Also: OpenAI revenue, Hong Kong shopping, Birkenstock shares
Good morning. Peter Vanham here in Geneva, filling in for Alan.
Inflation keeps hovering around 3.7% in the U.S., meaning there’s still a way to go until we reach price stability. But one retailer is determined to do its bit to bring prices down: IKEA, the Swedish furniture maker, lowered prices on hundreds of its products, the company announced yesterday. The price drops follow price increases since 2021, which resulted from supply chain hiccups and supply scarcity.
I met the CEO of the company, Jesper Brodin, earlier this week in Malmö, Sweden, and discussed a wide array of topics with him. He reminded me, among other things, that price drops are a crucial aspect of the retailer’s long-term promise to uphold “democratic design.” Breaking that promise would imperil the company’s relationship with its customers, even if it led to higher revenues and profits in the short term.
Here’s what else we talked about, in an interview for Fortune’s upcoming China 500 conference in Shanghai, China:
On generative AI:
“We are taking a crash course for some 400 leaders […] where we learn: What is AI, what does it mean for us, and how do you bring it to your own leadership. This is something I recommend. We need to educate ourselves.”
On the West’s “de-coupling” from China:
“It’s troublesome, for us and for everybody. Trade barriers means bureaucracy. In the end, it means more costs for customers.”
“In the past, the notion was that governments are slow, companies are fast. In my world, it’s the opposite. Change, unfortunately, has been quick in governments […], whereas you invest like we do, heavy assets, shopping centers, stores, factories, jobs. You don’t switch that and de-risk one year to another.”
“There is no middle way here, as I see it. Either you’re in China, you’re committed to being part of society, then you have to take some good years and some bad years from time to time. But as an international brand, before you ask, ‘Am I being treated fairly and equally on this market?’ You should actually ask yourself, ‘Are we contributing to society, or are we only here to gain capital?’”
On sustainability:
“I’m absolutely an optimist on energy. It’s more or less a tick in the box in the IKEA value chain. In absolute terms […] we’ve grown [revenue] since [the signing of the Paris accords] by 24%. Absolute carbon emissions [are] down by almost 14%. By addressing sustainable consumption, and re-engineering the value chains, energy, mobility, circular material, we will be able to go to 50% by 2030.”
More news below.
Peter Vanham
peter.vanham@fortune.com
@petervanham
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OpenAI’s rapid ascent
The developer behind ChatGPT is earning $1.3 billion in revenue, calculated at an annualized rate, OpenAI CEO Sam Altman told employees this week. Last year, the developer generated $28 million in sales. OpenAI, which makes most of its money from subscriptions to its AI chatbots, is reportedly now exploring a new consumer device with iPhone designer Jony Ive and Softbank CEO Masayoshi Son. The Information
Hong Kong shopping
The city of Hong Kong is losing its appeal as a high-end shopping destination for millions of Chinese tourists, threatening the city’s recovery from years of pandemic-era isolation. Visitors are instead looking for experiences, flocking to sites popular on Chinese social media platforms such as the Instagram-like Xiaohongshu. Chinese travel is recovering slowly amid a sluggish economy, with domestic travel during the popular Golden Week holiday measuring just 4% above pre-COVID 2019 levels. Bloomberg
Birkenstock drops
Shares in sandalmaker Birkenstock dropped 13% in their first day of trading, following a debut on the New York Stock Exchange that valued the company at $8.6 billion. It’s the worst first-day performance for a company worth over $1 billion in two years. Analysts think the company may have been the victim of bad timing, coming right after weak results from French luxury giant LVMH. Fortune
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