ed IKEA expansion

IKEA’s success in the Korean market attests to the endurance of innovative businesses even during an economic downturn. Marking its first year in Korea, the Swedish home-furnishing giant announced a 1.2 trillion won ($1 billion) expansion plan that includes opening five more stores by 2020. The plan would place Korea at the center of IKEA’s Asia operations next to Japan, which has five stores.

In such a short period since its arrival, the first IKEA store in Gwangmyeong, Gyeonggi Province, has become a magnet for furniture-shoppers and families. The Korean unit posted 308 billion won in sales, welcoming 6.7 million shoppers in its first year. At this rate, IKEA seems on course to beat local and international rivals to become Korea’s no.1 furniture brand soon.

What is the reason for IKEA’s swift rise in the local market?

IKEA’s timely arrival coincides with the surge of the home-furnishing trend in Korea, with more people opting to build and decorate their homes. But it is not just timing. The success elements for IKEA are varied, including competitiveness in pricing and design.

With continuous growth expected in the home-furnishing market, local competitors must brace for tough competition with international giants like IKEA. This can be done by benchmarking the company’s strategies in marketing, pricing, product range and design, among other things. In particular, low prices are the cornerstone of the IKEA concept to provide quality home-furnishing products at affordable prices. Korean companies lag particularly in design compared with international brands.

After one year, it turns out that IKEA’s arrival has been a win-win result for the growth of Korea’s home-furnishing industry and the local economy.

Industry insiders had initially worried that IKEA would hurt Korean home-furniture brands. But IKEA’s entry has had a positive effect on the industry by alerting contemporaries to brace for an era of home furnishing. Leading local competitors such as Hanssem posted a 31 percent increase in sales this year, and other brands, such as Livvart, Fursys and Enex, also recorded more than a 20 percent sales increase each. IKEA also has been a contributor to the local economy, as the sales of the stores within a 10-kilometer radius of the IKEA Gwangmyeong store increased by as much as 27.4 percent.

Considering these positive outcomes, the local industry should embrace the entry of multinational innovators like IKEA rather than fretting over them. Competing with them can motivate our own growth. This is why Korea should do more to create a more friendly business environment for international companies.