Ikea Courts Chinese As It Plans Expansion

Yang Shuqi paces up and down Ikea’s Beijing store, looking for a “small bed with toys” for her grandson.


She doesn’t plan to buy it – 1-year-old Beibei just needs to take a nap.


Saturday afternoon is a bad time to look. Every bed in the 463,000-square-foot store is occupied, with some children and adults fast asleep under the covers. The local outlet of the world’s No. 1 home-furnishings retailer is always full on weekends, Yang said.


Ikea, whose biggest Asian store is in China, plans to more than double its outlets in the country by 2015 as rising incomes turn more dozing visitors and diners at in-store restaurants into furniture buyers.


The home-furnishings market is projected by Euromonitor International to surge 17 percent this year in China, the world’s fastest-growing major economy.


“The idea is that maybe if you’ve been visiting Ikea, eating meatballs, hot dogs or ice cream for 10 years, then maybe you will consider Ikea when you get yourself a sofa,” Ian Duffy, the company’s Asia-Pacific president, said in an interview in Wuhan, central China. “Some people just come for food; that’s OK. For them, it’s an experience.”


Ikea said this month it will add $300 million to the $1.2 billion being spent by a mall developer part-owned by the furnishings company, as the chain increases its stores in China to 18 from eight. The retailer also has three outlets in Hong Kong among more than 300 worldwide.


China’s economic transformation lifted 300 million citizens out of poverty during the past three decades, according to the United Nations. The growing prosperity will help the nation’s home-furnishings market expand to $28 billion this year, according to information from Euromonitor.


“Government stimulus spending and favorable policies toward retailing and consumer lending have encouraged overall retail growth in China,” said Alex Liu, an analyst at Euromonitor in Shanghai. New financing options will help consumers who use credit to buy big items, including Ikea products, he said.


Ikea, founded in Sweden in 1943 by Ingvar Kamprad, entered mainland China in 1998. Kamprad, 84, and his family have an estimated net worth of $23 billion, according to Forbes, placing them 11th on the magazine’s list of billionaires.


Bilanz magazine on Dec. 4 estimated his wealth at $35 billion, topping its list of richest Swiss residents.


The retailer’s Scandinavian-design furniture and in-store cafeterias serving Western food are helping it tap the economic boom in China, which more than tripled per-capita gross domestic product in the past decade.


“I like the environment,” said Zhang Xihua, a 62-year-old retired schoolteacher from the eastern city of Wenzhou. “It makes you feel like you’re abroad.”


A trip to Ikea’s store in the northeastern section of Beijing is part of her routine when she visits her son, she said.


Ikea has the biggest share of China’s home-furnishings market, at about 7 percent, according to Euromonitor. The company doesn’t provide sales data for its stores in the country.


For Ikea, boosting sales will involve persuading customers such as Xu Nan, a 22-year-old college student, to make more purchases.


“I’m still living in a dorm, but I want my future home to look like this,” said Xu, spending a Saturday afternoon lounging on the furniture and taking pictures with her classmates in the Beijing store.


Yang, who didn’t find a bed for her grandson, said she and her family go to Ikea every month.


“We don’t need furniture for our home now,” she said. “But we still visit here very often, just for fun.”

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