This undated file photo shows IKEA Korea’s flagship store in Goyang, just north of Seoul. (Yonhap)
SEOUL, Sept. 15 (Korea Bizwire) — South Korean furniture industry is riding high on surging demand for desks, chairs and sofas during a pandemic that has kept millions of families largely stuck at home for nearly a year.
But Global furniture giant IKEA’s South Korean unit is suffering stalled growth.
IKEA Korea’s revenue for fiscal year 2021 (Sept. 2020-Aug. 2021) amounted to 684.6 billion won (US$583 million), up 3.4 percent from a year ago. This was the lowest growth since IKEA landed in Korea in December 2014.
There are two main factors behind IKEA Korea’s stalled growth. First, its price competitiveness weakened due to the impact of COVID-19.
Thus far, IKEA Korea has sold standardized furniture through warehouse-type stores. Consumers could lower the purchase price by picking up, bringing home, and assembling the furniture themselves.
However, as the number of consumers who purchase on a non-face-to-face basis increases along with the prolonged COVID-19 pandemic, complaints have grown over expensive delivery and assembling services.
Another factor is the spread of showroom-type stores across the country. These types of stores were regarded as a unique strength for IKEA Korea.
Furthermore, a variety of online services where consumers can get a full range of home decoration information made it easier for consumers to access model house-type showrooms on a non-face-to-face basis.
Ashley Song (ashley@koreabizwire.com)
