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IKEA KOREA LTD.: RENEWING SUCCESS IN A TURBULENT
ENVIRONMENT
Taehoon Park and Martin Hemmert wrote this case solely to provide material for class discussion. The authors do not intend to
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Version: 2023-09-27
On an icy winter day in December 2022, IKEA Korea Ltd.’s (IKEA Korea) chief executive officer, Fredrik
Johansson, reviewed the latest business reports in his office in the city of Gwangmyeong, near Seoul, South
Korea (hereafter “Korea”). It had been only eight years since IKEA opened its first store in Korea, entering
Asia’s fourth-largest market and meeting a strongly positive customer response. Within a few years, the
company became Korea’s third-largest furniture retailer. However, Johansson was in no mood to celebrate
this success. He had to grapple with a range of severe challenges, including the rapid digital transformation
of Korea’s furniture retail market, strong competition from major Korean furniture retailers, and a severe
market downturn due to a slump in housing transactions and household moves. Furthermore, as a result of
the company’s growth in Korea, its workplaces gradually lost their family-like atmosphere, and labour
unions were raising various complaints. Consequently, there was a need to think about how to meet all
these challenges and reinforce the company’s growth in the country.
IKEA’S BUSINESS MODEL INNOVATION AND COMPETITIVENESS
Inter IKEA Systems B.V. (IKEA), a multinational brand of prefabricated furniture, bedding, kitchenware,
and bathroom supplies, was founded in 1943 by Ingvar Kamprad in Sweden with a mission “to offer a wide
range of well-designed, functional home furnishing products at prices so low that as many people as
possible will be able to afford them.”1 Initially set up as a mail-order general retail company, IKEA began
selling furniture in 1948, disrupting the Swedish market with its low prices. It strengthened its cost
leadership through various major innovations, introducing flat-pack furniture that could be easily and safely
transported. Furthermore, customers could directly pick up furniture items at IKEA stores and assemble
them at home. In short, IKEA introduced a do-it-yourself business model that furnished an average
household at less than half the price of other furniture companies.
After opening its first store in 1958, IKEA grew into a giant company with annual revenues of US$ 48.38
billion in 2022 (see Exhibit 1).2 IKEA operated approximately 500 stores around the world and offered a
1
2
“Vision, Culture and Values”, IKEA, accessed September 15, 2023. https://ikea.jobs.cz/en/vision-culture-and-values/.
All currencies in US$ unless otherwise noted.
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wide range of home furnishing and daily necessity items, relying on low price and innovative product
planning and distribution methods as sources of competitiveness.
IKEA achieved a major cost advantage due to the following cost saving policies that Kamprad had laid out:
(1) find companies that supply high-quality products at low prices in various countries, (2) reduce labour
costs by allowing customers to select and transport products themselves (do-it-yourself), (3) establish a
mass production and mass sales system (economy of scale), (4) discover alternative materials at low prices
and of good quality, (5) try to find new materials at low prices that functioned well, and (6) think about
how to make furniture and use the remaining materials.
IKEA also established a completely different product-planning process from other furniture companies. In
contrast to a traditional planning process that moved stage-wise from market survey to design and on to
material selection, cost calculation, and consumer price determination, IKEA applied a target
price−oriented product-planning policy that set prices at 50 per cent to 70 per cent of competitors’ prices
from the outset, this under the motto of “We design the price tag first.”3 Furthermore, IKEA displayed
products in a highly organized manner by room type (e.g., living room, bedroom, or kitchen) in alignment
with a practical “Scandinavian lifestyle.”
IKEA also established new product distribution systems. While other furniture companies set up stores in
downtown areas with high population density, IKEA selected locations in suburban or rural areas with
lower land prices, offering large parking spaces and convenient transport access. Moreover, IKEA
promoted a self-shopping method in which the customers purchased discounted products from warehousetype stores and transported and assembled the furniture themselves. Based on its unique product planning
strategy and business model, IKEA established a strong brand identity.
