After years of increases, companies are rolling back prices

Businesses that sell a range of products from IKEA sofas to Air Jordan sneakers have said in recent weeks that they have lowered prices this year. In part, that is because many companies increased prices rapidly in preceding years when supply chain and labor costs rose, and flush consumers were willing to pay more.

But demand for many goods that aren’t necessities, such as home furnishings or pricey sneakers, has fallen, leaving companies that sell those goods in a battle for a larger piece of a smaller pie.

Inflation has eased this year, but many consumers are strained by what amounts to higher prices than before the pandemic for necessities such as food, insurance and housing. In September, U.S. inflation eased to a three-year low but cooled more slowly than economists expected.

This year, inflation hit shoppers globally and “everyone paid more for their housing, for food and for energy," said Jon Abrahamsson Ring, chief executive of Inter IKEA Group. To drive demand, IKEA dropped global product prices by around 10% this fiscal year, the largest annual price drop in company history, said Abrahamsson Ring.

In late 2023, IKEA’s 12 franchisees that operate most stores agreed to lower prices collectively because of the global nature of the trend, a rare moment for the furniture behemoth, he said. “Many people have to spend more money on other things, so we have to help them with as low prices as we possibly can," he said.

IKEA raised prices overall in the preceding two years to offset rising costs, he said. This year’s price cuts drew more shoppers to its stores but they spent less. On Thursday, the company said annual sales fell 5.3%.

Nike is dropping some prices for a different reason: to unload inventory that isn’t selling as fast as hoped. “The outlook for the balance of the year is going to require us to be more promotional," Matthew Friend, chief financial officer for the company, said on a call with analysts.

Nike’s revenue declined 10% in the latest quarter, and its profit fell 28% from a year ago, in part because higher-than-expected promotions ate into margins. Nike executives warned that sales could retreat another 10% in the current quarter.

Restaurants have also worked to deliver discounts to stimulate demand after years of price increases.

Same-store traffic is down across restaurants this year, particularly at sit-down chains, according to market-research firm Black Box Intelligence. Chains have launched more discounts and promotions this year to try to lure customers back.

Domino’s Pizza said Thursday that its prices during the most recent quarter were up 1.6%. As lower-income shoppers pull back on delivery, the chain is using more temporary promotions to spur purchases. In September, Domino’s offered a large pizza for the price of a medium on some orders, and this month brought back an “Emergency Pizza" buy-one-get-one deal it ran last year.

Pizza delivery companies will continue to compete on price this year, said Chief Executive Russell Weiner on a call with analysts. “We’re in the pizza wars right now," Weiner said.

Other restaurant chains have amped up deals since the summer. McDonald’s said it would continue selling into December a $5 meal deal introduced in June, as the company and its franchisees aim to keep its meals affordable.

Darden Restaurants said in September it would more prominently advertise its low-price menu prices to consumers, and its Olive Garden division brought its Never-Ending Pasta Bowl deal back through November. Olive Garden plans to run the deal about a month longer than it did last year.

Write to Sarah Nassauer at Sarah.Nassauer@wsj.com and Heather Haddon at heather.haddon@wsj.com