IKEA’s Presence in South Korea Affecting Smaller Retailers
luvsmiling, Feb. 9, 2015, 10:14 a.m.
Swedish furniture giant IKEA dealt a harsh blow to smaller Korean businesses when it opened its first store in Gwangmyeong, Gyeonggi Province on Dec. 18 last year. In a survey of 200 small or mid-sized businesses in the city by the Korea Federation of Small and Medium Business, 55 percent said their sales decrease on-year between Dec. 18 and Jan. 9.
Rather surprisingly, the hardest hit were home textiles stores, some 77 percent of which said they suffered a drop in sales. Furniture stores came next with 72 percent, followed by those dealing in kitchen appliances with 71 percent.
These three sectors saw their sales fall 31 percent on average. A staffer with the federation said this shows that IKEA affects not only furniture but also other related home goods businesses.
"When large companies, no matter whether they are local or multinational, want to expand their presence in the retail market, the central and regional governments should consider the possible impacts on small businesses carefully before they give the green light," he added.