IKEA seeks to close sales

5 April 2013

BEIJING: IKEA, the home furnisher, has reported double-digit sales growth in China but faces a challenge in converting millions of visitors to its stores from those "just looking" to actual buyers.

The retailer currently has 11 stores in China with the Beijing flagship store alone attracting more than 6m visitors in 2011, all of them keen to experience the flavour of a western lifestyle, according to the Financial Times.

But reports suggest many are going to the store simply as a day out and have no intention of buying, preferring instead to grab a nap on a sofa or enjoy the air conditioning (Beijing's air quality is notoriously bad).

With an eye to the longer term, however, IKEA is putting up with such behaviour, regarding it as aspirational and hoping to tap into a potentially huge market for home furnishings among the growing middle class.

"China will be Ikea's number two market relatively soon, and number one maybe in the long run," Mikael Ohlsson, chief executive officer, said earlier this week as he announced plans to develop a total of 40 stores by 2020.

The company's immediate plans involve opening new stores in Shanghai, Beijing, Ningbo and Chongqing.

Prices in stores have been cut so they are around half those of western markets as the retailer seeks to attract consumers on lower average incomes, but despite this the typical customer spends only a third of their western counterpart.

IKEA's openness also extends to permitting people to take detailed photos of their displays, despite the likelihood that fake versions will turn up at a fraction of the price.

Data sourced from Financial Times, Bloomberg; additional content by Warc staff