Major furniture firms brace for IKEA arrival

By Park Ji-won

Local furniture firms are overhauling their business strategies to brace for the arrival of Swedish furniture giant IKEA here at the end of this year.

Hanssem, Livart and ENEX, the three leading furniture brands in the nation, are diversifying their portfolios, launching low- to mid-priced product lines and strengthening their direct distribution and online channels to target individual customers.

Hanssem, the No. 1 furniture company in terms of sales, has been expanding its direct offline sales channels to boost its share in the business-to-customer segment, positioning itself as a “total service furniture provider.”

It also plans to build a 5,620-square-meter offline showroom in March in Mokdong, western Seoul, in a bid to strengthen face-to-face relations with customers.

“What we can provide better than IKEA can is customer service and higher-quality furniture for newly married couples and customers in their 30s who want to buy furniture that will last for a long time,” official Lee Ji-ye at Hanssem said.

Until recently, the firm has been putting much effort on the business-to-business segment, which mostly involves installing furniture in new buildings. In addition to focusing on individual buyers this time, it increased the number of employees for the Hanssem online mall in recent months.

The Sweden-based ready-to-assemble furniture company plans to open its first store in Gwangmyeong City at the end of this year and its second and third branches in Goyang City in Gyeonggi Province and Gandong-gu in eastern Seoul, respectively, in the coming years.

Hyundai’s furniture unit, Livart, the No. 2 player in the furniture industry, has also been putting much effort in targeting individual customers since last year. On Feb. 11, it opened its 20th and largest shop in Junggok, northern Seoul, which is known as a furniture town, a firm official said.

“We have been boosting offline channels and the online mall to provide service-oriented products,” Livart spokesman Yang Young-san said.

In September 2013, the firm also launched Livart Kitchen, a brand that sells low- to mid-priced kitchen furniture. The brand can be found in 120 existing offline Livart outlets.

ENEX, a furniture manufacturer with a strong focus on sink cabinets, announced late last year that it will increase the range of kitchen furniture from this year with its new product line, Revolution Kitchen. It will also strengthen its online mall and add new franchise outlets in big cities such as Busan, Ulsan and Daegu.

The estimated size of the furniture market in Korea was 1.4 trillion won in 2013, according to analysts at securities firms. Half of the market is occupied by the three leading furniture brands and the other half by small and medium-size manufacturers or subcontractors.

“The leading firms seem to have two big expansion strategies in preparation for the arrival of IKEA to continue making high-end furniture and to increase the presence of their offline and online shops,” analyst Ko Hoon at Mirae Asset Securities said.

“IKEA’s arrival will have limited impact on those leading companies. The problem lies with small- and medium-size entrepreneurs, which account for the other half of the market and whose products may overlap with those of IKEA, which sells low-end furniture.”