Looming IKEA’s entry into S. Korea reshapes furniture market

Looming IKEA’s entry into S. Korea reshapes furniture market

2014.03.13 17:47:47

Global furniture behemoth IKEA will be entering South Korea eight months later. IKEA is preparing to make foray into the Korean market by offering up to 50 percent lower prices based on flat-pack, do-it-yourself (DIY) furniture, a set of separated pieces of furniture for easier mobility, and independent production and distribution network. 
The domestic furniture market has already seen the start of ‘big bang.’ The imminent IKEA’s entry is reshaping purchasing trends in furniture. So far, consumers bought furniture to back up built-in furniture installed at apartments provided in business-to-business (B2B) deals. But in recent trend, the business-to-consumer (B2C) market is rapidly growing, where consumers find furniture for living rooms, bedrooms and kitchen befitting their tastes.
Consumer groups are polarizing, too. “Consumers are grouping into those who are looking for low-priced models offered by companies like IKEA and those who want the existing high-end models,” said Yoon Jong-ho, chief of Sealy Korea.
Korean companies are striving to adapt to changes. Large companies such as Hanssem and Livart Furniture have opened a number of directly operated stores and big dealerships at key commercial areas of downtown in Seoul and Busan since the second half of last year to brace for IKEA.
But concerns are rising over local smaller furniture businesses, which take up 70 percent of the domestic market and are unprepared for the IKEA’s expansion with low-priced products.
“IKEA is coming to Korea, while existing furniture companies have secured large stores, putting about 300 small furniture companies at risk of bankruptcy,” said Gang Jum-hee, head of furniture cooperative in Goyang.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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