IKEA actively increases the number of stores in China

Recently, Ikea Group, the world's largest household goods retailer, plans to increase the number of its stores in the Chinese market by a factor of four, hoping to expand the Chinese market to the company's second largest market. While striking into the Chinese market, IKEA suffered from "growth".

The number of IKEA stores in China has soared

IKEA CEO Mikael Ohlsson said in his speech that IKEA plans to open new stores in Shanghai, Beijing, Ningbo and Chongqing. MikaelOhlsson also said that China will soon become IKEA's second largest market, and in the long run may become the largest market. MikaelOhlsson said that the company currently has 11 stores in China, and it hopes to add 5 stores. By 2020, IKEA hopes to expand the total number of stores in China to 40.

Bloomberg said IKEA is looking to expand in high-growth emerging markets to offset its dependence on Europe since the recession. According to data published on IKEA's official website, as of August 2012, IKEA had a total of 338 stores, of which 245 were in Europe. At the same time, IKEA also hopes to open more stores in Russia this year.

20% of sales in China, plans to increase the number of stores by 4 times

In IKEA's global map, sales growth in the Chinese market is impressive. According to data released by IKEA China, in fiscal year 2012 (data as of August 19, 2012), IKEA China sales exceeded 5.4 billion yuan, an increase of 21% over the previous fiscal year. Based on this calculation, IKEA China's sales accounted for 20% of global sales. However, IKEA did not disclose the profit data of IKEA China.

According to Mikael Ohlsson, group president and CEO of IKEA, the fastest growing IKEA in the global market is China, Russia and Poland, followed by the United States and Germany.

However, while giants such as Home Depot and B & Q experienced or withdrew from the Chinese market or their performance declined, IKEA's same-store sales also faced a decline. IKEA said that sales in existing malls increased by 4.6% in fiscal 2012. The data shows that as of August 31, 2011, IKEA's same-store sales growth was 7%. According to foreign media reports, Ohlsson expects IKEA Group's sales to increase by about 5% year-on-year in the next few years.

Ten years of price cuts exceed 20%, the bottom price triggers "low quality"

In addition, it is worth noting that IKEA's net profit in fiscal 2012 increased by 8%, compared with 10.3% in the previous fiscal year. According to IKEA, the average price of IKEA products fell by 0.8% in the 2012 fiscal year. In the previous fiscal year, the average price of IKEA decreased by 2.6% per year. In addition, IKEA said that in the past ten years, the price of IKEA products has dropped by more than 20%

It is understood that since 2002, IKEA has significantly reduced the price of commodities, and the average price of its commodities has fallen by 31% in the following three years. In 2005, the price of its original more than 7,000 products fell by an average of 14% recently. By 2007, as IKEA continued to improve its procurement system, some of its products dropped by as much as 50%. Based on the fact that IKEA has lowered the price of commodities every year, the price of IKEA products has fallen by more than 60% compared with the original price in the past ten years. Behind the low price is the pressure of cost control.

But in order to pursue the ultimate "low price strategy", IKEA not only caused the foundry tortured, and finally chose to escape, but also caused IKEA products to frequently expose quality problems. Because IKEA's price reduction is very low, and many factories are facing various problems of rising costs, they can only "make a fuss" on the material. Some people in the industry said that the quality of IKEA's products is indeed not good in the industry.

Industry experts said that the price of IKEA products has dropped significantly in recent years, which is mainly related to the expansion of the sales network and the close cooperation with suppliers. These two factors will also continue to allow IKEA to adjust prices to provide consumers with fully functional and affordable products. Indeed, unlike Home Depot's withdrawal from the Chinese market due to unacceptable conditions, IKEA can adapt to the Chinese market mainly because of cost control strategies.

Since IKEA entered China in 1998, it has set off a whirlwind of “IKEA” in China. "IKEA" in the petty bourgeoisie means "taste". If IKEA ventures blindly, it is bound to embark on the road of death.