In South Korea, IKEA opens biggest store to lure tiny households
By Joyce Lee and Kahyun Yang
SEOUL (Reuters) - Iconic Swedish furniture retailer IKEA built its biggest store in the world to serve South Korea's shrinking households, targeting millions of people living alone with Korea-only items like super-sized single beds and in-store kimchi rice.
The store opened on Thursday in Gwangmyeong, less than an hour's drive or 14 minutes by train from central Seoul, with a sales space nearly as big as the Louvre museum at 59,000 square meters. The previous record-holder at IKEA, known for its inexpensive, self-assembly products, was in Stockholm spanning 55,200 square meters.
Stiff domestic competition and sluggish spending have made South Korea an unhappy hunting ground for global retail giants like Wal-Mart (WMT.N: Quote) and Carrefour (CARR.PA: Quote), who exited years ago. But IKEA's design appeal to South Korea's urban crowds, and few big local rivals, leave it well placed, retail experts say.
"Korea has a population structure that fits IKEA's basic growth DNA - demand from design-conscious one-person and two-people households," said Suh Yong-gu, professor of marketing at Sookmyung Women's University.
With the world's fastest-aging population, South Korea's attraction has faded for general retailers. Private spending growth fell from 4.4 percent on-year in 2010 to 1.9 percent in 2013.
But IKEA, now present in 43 countries with 365 stores, could fill a niche as it plans to grow to five outlets by 2020. As younger people marry later or not at all, the number of one-person households in the nation of 51 million people will climb to 34.3 percent of the total by 2035 from 25.3 percent in 2012, according to Statistics Korea - and each home needs furniture.
IKEA will offer a new challenge to the country's legion of furniture makers, many of which are small. About 61 percent of a total of 1,247 firms in 2012 employed less than 20 people, private think tank Hana Institute of Finance said.
"I came because it's inexpensive and useful, and I wanted to buy after seeing for myself," said Woo Jin-sook, a 46-year old from Seoul. Woo said she took a day off work to be at the store's opening. Continued...