It took some time to figure out just the right shopping complex, off just the right highway interchange and just the right distance from Seoul, that could accommodate a 624,000-square-foot store—that is to say, one more than three times the size of the average Wal-Mart Supercenter. It took more time to solve certain mysteries, like how big to make the store’s children’s section in a country where kids are often given ample space in the family living quarters. It took more time to figure out how to showcase kitchens that incorporate kimchi refrigerators, a uniquely Korean appliance—and even more time to untangle nuances of the market, like the South Korean’s preference for metal chopsticks.
In all, it took about six years for Ikea to unveil its inaugural store in South Korea, in Gwangmyeong, starting from the first scouting trip. Ikea celebrated the opening in December with a tree planting rather than ribbon cutting. (Chalk that up to Ikea tradition rather than to South Korean custom.)
The lag was quintessentially Ikean. “They are ferocious about not expanding too rapidly,” says David Marcotte of consulting firm Kantar Retail. But six years? “The more global, the more complex it gets,” replies Mikael Palmquist, the regional manager of retail for Asia Pacific. “We need to get these things right or we will never be taken seriously.”
Even with all that careful planning, Ikea managed to get a few things wrong. It misjudged the number of parking spaces needed, and a seemingly benign map for sale upset some customers: The body of water east of Korea was labeled the Sea of Japan rather than the East Sea, as South Koreans prefer.
But the Koreans seem, for the most part, to have forgiven the Swedes. Today the Gwangmyeong store, which is the company’s largest in the world by shopping area, is on track to become one of Ikea’s top-performing outlets for 2015.
The success is hardly a fluke. Ikea, it seems, is a genius at selling Ikea—flat packing, transporting, and reassembling its quirky Swedish styling all across the planet. The furniture and furnishings brand is in more countries than Wal-Mart, Carrefour, and Toys “R” Us. China, where Ikea has eight of its 10 biggest stores, is the company’s fastest-growing market. An outlet in Morocco is coming soon, and there are hints that Brazil may not be far off. Meanwhile, Ikea is going meatballs out in India, where it plans to invest about $2 billion over a decade to open 10 stores.
Getting it right in emerging markets like China and India, where Ikea is well-positioned to capitalize on a growing middle class, is a key factor in its goal of hitting €50 billion in sales by 2020. That’s up from €28.7 billion in its fiscal 2014 ($39 billion based on the average exchange rate for Ikea’s fiscal year) and almost double its 2005 sales level. Today the Ikea Group has 318 stores, not including the brand’s some four dozen franchised locations; it’s aiming for around 500 by 2020.
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This story is from the March 15, 2015 issue of Coins2Day.
