Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
IKEA to open 5 more stores by 2020
Andre Schmidtgall, country retail manager at IKEA Korea, speaks during a press conference at the Nine Tree Convention Center in downtown Seoul, Wednesday. He said IKEA will invest 1.2 trillion won to build five more stores here by 2020. / Courtesy of IKEA Korea
By Lee Hyo-sik
Expansion plan poses threat to local furniture makers
By Lee Hyo-sik
IKEA will open five more stores here over the next five years to capitalize on the country’s rapidly growing DIY furniture market, the head of its Korean unit said Wednesday.
IKEA’s latest expansion plan will likely pose a greater threat to Hanssem and other domestic furniture makers who have been struggling to keep up with the Swedish-based furniture giant.
“We will open five more stores by 2020 to better serve our Korean customers,” said Andre Schmidtgall, country retail manager at IKEA Korea, during a press conference marking the store’s first anniversary in Korea.
IKEA opened its first store in Gwangmyeong, Gyeonggi Province, in December 2014. For the first year, the company, which employs 913 people, earned 308 billion won in sales and attracted 6.7 million visitors.
“To open five new stores over the next five years, we will invest a total of 1.2 trillion won,” Schmidtgall said. “Including our Gwangmyeong store, we will be operating four outlets in Seoul and Gyeonggi Province by 2020. We will also have one in Daejeon and another in Busan. By then, IKEA Korea will be employing more than 3,500 workers.”
IKEA’s second store in Goyang, Gyeonggi Province, will open on a 51,000-square-meter site in the second half of 2017, the country manager said.
“Korea is a great market with huge growth potential on the back of the growing customer interest in home furnishings,” he said. “IKEA Korea will continue to make the investment in order to provide well-designed, functional home furnishing products at low prices to create better everyday lives for our customers.”
To counter the mounting criticism that IKEA’s Gwangmyeong store has stolen customers from nearby smaller furniture retailers, Schmidtgall stressed that Korean customers who shopped at the IKEA store also made purchases at other nearby stores.
“According to research by the Korea Distribution Association based on credit card transaction data from December 2014 to August 2015, about 75 percent of IKEA customers come to our store from 10 kilometers away or further,” Schmidtgall said. “The research also found that 54 percent of IKEA customers spent money at other stores located within 10 kilometers from our Gwangmyeong store. The sales of these nearby stores were found to have jumped as much as 27.4 percent.”