BUSINESS

IKEA’s pricing policy sparks new controversy

By Korea Herald

Swedish furniture-maker under fire for charging higher prices in Korea

  • Published : Jun 22, 2015 - 19:41
  • Updated : Jun 23, 2015 - 09:33

The Korean unit of Swedish furniture-maker Ikea has come under fire as it was found to have priced some of its products in Korea as much as double the global prices.

According to local advocacy group Consumer Research on Monday, the average price of the retail giant’s couches and wardrobes are 15 to 20 percent higher in Korea compared with those in the U.S., Germany and Japan.

“Ikea Korea charged 10-30 percent more for the majority of products marked over 100,000 won ($91) in Korea compared with the other three countries,” a Consumer Research official said.

The controversy was ignited about three months after the country’s antitrust watchdog Fair Trade Commission announced that 44 products at Ikea’s store in Korea had higher price tags compared to the average prices in 21 member countries of the Organization for Economic Cooperation and Development.

Ikea’s first Korean outlet in Gwangmyeong, Gyeonggi Province. (IKEA Korea)

“The finding shows that Ikea sticks to its higher pricing policy in the country despite Korea’s strong currency,” the official said.

The recent study, which was conducted on 126 Ikea products sold in all four countries, showed that the average price of the homeware products in Korean market is 522,717 won, compared to 455,344 won in the U.S., 453,737 won in Germany and 437,578 won in Japan.

Ikea defended its different pricing of the same products saying market conditions such as demand and delivery service may vary by country.

“There’s price discrepancy among countries because we regard each country as a separate market,” an Ikea official said.

The home furnishing company said many factors including lifestyle, tariffs, the number of stores and value-added tax affect the price.

The pricing row, which was first sparked last year even before the Swedish company open its first Korean store, angered many Korean consumers who expected Ikea to provide high-quality goods at affordable prices.

Nonetheless, Ikea’s first store in Gwangmyeong, on the outskirts of Seoul, drew over 1 million visitors in its first month since opening in December 2014 and is expected to draw some 4 million visitors by June.

By Park Han-na (hnpark@heraldcorp.com)


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