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Swedish furniture giant IKEA will invest 300 million euros (US$327 million) in South Korea over the next three years to strengthen its presence in Asia's fourth-largest economy. The company aims to enhance its market share and establish a closer connection with regional customers.
Strategic Store Expansion
IKEA currently operates four stores in South Korea and plans to open a fifth next year. This strategic move is part of the company's initiative to explore new formats that bring IKEA closer to customers' daily lives, workspaces, and social hubs.
In a recent interview with Yonhap News Agency, Tolga Oncu, IKEA's retail operations manager at Ingka Group, it was revealed that the investment will be directed towards developing new store formats. This includes pop-up stores with specific themes in shopping centers and smaller IKEA stores ranging from 5,000 to 10,000 square meters.
Focus on Customer Proximity
By introducing smaller store formats, IKEA aims to create a more intimate shopping experience for Korean customers. These new formats will provide a "big enough" IKEA experience while catering to the preferences and lifestyles of local consumers.
Sales Performance and Strategy
Korea Bizwire reported that despite declining sales in recent fiscal years, IKEA remains committed to the Korean market. The company attributes the sales decrease to external factors such as high utility prices and inflation, impacting consumer purchasing power during economic slowdowns.
In response to market challenges, IKEA plans to invest up to 7 million euros to lower product prices in Korea until the 2024 fiscal year. This strategic move aligns with Ingka Group's global price policy and aims to make IKEA products more accessible to Korean consumers.
Product Affordability and Quality
IKEA's focus on lowering product prices without compromising quality reflects its long-term growth strategy. By enhancing affordability and maintaining product standards, IKEA aims to sustain its legacy.
Photo: Jueun Song/Unsplash