IKEA’S INTERNATIONAL EXPANSION
Eager to leverage its highly successful business model beyond Sweden, IKEA began to advance
internationally in the 1960s. The company’s 20th-century international expansion unfolded in three main
stages: (1) the Scandinavian expansion in 1963, (2) the Western European expansion in 1973, and (3) the
North American expansion in 1976. In addition, IKEA began to actively target Asian markets and also
started expanding into the Middle East and Latin America.
An important feature of IKEA’s overseas expansion was its prioritization of a common worldwide brand
identity over strong localization in foreign markets. In contrast to other companies that considered
localization a first priority for overseas expansion to respond to market-specific customer needs, IKEA
implemented its business model (which was predicated on large stores and low prices) everywhere while
being flexible enough to meet local circumstances when needed. For example, in the United States, where
IKEA initially struggled to apply its low-price business strategy due to high land prices and construction
costs, the company set up local production lines for items that could be locally manufactured at lower costs
than being imported, and it also selected store locations with low land prices. The United Kingdom was
considered one of the most difficult markets to enter, as a huge furniture incumbent called Argos Limited
(doing business as Habitat), which also prioritized low prices, already existed. In this situation, IKEA
acquired Habitat rather than forcing its way into competition. In China, IKEA’s price competitiveness was
initially not strong, as local furniture retailers relied on low costs of labour, manufacturing, and distribution.
“Our Lowest Price,” IKEA Switzerland, accessed August 28, 2023, https://www.ikea.com/ch/en/campaigns/our-best-pricepubcc18f5f9.
3
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In response, IKEA reinforced its price competitiveness by increasing the proportion of locally sourced
inexpensive products displayed in showrooms to Chinese customers.
IKEA’S LONG ROAD TO KOREA
IKEA entered Korea only at an advanced stage of its international expansion. It had already moved into
other Asian markets, including Japan, where it opened its first store in 1974, Hong Kong (1975), Singapore
(1978), Taiwan (1994), China (1998), Thailand (2011), and Macau (2012). Korea was the 43rd global
market that IKEA entered.
The company’s late entry into Korea resulted from shifting international market expansion priorities.
During the early stages of international expansion, Asian markets were not a high priority for IKEA, and
the company therefore entered Japan, Hong Kong, and Singapore with the help of external franchisees to
limit its own investment costs. While the entries into Hong Kong and Singapore were successful, IKEA left
Japan in 1986 due to low performance. However, the company also built-up major supply networks in East
Asia to lower the worldwide costs of its products. This supply chain expansion and rising income levels
across the region induced IKEA to identify the largest East Asian countries as high-priority markets for
subsequent entries. Consequently, the company entered China through greenfield investment with full
ownership instead of franchising, and it entered Japan again in 2006 through the same entry mode.
Following successful entries in both countries, IKEA decided to enter Korea—East Asia’s third-largest
market—via greenfield investment as well.
In 2010, Korea had a population of 49.6 million and a gross domestic product of $1.14 trillion. Per-capita
gross domestic product had rapidly increased from $6,610 in 1990 to $12,257 in 2000 and $23,087 in 2010.4
Korea had pursued rapid economic development and industrialization since the 1960s, resulting in the
growth of large conglomerates (called “chaebols”) that dominated parts of its economy.
When IKEA’s intention to enter Korea became public, there were widespread concerns in the Korean
furniture industry that the company would become a category killer and drive many domestic players out
of business. Korea’s home furniture industry was highly fragmented, with many small and medium-sized
enterprises (SMEs) producing and selling furniture items at high prices. This industry structure and the
strong SME protection policies by the Korean government indicated that finding partners willing to provide
land for building a large store and to support an application for the administrative permission to build it
might not be easy. A further complicating factor was the high price of land in Korea, which meant that
IKEA’s competitiveness as a low-cost furniture vendor could be undermined.
Therefore, IKEA decided to prepare for its market entry with a long lead time. The company initially
focused on establishing effective communication channels with Korean government agencies and local
partners. In July 2011, after several years of preparation, the Korea Trade-Investment Promotion Agency
and the Korea Land and Housing Corporation (LH) signed a memorandum of understanding with IKEA to
facilitate one of the largest greenfield inward foreign investments in Korean history. As a result, support
was secured from Korean government agencies on a wide range of matters, such as the provision of site
information, addressing floor area ratio restrictions, licensing regulations, and conflicts of interest with
domestic companies. LH stipulated an open bid for the sale of a total land area of 78,198 square metres in
Gwangmyeong on December 19, 2011. IKEA Korea set up its headquarters in the Yongsan District of Seoul
in December 2011, participated in the LH’s open bid, and acquired the land through an investment of KRW
“Data Bank, World Development Indicators”, The World
https://databank.worldbank.org/source/world-development-indicators.
