Ikea UK sales slid in its latest financial year, as it invested further into slashing prices.

The homewares giant’s sales dropped 6.8% to £2.3bn in the year to 31 August, which it said was due to its “strategic decision” to prioritise affordability and invest more than £117m into cutting prices.

The cuts were focused on some of the retailer’s most popular items, with 33% of its range reduced in total with an average price reduction of 20%.

Despite the sales drop, Ikea saw an uptick in demand as the year progressed when new lower prices were introduced, particularly in key categories like kitchens, bedrooms, and storage solutions.

As well as cutting product prices, Ikea also lowered its service-related prices, introducing more affordable delivery options throughout the year, such as reduced furniture delivery pricing and lower cost click-and-collect services.

The Swedish retailer’s online sales continued to soar and now accounts for more than 40% (41.7%) of UK sales, up from 38.5% last year.

It said the UK business was “investing significantly” to become more accessible, and will open two new city stores on Oxford Street in London and in central Brighton next year.

Across the wider market, Ingka Group, the largest Ikea franchisor which includes the UK arm, saw total retail sales reach £33.2 bn (€39.6bn), a 5% drop from last year.

Ikea UK CEO and chief sustainability officer Peter Jelkeby said: “In a year of economic uncertainty, our priority was clear: stand with our customers. In spite of our reduced turnover, continuing to lower prices remains our long-term priority. This is true to the Ikea vision.”

Click here to sign up to Retail Gazette‘s free daily email newsletter