IKEA - a giant back to a giant market 04/05/2006
 Tommy Kullberg (IKEA) has seen the inside of a few Japanese homes lately and if he has learnt one thing it is that they tend to be, well, rather small. The soft-spoken Swede heading Ikea's return to Japan and his team have visited more than 100 local residences to take notes and try to avoid a repeat of the group's disastrous first foray into the world's number two retail market. Ikea has stores in more than 30 countries but none more challenging than Japan, where even the largest furniture retailer in the world has had to adapt its winning formula with a new store outside Tokyo. It first came to Japan in 1974 with a local partner but failed to win over Japanese consumers and withdrew 12 years later. "Disneyland is the biggest competitor" Tommy Kullberg (IKEA Japan)  "We are meeting the most demanding customers in the world, used to high quality and high service levels. Anyone operating in this market has to satisfy these demands," Kullberg said during a tour of the new store. "Why shouldn't Ikea be in the second-largest retail market in the world? Of course we should be here," he added. This time, he said, the company has done its homework and is confident Japanese consumers, used to unparalleled service and smaller stores, are ready for its large-scale, no-frills retail methods. At the heart of its new strategy is an emphasis on "small space living", with two-seater sofas, space-saving storage boxes and sofa beds for studio apartments. Most of the goods are the same as in its other stores. In Japan, a country of more than 127 million where people live cheek-by-jowl in urban areas, rooms tend to be much smaller and children frequently live at home before marriage, often sharing space with grandparents or in-laws. The new store, in Ikea's trademark blue and yellow colours, is one of its biggest, spanning 40,000 square metres (430,000 square feet), with 10,000 product lines, 2,200 car parking spaces, a child-care area and one of Tokyo's largest restaurants. Disneyland is their biggest competitor, says Kullberg. And he's only half joking. "Multinational companies entering Japan often don't spend enough time to understand the nature of the competition here, which is usually fairly fierce, and the so-called unique needs of Japanese consumers," said Davide Mara, a principal at consulting firm in Tokyo. "The key challenge for Ikea will be to translate their very globally successful concept, the type of design they offer and their retail format, into an acceptable Japanese way," he added. The stakes are also high for existing rivals, including out-of-town home improvement stores and downtown shops such as Muji, the "no brand" homeware retailer sometimes described as Japan's Ikea. But with Japanese furniture sales in decline, despite 1.2 million new homes being built every year, all retailers can profit if they can manage to expand the overall market, says Lars Petersson, Ikea's retail manager in Japan. "We have seen all over, wherever we have established stores, that there is room for everyone," he said, "In all cases we saw that the total cake became bigger." (AFP) IKEA JAPAN > www.ikea.com/jp/en    Comments Comments are closed. | Welcome to
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