4
Bank,
accessed
September
27,
2023,
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234.6 billion ($216.3 million), which was much lower than the investment needed to acquire a similar site
in Seoul. IKEA explained that it chose Gwangmyeong as the location for its first Korean store due to the
area’s accessibility to domestic consumers, because of the convenience of transportation. The
Gwangmyeong site was near to Korea Train Express, the country’s high-speed railway network. The city
was easily accessible from most parts of Seoul’s metropolitan area through various highways and highspeed trains. It also had proximity and convenient traffic access to Incheon, Korea’s third-largest city.
In June 2013, the Gyeonggi Province Pre-Construction Review Committee completed the application review
for building permissions on IKEA’s Gwangmyeong store and passed it with the condition that the company
develop a win-win plan that considered local SMEs and the impact on Gwangmyeong’s commercial district
when IKEA’s opened its complex. In accordance with this condition, Gwangmyeong granted the building
permit in August 2013, and IKEA opened the location on December 18, 2014.
However, as a result of a geopolitical dispute between the Korean and Japanese governments over the
official naming of the sea between the two countries, IKEA’s market entry encountered a major hurdle. In
November 2014, Korean consumers severely criticized IKEA for marking the East Sea (Korea’s name
preference) as the Sea of Japan (Japan’s name preference) on a world map on its official website. In
response, IKEA officially replied that there were no plans to sell this map in Korea and eventually decided
not to sell world maps with the Sea of Japan label anywhere in the world.
Another problem that IKEA faced while entering the Korean market was related to its pricing policies.
While IKEA had implemented a low-cost strategy in other countries, it had set the sales price of some
products in Korea up to 1.6 times higher than in the United States, sparking controversy. The Consumers’
Union of Korea launched a price survey of 49 IKEA products across Korea and other advanced countries
and released the results in January 2015. The survey found that approximately 90% of IKEA’s products in
Korea were more expensive than the average of the other countries surveyed. Overall, price levels in Korea
were found to be second only to Sweden among the surveyed countries, including many countries with
higher income levels than Korea (see Exhibit 2). In response, IKEA Korea stated that “it is unfortunate that
the Consumers’ Union only looked at 49 of the 9,200 products IKEA has in stock in Korea” and said that
“most of the products in the survey are items that are popular in Europe, not in Korea.”5 IKEA generally
differentiated its prices across countries and offered lower prices in Korea than in other countries for items
for which there was a high local demand.
Regardless of these criticisms, the IKEA Gwangmyeong store attracted strong customer interest. As of March
18, 2015, IKEA Gwangmyeong surpassed 2.2 million cumulative visitors, and IKEA Korea conducted a
consumer survey to commemorate the 100th day since the opening of the store. According to survey
respondents, frequently perceived advantages of IKEA products were their reasonable price range (45 per
cent) and design (39 per cent), and 96 per cent of respondents expressed their intention to revisit the store.
In terms of store designs and products offered, IKEA Korea followed IKEA’s general approach of being as
global as possible and as local as necessary. Its stores were built in a standardized manner. However, store
sizes were differentiated. In anticipation of strong customer demand in Korea, the Gwangmyeong location
was IKEA’s second-largest store in the world at that time. At 56,000 metres squared, it was more than twice
as large as the average IKEA store in Europe. In terms of product range, IKEA Korea offered its customers
9,500 items that IKEA sold all over the world. In addition, it also sold 1,000 locally relevant articles, such
as rice bowls and chopsticks, and some of these items were locally sourced.
Junghoon Lee, “IKEA, South Korea’s Sales Price No.
https://www.hani.co.kr/arti/economy/economy_general/682988.html.
