[Consumerwide - HueSoung Jun Reporter / Yohan Bok Reporter] A huge change is taking place as Nitori, "the little Ikea," settles down and competes with Ikea, the dinosaur of the furniture industry, in the imported home furnishing market in Korea.
Nitori has been conquering the imported home furnishing market quickly since they entered the Korean market with multiple domestic stores, and Ikea is responding to it by investing 430 billion won (0.3 billion euros) with a discount strategy, which is good news for consumers who enjoy home furnishing. I am curious about who is going to be the winner while both parties are ready for competition in the Korean market.
Nitori is competing with a number of domestic stores against Ikea, the dinosaur of furniture.Nitori is competing with a number of domestic stores against Ikea, the dinosaur of furniture.
Ikea has been spreading over the imported home furnishing market in Korea and is celebrating its 10th anniversary. However, Ikea has had a tough time for the last two years. Their sales record counts 600.7 billion won in the 2023 financial year (September 2022~August 2023), which is a 3.5% decrease, and their sales profit was 2.6 billion won, which is an 88% decrease from the same month last year.
A new competitor, Japanese No. 1 home furnishing business Nitori, entered the same market on November 29, 2023, and launched two domestic stores, each in Homeplus Yeongdeungpo (February) and Gayang (March 21).
Nitori is planning on securing market share in the Korean home furnishing market by sitting on large marts in the domestic area.
Onuki Keigo, the CEO of Nitori Korea, announced their marketing plan during an interview with Consumerwide on November 29, 2023, during their first launch at the Emart Hawolgok branch: "Nitori Korea plans to approach Korean customers with the slogan "Everything is ready when Nitori is with us," while targeting opening 200 stores in ten years. We think there are no stores like Nitori in the distance where customers can come easily. Ikea, which has the most popular items in the store, is in the area as well, but we are targeting to compete by multiplying the number of stores."
Nitori is cooperating with large marts, Emart and Homeplus, targeting opening 200 stores in ten years. In particular, they are opening over three stores this year at Homeplus: Homeplus Yeongdeungpo, the second store (February), Homeplus Gayang, the third store (March 21), Homeplus Incheonyeonsu (April), and Homeplus Geumcheon (August). Currently, Nitori Korea has also been attempting to cooperate with Lotte due to its store size range between 700 pyeong and 800 pyeong, as well as its capacity to approach consumers in family units being located in the centre of the city. This works with the strategy of Nitori, which aims for customer convenience based on practicability rather than price.
Counterattack of Ikea against Nitori by offering d/c and investment.
In response to Nitori's steps, Ikea is investing 430 billion won (0.3 billion euros) until 2027 for the automation of warehouses and pop-up stores in the Korean market. Ikea began facilitating popup stores: The Hyundai Daegu popup in October 2023, and The Hyundai Seoul (Yeouido) popup in March 19 this year. The Ikea popup store offers experimentation on a variety of popular home furnishing products, such as children's items, shelves, and office products, along with purchase (and take-home) right at the store, which is advanced service compared to the former delivery system. They are also launching a new store in Gangdong. Besides, Ikea Korea is offering d/c for approximately 800 products by investing an extra 7 million euros, apart from the 0.3 billion euros invested during the 2024 financial year.
An associated person from Ikea Korea said during an interview with Consumerwide, "Ikea Korea has been facilitating Ikea popup store The Hyundai Daegu since October 2023 in cooperation with The Hyundai Daegu in the centre of Daegu to offer Ikea product experience and purchase service in both on and offline spaces. Additionally, we are strengthening our omnichannel, where customers can meet us on every channel, including the store, the official online mall, and the Ikea app. We are planning on demonstrating even better online delivery and pop-up store services by investing in warehouse facility automation for our stores in Korea for the next three years, hoping more customers will meet us as closely as possible."