December 15, 2015 12:09
Korea's first IKEA store marks its first anniversary on the outskirts of Seoul this week. Greeted with howls of protest from domestic rivals, the Swedish chain seems to have given the industry a much-needed jolt with its smart and affordable design.
Business at IKEA in Gwangmyeong, Gyeonggi Province has surged since it opened on Dec. 18 last year, with visitor numbers to the chain's biggest outlet in the world now surpassing 10 million. Sales apparently topped W200 billion, and IKEA plans five more stores in Korea (US$1=W1,185).
Industry watchers have mixed views on its impact on the domestic furniture market. Smaller manufacturers, which accounted for 70 percent of the market, suffered a huge blow. But bigger companies with some brand power benefited handsomely as IKEA made home furnishings cool again and shook them out of their torpor.
The nation's top five furniture makers -- Hanssem, Hyundai Livart, Enex, Fursys and Ace Bed -- managed to stage brilliant turnarounds by adapting to new market trends, and their sales actually surged over the past year.
Hanssem and Livart, the No. 1 and No. 2, braced for the IKEA invasion by expanding their stores and diversifying sales channels, not least online, resulting in an increased customer base.
The accumulated revenues of the top five furniture makers until the third quarter stood at W2.3 trillion, up more than W400 billion compared to the same period last year.
Sales of household goods have also increased now other furniture stores are copying IKEA's one-stop concept of pushing anything from cheese graters to salad bowls on top of the usual standards.
Meanwhile other retailers are branching out to feed the home furnishing fad. Clothing giants Zara and H&M have opened home furnishing stores in major shopping malls. And Japan's Muji, once noted for understated bathrobes and t-shirts, wants to open two more stores emphasizing home products on top of the 14 it already has.
Muji's first-half sales here were slightly disappointing, but second-half sales have been rising now that everyone wants cushions in restrained earth tones. Sales for the year are projected at around W60 billion, up more than 20 percent from 2014.
Domestic home furnishing companies have also seen sales increase. Modern House, which E-Land launched in 1996, expects sales this year to total W300 billion compared to W230 billion last year.
"Larger domestic companies are improving their competitiveness after IKEA opened in Korea," said Kim Dong-sung at Hanssem.
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