Ikea to add more outlets in Korea

Ikea to add more outlets in Korea

Swedish home furnishing giant Ikea on Wednesday announced that the company will open five more stores in Korea by 2020, by investing 1.2 trillion won ($1 billion).

The company started its official operations in Korea in December 2014 by opening the Gwangmyeong store in Gyeonggi Province. The expansion will start with the second store opening in Goyang of northern Gyeonggi Province in late 2017, followed by two more inside Seoul, and one each in Daejeon and Busan.

“We have come to relook the market carefully since we started operations. We have seen the different rquirements of different people showing that we need more stores here than expected,” said Andre Schmidtgall, country manager of Ikea Korea, at a press conference to mark the 1st anniversary of the company operations. He said that once all stores are open, the company will hire 3,500 staff nationwide.

Schmidtgall disclosed that the Korean unit has posted 308 billion won in sales, with 6.7 million visitors in the inaugural year.

This is an encouraging figure for Ikea that has 328 stores in 28 countries, generating 32.7 billion euros ($35.7 billion) in revenue in the fiscal year 2015, he said.

Aiming to quash market anxiety that the company famous for rolling out cheap products would wither the domestic furniture market, Schmidtgall insisted that the arrival of Ikea has alerted the contemporaries to prepare for the era of home furnishing, and thus created a positive effect in the industry.

“If someone knew we were coming, they would be ready for how things will be in the future. We are creating more interest for home furnishing and others are participating. There are so many possibilities in the market that there will be a big growth in the home furnishing market in Korea,” Schmidtgall said.

Supporting Schmidtgall’s theory is the sales record of Hanssem and Livart, the Korean competitors of Ikea, who saw a 30 percent and 18 percent increase, respectively, this year, despite the economic slowdown.

The German manager also cited Korea Distribution Association data showing that 75 percent of Ikea customers come from further than 10 kilometers, and that 54 percent of them spend money at other stores within 10 kilometers.

“The sales of the stores within a 10 kilometer-radius from the Ikea Gwangmyeong store increased by 7.5-27.4 percent,” he said, stressing that the store created a win-win effect for the local economy.

“Someone said that we are a category innovator. I was really happy to hear that description,” he said.


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