IKEA Korea Faces Sales Growth Slowdown, Reduces Prices and Delivery Fees to Ease Burden

Sales Increased by Only 3.4% Due to Pandemic Impact
Management Policy and Plans for Fiscal Year 2022 Announced

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] From September last year to August this year, IKEA Korea's sales increased by only 3.4% compared to the same period the previous year. Offline store sales, which had driven sales so far, were hit hard by COVID-19. IKEA Korea announced that it will strengthen online sales while maintaining its price reduction policy and reducing delivery cost burdens.

IKEA Korea held an online press conference on the 26th to announce the fiscal year 2021 performance and future management policies.

Frederik Johansson, CEO of IKEA Korea, stated that sales from September last year to August this year reached 683.6 billion KRW, a 3.4% increase compared to the same period last year. This is a significant slowdown compared to the fiscal year 2020 sales (663.4 billion KRW), which increased by 33% compared to the previous year during the early stages of COVID-19.

IKEA Korea revealed that the total number of visitors both online and offline increased by 23% to 70 million, but did not disclose the number of offline visitors separately. CEO Frederik explained, "It is true that the number of offline visitors has decreased compared to before," adding, "Considering the pandemic period, many people avoided crowded large spaces." He further added, "The two price reductions implemented last year also affected sales."

The effect of new store openings also decreased. In the fiscal year 2020, IKEA Korea led sales growth by consecutively opening Giheung store (December 2019), Dongbusan store (February 2020), and urban contact stores Planning Studio Cheonho and Sindorim (April and August 2020), but no additional stores were opened in the current fiscal year.

In the new fiscal year 2022, IKEA Korea will conduct a brand campaign under the theme "Live Newly." The campaign plans to carry out various activities to help customers discover a new self and create a happy and meaningful daily life in a broader concept of home, community, and planet. This reflects the increased time spent at home due to the prolonged COVID-19 situation.

Policies to reduce consumer burdens will also continue. IKEA Korea offers a 10% gift card on the payment amount for purchases of 100,000 KRW or more on promotional products at all offline stores. This promotion is available to IKEA Family members until the 10th of next month.

Delivery fees will be segmented by volume and size into 3,000 KRW, 5,000 KRW, and 8,000 KRW. The same-day and next-day delivery service area, currently available near stores for 29,000 KRW, will be expanded to enhance convenience.

In particular, IKEA plans to strengthen its omni-channel strategy by integrating online and offline distribution channels. An external pickup point service, allowing customers to collect products outside IKEA stores, is scheduled to launch within this year.

Additionally, product information and ideas previously provided in the catalog will be incorporated into the official online mall "Digital Showroom" and detailed pages for each product to encourage online sales. The "Lower New Price" policy, which reduces prices on about 50 products, has also been expanded to twice a year.

Furthermore, a more reasonable cost calculation method will be introduced for the "furniture assembly service" to reduce consumer burden. Kitchen and bathroom installation services will be provided nationwide as a total solution in partnership with leading domestic specialized companies.

CEO Frederik said, "As the pandemic subsides and interest in homes continues, and with product inventory secured, we expect good results supported by the brand campaign."

This content was produced with the assistance of AI translation services.