IKEA, the world's largest home-furnishing retailer, is counting on record store openings to boost sales by about 10% next year because European demand may not revive till the end of 2004, said chairman Hans-Goeran Stennert.
It plans to open 16 to 20 new stores in Asia, Europe and the United States next year, the most in its 60-year history. Some of the Asian outlets will be operated by franchisees outside the Ikea group.
“During the late 70s and the whole of the 80s and 90s we were expanding rather heavily in existing countries in Europe,'' Stennert said in an interview in Kuala Lumpur. “Now, the Asian part will really grow.''
The region, together with the Middle East and Australia, now accounts for 4% of Ikea's revenue.
Ikea – which last week opened its biggest Asian store in Kuala Lumpur – plans to open five to eight new outlets a year in Asia and Australia over the next five years.
It also planned to open five stores a year in North America, and about 10 a year in Europe, including Russia, Stennert said.
“Unless markets turn pretty disastrous, then it's probably the right thing for them to do to carry on opening more stores,'' said Iain McDonald, an analyst at Numis Securities Ltd in London.
“That's generally what a lot of retailers do, to try and get their profits moving in difficult markets,'' he said.
In May, Ikea said it plans to spend US$600mil to open 10 stores in China by 2010, a six-fold increase in its investment in that country. It also has its eyes on Japan, which Stennert described as “a very big market''.
Ikea plans to open its first store in Japan in late 2006 at the earliest. It has bought a piece of land in the Tokyo area and is negotiating on the purchase of another, he added.
The retailer, which buys 34% of its goods outside Europe, also says it has benefited from the euro's 15% rise against the US dollar in the past year.
“Overall it's good news'' for Ikea, Stennert said, without elaborating. The euro's appreciation had not hurt Ikea's sales, he said, because the group bought and sold in almost all currencies. – Bloomberg
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