5
2
in
OECD,”
Hankyoreh,
March
19,
2015,
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STAFF MANAGEMENT: BEGGING TO BE DIFFERENT
In contrast to the long time it took to obtain affordable land for locations and administrative permissions
for store operations and merchandise import, IKEA was able to attract skilled and motivated employees for
its activities in Korea without major difficulties. Staff acquisition was generally a major task for IKEA
when entering new markets in view of the high labour intensity of its retail activities. The company attracted
strong interest from Korean professionals because of its open, non-hierarchical workplace culture. Its
managers and associates generally addressed each other by their first names, which was unthinkable in
many Korean companies with strongly hierarchical cultures. IKEA Korea’s workplace culture resonated
well with young Korean professionals. In contrast, some senior Korean managers found it hard to accept
that they were neither addressed by their titles nor offered any privileges, such as individual offices, and
they left IKEA Korea.
In addition to its non-hierarchical workplace culture, IKEA Korea provided various benefits to its
employees that were unusual in the country. Staff members were offered part-time positions in response to
their preferences with full social security benefits. In contrast to many other companies that employed a
substantial amount of their staff on short-term contracts that needed to be frequently renewed, IKEA Korea
offered stable, long-term employment, apart from temporary staff members who were needed to meet the
very high customer interest in the first few months after opening new stores. IKEA Korea also set up
daycare facilities to make it easier for parents with young children to work in their stores.
Further, IKEA Korea provided global career opportunities to its staff members. IKEA generally sought to
establish diverse workforces in each country in which it operated, but it sent a substantial number of
expatriates when it built up operations in Korea. Subsequently, the number of foreign managers was reduced
after local managers had acquired the necessary skills. Twenty-nine non-Korean managers worked at IKEA
Korea in 2022, down from 65 in 2017. However, Korean employees at IKEA Korea could also apply for
positions at IKEA in other countries that were advertised on a global basis. As a result, 15 employees had
moved from IKEA Korea to IKEA subsidiaries in other countries by 2022.
IKEA Korea had low employee-turnover rates and received three awards in recognition of its employeefriendly policies. It was included in the top 100 Great Places to Work by the Ministry of Employment in
2018. It was also awarded for its family-friendly and female-friendly workplace policies.
GROWING ITSELF AND GROWING THE INDUSTRY
The high popularity of its products among Korean customers resulted in new challenges for IKEA. Despite
its huge size, the Gwangmyeong store was overrun by customers, resulting in long queues. On many
weekends during the first year of operations, customers had to wait 90 minutes to enter the parking garage
next to the store.
To offer a more positive experience, IKEA Korea moved to rapidly increase its store network over the
following years. It opened additional locations in the cities of Goyang and Giheung (both in Gyeonggi
Province, which surrounded Seoul) in 2017 and 2019, and it added a fourth store in the East Busan Tourism
Complex in 2020 to reach customers in Busan, which was Korea’s second-largest city and was located on
its southeastern coast.
IKEA followed its general business model of building large stores on the outskirts of metropolitan areas in
Korea with its Gwangmyeong, Goyang, Giheung, and East Busan stores. However, in consideration of new
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market trends and tightening competition, Johansson, IKEA Korea’s chief executive officer since 2017,
emphasized the need to additionally establish a competitive online sales channel. E-commerce had emerged
as a major growth driver in the Korean retail industry, with the country’s total online shopping transaction
volume increasing by 135% between 2016 and 2020.6 The e-commerce retail market was estimated to
account for 55 per cent of the total retail market by 2025 (see Exhibit 3).
While IKEA previously focused on in-store sales, it had been making major investments to catch up with
consumers’ transition to online channels. The company strongly invested in a new e-commerce platform
system (IKEA.com), which was applied to online sales services in Korea from September 2018. Globally,
the number of visitors to IKEA.com increased from 700 million in 2010 to 2.5 billion in 2018, while the
annual growth rate of visitors to IKEA’s physical stores had decreased to less than 10 per cent. Furthermore,
augmented reality (AR) and virtual reality (VR) technologies were developed to compensate for the
limitations of e-commerce, such as having to shop without seeing the physical product directly. Already in
2013, IKEA introduced a mobile function to examine products using AR technology, and in 2017, it
launched a mobile application (IKEA Place App) so customers could examine products using AR (see
Exhibit 4). In contrast to conventional product displays on company websites, the IKEA Place App allowed
users to virtually place IKEA products into their individually specified living spaces. Through the rollout
of these new online services, IKEA Korea strengthened its accessibility for Korean customers.
