IKEA Korea posted sales of 618.6 billion won ($445 million) in the fiscal year ending August, down 10% year on year as the pandemic home decor boom hits at its end.
The 2022 financial year is the first time IKEA Korea has reported a drop in sales since it began publishing its financial statements in 2018. The furniture company did not disclose its net and operating profits .
“Given the Covid-19 situation, the revenge spending after Covid-19 and the availability situation we have had over the year, this is a result that we are very happy with,” said Fredrik Johansson, National Retail Manager of IKEA Korea at a press conference. conference on Wednesday.
Johansson noted that sales fell because its products were less available during the pandemic due to supply chain disruptions, although the company is currently recovering from the issue. Sales also slowed as social distancing regulations eased, with people less interested in buying home decor and wanting to engage in outdoor activities.
“Another external factor that has a huge impact on our business is the very small number of real estate transactions we experience here in Korea,” Johannson said. “When people move, there is more need for furnishings, and we have record real estate transactions that continue to decline.”
The company’s online sales grew 12% year-on-year. Although reporting a year-on-year increase, growth slowed from the 34% year-on-year rise in online sales the previous year.
It recorded 66.8 million online and offline visits, down 4.5% year-on-year.
To increase sales, the company will focus on improving its online services, offering interior design consultations via online chats and video calls.
Despite the slowdown in sales, IKEA Korea said it would do its best to keep prices lower than its competitors. The company raised the price of some products in April indicating an increase in raw material costs and logistics costs, but Martina Seidel, IKEA Korea’s national sales manager, said the company will lower prices for products that have experienced a price increase when these two issues are resolved. .
More IKEA stores will open in the coming years, including one set to open in Seoul’s eastern Gangdong district in the second half of 2024. Another will open in Daegu in the first half of 2025.
Although IKEA is known for its big-box stores, the company said it will open smaller branches in various locations to try to reach customers who live far from its existing branches. He currently sells IKEA products and offers interior design consultations in a small two-storey building in Gwangju, and plans to do so in other locations.
The company is also committed to focusing on sustainability.
A total of 42% of its food menu will consist of plant-based ingredients by the end of fiscal 2023, up from 25% currently.
About 30% of its delivery trucks are electric vehicles (EVs) and 60% will be EVs by FY2023. The company aims to have all of its delivery vehicles emission-free by 2030.
BY LEE TAE-HEE [lee.taeh[email protected]]