In the past three years, IKEA grew about 2.2% in the Korean market. This reflects demand shifting from remodeling with large furniture to smaller home furnishing products amid a sluggish real estate market.
At the IKEA Home Reimagine Media Day held at 11 a.m. on the 20th at NSP Hall in Magok-dong, Gangseo-gu, Seoul, Isabel Puig, IKEA Korea country manager and chief sustainability officer (CSO), said this when asked about performance in the Korean market and the impact of the real estate slump: If in the past consumers focused on redecorating homes, now spending is shifting toward using existing spaces better.
The Swedish furniture company IKEA entered the Korean market in earnest in 2014 when it opened the Gwangmyeong store. Since then, IKEA rapidly built recognition by selling low-priced, do-it-yourself (DIY) flat-pack furniture, but revenue has remained in the 600 billion won range for years and operating profit has been falling. In the last fiscal year, IKEA Korea's revenue was 639.3 billion won, up 2.1% from a year earlier, while operating profit in the same period plunged 41.3% to 10.9 billion won.
It appears that demand for home furnishing, which had risen during the COVID-19 pandemic, fell quickly, and the real estate downturn further slowed demand for furniture and interior products. This prompted IKEA Korea to recalibrate its strategy for the Korean market by expanding urban-format stores and strengthening services such as delivery and consultations.
IKEA Korea will first push to expand urban-format stores under its core pillar of Closer IKEA. While maintaining large stores on the outskirts such as Gwangmyeong, the company plans to increase urban stores under 1,000 square meters in mixed-use shopping malls to secure everyday consumer touchpoints.
IKEA Korea has opened its first store inside Lotte Department Store in Gwangju. Puig said, We plan to roll out urban-format stores in major regions such as Incheon, Daegu, and Daejeon by 2027, adding, Discussions in Incheon have advanced to the point that we can soon announce a specific area. Daegu and Daejeon are still at the site review stage.
Alongside this, IKEA Korea will also pursue the strategies of More convenient IKEA and IKEA in everyday life. More convenient IKEA will strengthen next-day delivery, in-store pickup, one-on-one space styling consultations, and kitchen design and installation services, aiming to improve purchasing convenience across online and offline.
IKEA in everyday life is a strategy to broaden customer touchpoints through in-store experiences and external partnerships. Focusing on IKEA Food, seasonal menus, and repair services, the brand aims to extend beyond simple furniture stores into everyday living. As part of this, IKEA Korea plans to launch a repair service at the Giheung store starting in July.
A new brand slogan, Home begins with you, was unveiled at the event. The slogan signals redefining the home not as a simple living space but as a space that reflects an individual's lifestyle, and strengthening the role as a Life at home partner that supports this.
Park Yuri, country marketing manager at IKEA Korea, said, Korean consumers value organized environments, me-time, and health, but are not fully achieving them, adding, Because there is a gap between this perception and actual life, we put into the slogan the idea of changing the home more to fit individual needs and lifestyles.
In the subsequent Q&A, questions continued about the Korean real estate downturn and strategies against competitors such as Coupang and Today's House. In response, Puig said, Even if shopping in the Korean furniture market starts online, it often leads to in-store experiences where people can touch products, adding, The omnichannel experience that combines online and offline is important.
On the stagnating sales in particular, Puig said, The key to growth is lowering prices to improve accessibility so more people can use our products, adding, As visitor numbers and online use increase and customer touchpoints expand, we view the current phase as reaching new customers. It is actually a positive signal.