Meanwhile, the Korean furniture industry experienced a large increase in annual revenues since IKEA
landed in the country in 2014, this despite an initial reduction of furniture prices of up to 40 per cent in
response to the low prices offered by IKEA. A catfish effect—efforts by weaker competitors to strengthen
themselves after the emergence of a strong competitor—occurred. After IKEA’s market entry, other home
furnishing firms, such as Hanssem Co. Ltd. (Hanssem), Hyundai Livart Furniture Co. Ltd. (Hyundai Livart),
and Fursys Inc., increased their business volume as well. Johansson commented: “There were a lot of
companies that were very scared of IKEA’s market entry. They felt that this will be a category killer if we
were to come in. But we say the opposite. As we have seen in market after market, including Korea, when
we come in, we actually create a very big interest for home furnishing so that the whole market grows and
everybody benefits.”
The biggest beneficiary of IKEA’s market entry was Hanssem. Founded in 1970 as a kitchen furniture
company, the company expanded its business to interior furniture in 1997, ranking first in the domestic
market. After IKEA Korea’s market entry, Hanssem increased the number of its stores located outside city
centres, and it introduced many new home furnishing items and interior accessories, such as cushions and
electric lights, that were complementary to the furniture. Hanssem also acquired land of 9,256 metres
squared in Daegu in 2015 to open a large retail store, and it increased the number of major direct stores
from seven to 20 by 2020. These investments appeared to strengthen Hanssem’s business performance,
which greatly improved in 2020 and 2021 (see Exhibit 5).
Furthermore, Hyundai Livart, a subsidiary of the Hyundai conglomerate and the number-two player in the
Korean furniture industry, had started focusing on the expansion of downtown stores and collaborations
with global home furnishing brands. For example, the company signed a domestic exclusive-sales contract
with the American home furnishing brand Williams-Sonoma, Inc. (Williams-Sonoma). Hyundai Livart
leveraged synergies with Hyundai by opening a Williams-Sonoma store within Hyundai’s Apgujeong
flagship department store in central Seoul. Hyundai Livart’s consolidated operating profit rose by 55.8 per
cent year over year to KRW 37.2 billion ($31.5 million) in 2020, while revenues increased by 11.9 per cent
to KRW 1.39 trillion ($1.17 billion).
Jaebin Lee, “Offline Market Shrinks, Online Shopping Is Brisk,” Maeil Ilbo, March 10, 2020, https://www.mi.kr/news/articleView.html?idxno=689667.
6
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THE PERFECT STORM: THE COVID-19 PANDEMIC AND ITS AFTERMATH
IKEA Korea constantly expanded its business volume during its first years of operations. In 2019, it ranked as
the third-largest furniture vendor in the country, after Hanssem and Hyundai Livart (see Exhibit 6). However,
after the COVID-19 pandemic hit the country in 2020, IKEA faced severe challenges on multiple fronts.
As in many other countries, pandemic-induced social distancing regulations and widespread preferences to
stay at home to avoid getting infected saw customer demand in Korea rapidly shift from in-store to online
purchases in spring 2020. This sudden shift created a major challenge for IKEA Korea, which still primarily
relied on customer purchases in store. To address the burgeoning online demand, IKEA Korea rapidly
ramped up online delivery services together with its logistics partners, and it introduced new online service
functions such as Remote Planning and Click & Collect with full support from the IKEA customer support
centre, thereby minimizing the need for face-to-face interactions.
New challenges emerged as a result of severe disruptions to global supply chains during the prolonged
pandemic. IKEA Korea faced difficulties importing enough of some home furniture items to meet customer
demand, resulting in the non-availability of popular items and consequent customer dissatisfaction.
Furthermore, due to the rising cost of materials and logistics, IKEA Korea had to increase its prices in 2021.
