Ikea plans China expansion
Furniture retailer aims to grow store network
Ikea plans to expand its chain of furniture superstores on mainland China, believing it can benefit from the success of rival B&Q by selling Chinese consumers furniture for their newly-decorated homes.
The China Daily newspaper reports that Swedish furniture retailer Ikea plans to open eight further stores in China over the next five years, building on the success of stores in Beijing and Shanghai, opened in the late 1990s.
Ikea is developing a second Beijing store in the suburb of Wangjing, due to open next year, and believes the city will support two further stores. In all, 14 Chinese cities have been identified as potential locations.
Ian Duffy, president of Ikea China, told China Daily: “We will begin quite soon to look to establish stores outside of the major cities in the next two years.”
Ikea was regarded as overpriced when it first opened in China. With prices reduced by about 10 per cent, sales rose by 35 per cent last year and 50 per cent during the first three month of this year. Duffy said: “We needed time to learn and change in the market to become a success.
“Our business idea in China is to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”
The stores remain a curiosity, with 8m people expected to visit Ikea’s Chinese outlets this year, but only about half of them converting into paying customers on their initial visit.
[img r]B&Qchina.jpg[/img]With Kingfisher owned B&Q also expanding in China, Duffy believes the two retailers have a complimentary offer as Chinese consumers develop a taste for home improvement. He said: “We regard B&Q as a hard decoration provider, while we offer soft decorations.”
He said consumers shop at B&Q for building and decoration materials and services and then go to Ikea for furniture. B&Q now has 15 stores in China.
As well as making the most of China’s developing consumer market, like rivals such as Wal-Mart, Ikea is also expanding the products and raw materials it sources in China, which now includes glass, timber, hardware and textiles.
