Ikea, the Swedish furniture giant, is planning to invest 300 million euros (US$327 million) in South Korea over the next three years to expand its presence in Asia's fourth-biggest economy [79d84280]. Currently operating four stores in South Korea, Ikea intends to add a fifth store in Seoul next year. The investment will be used for the upcoming store and new formats, including pop-up stores and small Ikea stores [79d84280]. Despite a decline in sales and operating profit in recent years, Ikea is investing in lowering product prices in Korea to focus on affordability and long-term growth. The company aims to bring prices back to pre-pandemic levels by the end of next year [79d84280]. Ikea expects positive earnings results in the 2024 fiscal year and welcomes competition from smaller rivals. The company also plans to enhance automation and expand last-mile deliveries in Korea [79d84280].
Ikea, the largest owner of Ikea stores globally, remains committed to China's growth despite the country's slowing economy [95847430]. CEO Jesper Brodin emphasized their commitment to China's growth and development, stating that there is no middle way and they are fully invested in the country [5a8d2554]. Despite China slipping to tenth position in terms of revenue for Ingka Group, accounting for 3.6% of global sales in the 2023 financial year, Ingka Group saw a 7.4% increase in visits to its Ikea stores in China, with a higher rate of increase as stores reopened and shoppers returned [eb2c7481].
In response to the easing US inflation rate, Ikea is lowering prices and offering price cuts of up to 20% on some popular items [a95fd719]. The company sees an opportunity to lower prices as costs have fallen along its supply chain, while inflation remains persistent [a95fd719]. This move is in line with Ikea's tradition of consistently lowering prices over time [a95fd719]. Despite inflation-related price hikes offsetting lower sales volume, Ikea's sales hit a record $50.6 billion for fiscal year 2023 [a95fd719].
Ikea is considering closing its store in the Yangpu district of Shanghai, China in response to changing shopping patterns during the pandemic [e99f93cc]. This would be the second store closure in China this year. Several Western companies have been reassessing their business in China due to the impact of the pandemic and Beijing's strict adherence to its zero-Covid policy [e99f93cc]. Ikea opened its first store in mainland China in 1998 and currently has five stores in Shanghai. The company's expansion in China has been affected by Covid outbreaks and lockdown measures [e99f93cc]. Other Western companies, such as Nike, Amazon, and Airbnb, have also made changes to their businesses in China recently [e99f93cc].
In addition to its commitment to growth and affordability, Ikea has also become a social space for single seniors in Shanghai. The Ikea store in Shanghai has become a popular gathering spot for single seniors looking for companionship. Many middle-aged and elderly people visit the store's restaurant daily, hoping to find a hot date or simply stave off boredom and loneliness. The gatherings attract singles, matchmakers, and older people seeking conversation. Topics of discussion include pension plans, children and grandchildren, and housing. Some seniors have found relationships through these gatherings, but many have not. The criteria for finding a companion are often simple, such as having a place to live and a pension. However, trust and compatibility can be challenging issues. The Ikea dating scene has been a fixture in Shanghai for over a decade, with attendance dropping in recent years due to mobility issues and deaths. The gatherings have produced few successful matches, and even those who get married often reappear at Ikea after a few years. The Ikea dating scene is seen as a response to insufficient social support networks for seniors. Despite the low success rates, seniors continue to come to Ikea regularly to pass the time and make friends [45eb44b4].
Ikea's commitment to China's growth, its response to cooling inflation, and its role as a social space for seniors in Shanghai reflect its dedication to providing affordable furniture and home goods to consumers worldwide. By staying true to its mission, Ikea continues to be a leader in the retail industry [95847430] [5a8d2554] [eb2c7481] [a95fd719] [45eb44b4] [e99f93cc] [79d84280].