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Ikea and Costco

Posted March. 27, 2014 02:48,   


An issue that has been swaying the Korean furniture industry over the past several years is the giant shadow of "Ikea’s foray into the Korean market." Even before the start of its official sale in Korea, products from the Sweden-based furniture maker have been enjoying immense popularity through gray import and other routes of introduction. As a furniture giant with annual sales of over 40 trillion won (37.2 billion U.S. dollars) and its immense global brand power, Ikea`s expansion into Korean market has been truly a hot issue.

In reality, Korea has had little information on the furniture giant, however. Despite keen attention from the Korean furniture industry and media, Ikea maintained mysticism. Even until recently, when Ikea plans to open its first store in Gwangmyeong, Gyeonggi Province by the end of this year, its foreign-based PR agency here maintained a stance that “it has no obligation to give information” even on trivial matters. Surprisingly, Ikea recently opened an official popup store on Garosu-gil in Seoul’s upscale Gangnam district, and even invited reporters.

This reporter visited the store with high expectations. However, the store, which was refurbished at basement of a building on a backstreet in Shinsa-dong, was difficult to find because it had no a proper signboard. It looked even humble due to its small scale measuring 231 sq. meters, and simple contents on display, and hardly lived up to expectations. Ikea Korea’s marketing team gave official greetings, but none of the team members even had a business card to share. The store even stopped short of publicizing the price of furniture and product items on display.

In reality, this space exuded the company’s sense of confidence in its brand identity and stubbornness to deny compromise, rather than agony over how to localize its business in Korea and public relations endeavors targeting consumers in a new market. Indeed, the company prepared a corner designed to enable visitors to experience Swedish style coffee culture in the store that is rather small in size, as it sought to focus on introducing Swedish culture and traditions, which served as the foundation of the company.

Witnessing Ikea Korea’s first official move, this reporter naturally came to recall the image of Costco, a retail giant that had already entered the Korean market. Apart from being global enterprises with annual sales of tens of billions of dollars and their lack of communication channels with the media, the two companies are similar to each other in many aspects.

For starters, they are cheap but inconvenient to shop. They operate as warehouse style stores, and focus on cutting prices by minimizing construction and logistics costs. Also, they both insist on following the way of doing business in their home turfs here, rather than localizing. Ikea aims to present consumers with Swedish lifestyle through furniture, while Costco insists on using an inconvenient settlement system that only accepts cash or Samsung Credit Card, and checking purchased items after payment.

It is an interesting phenomenon that Korean consumers, who are known to be exceptionally picky, have generously accepted as exceptions arrogant business style of only a few global enterprises. Attention is focusing on whether Ikea, which is known to be "selling inconvenience," will be able to achieve success in Korea by stimulating the public’s fantasy and expectations about "Northern European lifestyle," just as Costco has offset its weakness by selling “American shopping culture,” something Korean society has aspired for.