IKEA Singapore announced on Dec 21, 2023, that it will absorb the 1 percent GST rate increase that will take effect from Jan 1, 2024¹. This means that the prices of its products online and in-store will remain unchanged, despite the GST hike from 8 percent to 9 percent. How will this decision affect your shopping habits? Here are some possible ways:
1. You might shop more at IKEA
One obvious effect of IKEA’s GST absorption is that you might be more inclined to shop at IKEA, especially if you are looking for home furnishing items.
Compared to other retailers that might pass on the GST increase to consumers, IKEA will offer you the same value for money as before. You might also be tempted by IKEA’s other initiatives to keep prices low, such as lowering the prices of over 200 products in 2023 and 2024², and offering vouchers for new home packages³.
2. You might save more money
Another possible effect of IKEA’s GST absorption is that you might save more money, either by spending less or by getting more for the same amount.
For example, if you buy a sofa that costs $999 at IKEA, you will pay the same price in 2024 as in 2023, whereas if you buy it from another retailer that charges the GST, you will pay $1,008.90 in 2024, an extra $9.90. Alternatively, if you have a budget of $1,000, you can buy more items at IKEA than at other retailers that charge the GST.
3. You might appreciate IKEA more
A third possible effect of IKEA’s GST absorption is that you might appreciate IKEA more, not only for its affordability, but also for its customer-centricity and sustainability.
IKEA Singapore said that its decision to absorb the GST hike was part of its mission to create a better everyday life for the many people, and that it had made extra efforts to streamline its supply chain operations to pass on the savings to customers¹.
IKEA Singapore also said that it was committed to being the most sustainable home furnishing retailer in the country, by offering products that are made from renewable or recycled materials, and by reducing its carbon footprint⁴.
IKEA Singapore’s GST absorption could change your shopping habits in various ways, depending on your preferences and needs. Whether you shop more, save more, or appreciate more, you can enjoy the benefits of IKEA’s decision to support its customers in challenging times.