The eagerly awaited opening of an IKEA store on the outskirts of Seoul has many consumers excited but apprehensive about pricing, and domestic rivals bracing for tight competition.
The Swedish home furnishing giant said Tuesday it bought a site in Gwangmyeong, a satellite city southwest of Seoul, for its first store in Korea.
The store is expected to open in about two years on the 78,198 square-meter site near Gwangmyeong KTX station.
Many consumers are concerned IKEA might follow the footsteps of several foreign fashion brands such as Zara and H&M, which raised their prices in the Korean market.
“I often ask my family members whenever they travel to China to buy IKEA textiles, rugs and lighting products for me and especially my son who is three years old. I don’t know why it took so long for IKEA to launch in Korea,” said Jeon Young-jie, a housewife in her 30s.
“The success of IKEA in Korea will depend on its price, though. IKEA products currently sold by individuals through the Internet are way too overpriced. IKEA is popular because of its good design and quality for the price, so there would be no merit if it’s priced higher than in neighboring markets.”
|An IKEA store that opened in Sydney, Australia on Nov. 3. (Bloomberg)|
Some are skeptical of IKEA’s success here because DIY furniture has never been well-liked in Korea. B&Q, a British DIY and home improvement retailer, entered the Korean market in 2005, opening its first store in Guro-gu, southwestern Seoul, but pulled out two years later due to sluggish sales.
“Korea doesn’t have a major DIY culture. I heard they offer assembly services, but still, I don’t think having to put furniture together would appeal much,” said Kim Sung-min, another housewife in her 30s who lives in Seoul’s southeastern district of Jamsil.
“Also, couldn’t they find anywhere better than Gwangmyeong? It’s too far.”
Internet communities of housewives, Korea’s most powerful consumer group, were awash with similar postings on IKEA’s upcoming lauch.
Lee Da-rai, a public relations representative for IKEA Korea, said nothing about the company’s pricing or product lineup has been decided yet.
“About half of IKEA’s products worldwide are non-furniture, so we call it a home furnishing company instead of a furniture company,” Lee said.
Domestic home furnishing companies are preparing to improve their product quality and after-sales service to fight IKEA’s unbeatable cost competitiveness.
“DIY doesn’t work in Korea, but I’m sure IKEA has its strategies to work that out,” said Kim Dong-sung, spokesperson of Hanseem, Korea’s largest furniture company.
“As for furniture, we target a different group of customers looking for a whole room interior package whereas IKEA caters to customers in their 20s and 30s shopping for single items. IKEA’s strength lies in household appliances, so we plan to focus more on after-sales service as IKEA would obviously have a weak network for service.”
With some 1,300 suppliers in 55 countries, IKEA gives out orders to those that can manufacture its designs at the lowest cost, making its products nearly half the price of Korean furniture.
IKEA, founded in 1943 in Sweden, is the world’s leading home furnishing company with more than 287 stores in 26 countries. In 2011, the IKEA Group recorded 24.7 billion euro ($32.2 billion) in global sales, an increase of 6.9 percent on the previous year.
By Kim So-hyun (email@example.com)