s line at the same time. Ask anyone who has sat through a value-menu argument at a fast food chain. Inter IKEA said yes and wrote the cheque.

But here is the part we keep coming back to at Edda Creative.

No one consulted the rest of the sector. On 2 September, every furniture retailer in Europe woke up inside a new pricing reality they had no part in creating. A single company deciding to give up margin quietly reset what shoppers across the continent now think a bookshelf should cost.

That is not market share. That is authorship.

“There are plenty of IKEA lookalikes now” misreads the problem

We hear a version of this in almost every category conversation. IKEA has been copied to death. Same particleboard, same flat pack, same pared-back Scandinavian look, often cheaper, sometimes better built. So why does the brand premium hold?

Because IKEA is not a product range. It is the definition of a category.

Competitors can copy the products, and they do. What they cannot copy is being the reference point. The moment a shopper says “it’s like the IKEA one but cheaper,” they have not chosen a challenger brand. They have confirmed IKEA. Whoever sits in the denominator of the comparison is running the category.

Marketing has a name for this. Brand prototypicality: when a category is mentioned, one brand surfaces first and gradually becomes indistinguishable from the category itself. Flat-pack furniture is not a product type in most people’s heads. It is an IKEA memory.

Three mechanics behind the grip

It drives the market instead of reading it. There is an old distinction from Kumar, Scheer and Kotler between market-driven and market-driving firms. The first serves demand as it exists. The second changes how demand behaves. Sending customers to a warehouse, handing them an Allen key and framing all of that as a benefit rather than a compromise is textbook market-driving. Nobody asked for it in a focus group.

It sets the anchor. Billy’s price is not IKEA’s price. It is the category’s ceiling. If your bookshelf costs more than Billy, you are now obliged to justify yourself. Owning the anchor means permanently setting homework for your competitors.

It rearranged the value chain rather than optimising it. Normann and Ramírez wrote about IKEA thirty years ago and the analysis still holds. IKEA does not run a linear chain. It redistributes roles across a system. The customer takes on transport and assembly and gets a price for it. The supplier accepts cost discipline and gets long-term volume and technical support. Copy one link and nothing works.

There is a psychological kicker too. Norton, Mochon and Ariely showed that people place inflated value on things they assembled themselves. The famous IKEA effect. So those two irritating hours with the instruction sheet are not only a cost transfer. They are an attachment mechanism. When a competitor promises “delivered fully assembled,” they are also quietly giving that up.

Organising a sector you do not own

IKEA’s global furniture share sits at roughly 7.5%. In a fragmented market that makes it the leader, but it is nowhere near dominance in the usual sense. The influence runs far ahead of the share, and it works through a few channels.

It sets the pricing calendar. Launching new products at lower prices than the ones they replace is stated policy. A player pushing deflation into a category during an inflationary period shrinks everyone else’s room to raise prices.

It standardises the language. Dimensions, modular systems, product names. In market after market, independent manufacturers now build fronts, legs, handles and inserts that fit IKEA carcasses. Those firms started as competitors and ended up as complementors. Whoever owns the standard owns the platform.

It resets the baseline of expectation. Clear instructions, easy returns, the showroom layout, the kids’ area, the food. None of these are IKEA features anymore. They are the minimum shoppers expect from the whole category, which means a competitor who offers them gains nothing. They simply avoid a penalty.

It occupies the entry points. First apartment, moving out, student housing, a nursery, setting up a home office. IKEA is the default answer at nearly every one of those life moments. The brand is attached to a life stage, not to a product.

The armour has cracks

None of this makes IKEA safe.

FY25 retail sales came in at €44.6 billion, down about 1% on the year, even though volumes and customer numbers both rose around 3%. Price cuts are buying traffic, not revenue. Put the €1.2 billion against the combined FY25 net profit of Ingka and Inter IKEA, roughly €2.9 billion, and you are looking at close to 40% of the system’s bottom line committed to one pricing decision. It does not sit on a balance sheet either. Nothing capitalises, nothing depreciates. It shows up once, as revenue the company agreed in advance not to collect.

Meanwhile Temu, Amazon and a long tail of cross-border sellers are dragging the anchor lower from below. That is the structural risk of owning the price reference in a category. Someone can always throw the anchor deeper than you can afford to follow.

And the quality perception problem has never gone away. Particleboard and self-assembly carry a durability tax in the customer’s mind, which is exactly the gap mid-market local brands have been living in for years.

What we take from this

If you work on a brand in a category with a clear leader, four things are worth sitting with.

Find out who occupies the denominator in your category’s comparisons. If customers describe you in relation to someone else, that someone else is pricing you.

Study the system, not the move. Reading a competitor’s discount is easy. Reading the operating architecture that makes the discount survivable is the actual work.

Stop treating your distinctive assets as product features. Colour, naming, ritual, store choreography. These are memory infrastructure and they are the most expensive things you own.

Being a price leader is not the same as discounting. One manages the category’s expectations. The other just hands over margin. The difference sits in where inside your system the cut is financed.

Small share, large category authority is a position you can build deliberately. Brand value does not always track revenue. Sometimes it tracks who gets to decide what the sector talks about.

What does your category’s anchor look like, and who set it?