KOTRA Express talks to Fredrik Johansson, Country Retail Manager of IKEA Korea, to hear more about Korea’s home furnishing retail industry and his experience doing business here.
In July 1943, Ingvar Kamprad founded IKEA in the outskirts of Älmhult, a small town located in the southern region of Sweden. What started as a small post-order business operated by a teenager on a bike, IKEA has grown to become a global home furnishing company offering well-designed, functional and affordable, high-quality home furnishing, produced with care for people and the environment.
IKEA is a values-driven company with a passion for life at home. Every product it creates is its idea for making home a better place. Its business is based on the aim, “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.”
In December 2014, IKEA Korea entered the Korean market with the opening of IKEA Gwangmyeong and created many meaningful jobs in the country. In 2017, the company opened its second store in Goyang and launched its e-commerce channel in 2018, in efforts to expand its touchpoints. Having recently opened two more new stores, IKEA Giheung and DongBusan, as well as its first city touchpoint in Seoul, IKEA Planning Studio Cheonho, the company will continue to expand as a true multi-channel retailer reaching many more with new store openings to come in the future.
KOTRA Express sat down with Fredrik Johansson, Country Retail Manager of IKEA Korea, to hear more about Korea’s home furnishings retail industry and his experience doing business here.
How did you become interested in Korea?
My special relationship with Korea began when I had the opportunity to study briefly at Seoul National University Graduate School for my master’s thesis in the 90’s. I met my wife during this time, and over the years of working across different IKEA markets, I have always wished for a chance to come back to Korea, which is one of the fastest growing markets for the company.
Opportunity came in 2017 when I took the position as Deputy Retail Manager at IKEA Korea, then in 2019, I became the Country Retail Manager. I am honored to be taking this exciting journey in Korea and bring the IKEA vision “to create a better everyday life for the many people” closer to many Koreans, enabling them to live a happier everyday life at home.
What made IKEA establish a branch in Korea?
At IKEA, we are always looking into what country is a possible market to enter for us to move closer to our vision. We want to enable as many people as possible to live happier lives at home with well-designed, functional and affordable home furnishing.
In Korea, we invested several years looking into various factors of the market potential including GDP, competition and the overall interest in home furnishing, as well as the risks and complexities involved. We decided to establish our business here as we saw a great potential for us to drive a home furnishing movement and enable the many people in Korea to see that a happy life starts at home.
What are the advantages of doing business in Korea?
The Korean human resources market offers a highly-educated, eager-to-learn talent pool which enables us to develop a strong work force.
We also see that Korean consumers are very fashionable and trendy. They lead and even create new trends. Also, they are highly sensitive to the significance in what they buy and the messages their purchases communicate to other people.
Were there any specific strategies that IKEA established to target Korean customers?
We have a deep curiosity about people’s lives at home. We want our home furnishing range to play an important role in meeting their needs and living situations so they can truly live a better life at home.
Every market has its unique characteristics, but our focus is always on the consumers. We conducted hundreds of home visits to understand the lives of Korean consumers at home as well as a series of research activities and surveys to study Korean lifestyles prior to the official opening of a new store in the country.
Through the research, we found that Korean consumers put children as their top priority and seek more storage and organizing solutions. Based on our findings, we offered home furnishing ideas that can increase space efficiency at affordable prices through many channels including our stores, website, social media, etc. This is to help our customers find the most relevant home furnishing solutions at our stores that best meet their needs.
IKEA also has a unique pricing strategy, where we set prices differently for each market based on market-specific variables and consumer preferences, to offer popular products to as many people as possible at a low price. This means we continuously invest in lowering the prices of products with higher demands in Korea; in fact, some Chinese-made products that are particularly popular in Korea are priced lower in Korea than in China.
Five years after our opening, we are very happy to see that the IKEA Concept has been welcomed by the many people here in Korea, where we have been positively recognized as a “category innovator,” increasing the overall interest in home furnishing and enabling the many Koreans to love their homes.
What opportunities in Korea do you think foreign companies are most interested in investing in?
We see Korea as an exciting market with an enormous potential, an attractive business environment and great talent pool; we believe any industry/sector that adds value to Korean customers is a good investment opportunity in Korea.
What advice would you give foreign investors/companies seeking to enter the Korean market?
IKEA’s long-term direction is to lead the future of multi-channel home furnishing retail, and the starting point is our forever concept “to create a better everyday life for the many people.”
For each market, we believe it is important to understand the needs and characteristics of local consumers. This helps enable the consumers to understand who we are and what we do.
Both qualitative and quantitative results matter; not only growing sales figures, but also increasing customers’ interest in home furnishing.
What Korean companies/government agencies do you work with to strengthen your business partnerships?
We are in close connection with the local governments in areas where we operate our stores, for continued cooperation and contribution to the local community as a good neighbor.
Under our aim to be a good employer and create meaningful jobs in Korea, we work closely with various government bodies including the Ministry of Employment and Labor and the Ministry of Gender Equality and Family.
Also in our efforts to be a responsible, good neighbor in our community, we are in close collaboration with several non-governmental organizations such as Save the Children, WWF and Korea Foundation for Women to bring a long-term, meaningful impact on people and the planet.
How can Korea become a more ideal business environment for foreign companies like IKEA Korea?
As a foreign company to continue such investment into our business in Korea and develop hiring plans in the long-term, it is crucial to have the support of a stable and transparent regulatory framework that is relevant to the needs of the many Koreans.
What are some future plans that IKEA Korea has in terms of doing business in Korea and in Asia?
We are committed to understanding and fulfilling our customers’ needs in today’s urbanized world. We are constantly looking into different possibilities that enable us to offer a better customer experience in a more convenient, affordable way.
In today’s rapidly-changing retail environment, we want people to be able to meet us whenever, wherever and however they want, which is why we are exploring different types of touchpoint formats in cities.
In line with this global direction, IKEA Korea also has expansion plans to meet more of the many Koreans in a new, exciting ways. In addition to our 2 new store openings in Giheung (December 12, 2019) and DongBusan (February 13, 2020), we have taken the first step in our city strategy by opening the first city touchpoint in Seoul, IKEA Planning Studio Cheonho on April 30, 2020 and we’re looking forward to expanding more touchpoints in different locations in the capital and Gyeonggi area.
We think the Korean market is one of most exciting markets for expansion. As a values-driven company with a long-term commitment and growth strategy for the Korean market, we aim to create a new IKEA that is more affordable, convenient and sustainable for the future.
We will continue to focus on building a great, diverse and inclusive place to work, where everyone feels respected and valued for who they are.
As a large retailer and a global leader in sustainability, we will make our best efforts to have a positive impact on people and the planet in order to contribute to wider changes for a fair and inclusive society; ultimately becoming a circular and climate-positive business enabling a healthier and more sustainable living.
By Grace Park
Investment Public Relations Team / Invest Korea
Korea Trade-Investment Promotion Agency (KOTRA)