To mitigate customer dissatisfaction, the company lowered its delivery fees. While it previously charged
KRW 5,000 for delivery products that could be put into boxes and KRW 49,000 for furniture, in the new
delivery system introduced in August 2021, delivery charges were set at KRW 3,000; 5,000; and 8,000
depending on the size and weight of the item. As a result, the delivery fees for most products were
substantially reduced. Furthermore, same-day and next-day delivery services, which were provided for
KRW 29,000 for locations in close proximity to IKEA stores, were also expanded.
Another challenge for IKEA Korea was the rapid advance of new services by competitors. In IKEA stores,
products were arranged and displayed like in model houses according to the number of household members.
These arrangements enabled customers to get a glimpse of how they could furnish their homes with IKEA
products. However, Korean competitors also began to operate large stores with model house–type showrooms.
Furthermore, Hanssem provided customers with 3D VR experiences and a sampling zone for building
materials, and Hyundai Livart arranged free spaces for public cultural events. In addition, various online
services, such as Bucketplace Co. Ltd., a Korean one-stop home furnishing vendor, and Pinterest, Inc., a social
networking service that allowed users to post, share, and scrap images of their individual interests, had gained
high awareness among consumers as information sources on home furnishing and decoration.
Furthermore, Korean conglomerates strengthened their efforts to participate in the growth of the home
furnishing market. Lotte Shopping Co., Ltd., an affiliate of Lotte Co., Ltd., joined forces with private equity
fund IMM Holdings, Inc., in 2021 to take over Hanssem’s management rights, while Hyundai Livart
aggressively targeted the furniture market through the distribution networks of the Hyundai conglomerate.
Korean competitors also invested in new customer showrooms. Hanssem introduced large Hanssem
ReHouse showrooms so that customers could have physical access to sample products, such as floor tiles,
doors, and windows used in the remodelling of apartments. Through this arrangement, Hanssem provided
customers with the experience of visually understanding the design of their homes after remodelling.
When the pandemic receded in 2022, major Korean furniture vendors, anticipating a rebound of in-store
customer demand, aggressively expanded their brick-and-mortar store networks. While Hanssem opened
22 new stores in 2022, Hyundai Livart opened no less than 50.
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At the same time, there was a general downturn in the Korean furniture industry. According to the Korea
Real Estate Board, the number of countrywide apartment sales in the second quarter of 2022 amounted to
109,950, down 43.4 per cent from the same period in 2021.7 As a result of a rapid decline in housing
transactions and household movements in the wake of a general economic downturn, the home furnishing
market volume decreased by 9 per cent in 2022, with a particularly steep decline in the low end of the
market in which IKEA held a high share.
These developments had an adverse impact on IKEA’s business. While IKEA Korea’s sales had been
growing strongly until the 2020 fiscal year, this growth levelled off thereafter, and sales fell by 10 per cent
in 2022 to KRW 618.6 billion, marking the first annual decrease since entering the Korean market in 2014
(see Exhibit 7). While online revenues grew by 11 per cent compared to the previous fiscal year, this
increase was not sufficient to offset the decline of in-store revenues.
At the same time, labour relations at IKEA Korea also became more unruly. As the company’s size rapidly
increased, workplaces lost their family-like atmosphere. A labour union was established in 2019, and its
representatives began to complain about various employment practices. The union stated that the number
of employees at the Gwangmyeong store had been reduced from 800 at the time of opening to 600 in 2021,
that the number of workers at the Goyang store, which was 600 at the time of opening in 2017, had been
reduced to 490 in 2020, and that the number of workers at the Giheung store, which was 490 at the time of
its opening in 2019, had decreased to 360 in 2020. Furthermore, the union asserted that the company’s
salary levels were substantially lower in Korea than in other countries.
IKEA’s management responded by saying that staff reductions at stores were inevitable during the COVID19 pandemic, when a large part of customer demand transitioned to online purchases and when a substantial
part of online fulfillment was handled by external logistics partners. Management also pointed out that
IKEA Korea did not lay off any employees and relied on staff fluctuation instead to adjust its staff size.
Regarding salary levels, IKEA Korea emphasized that there was a need to differentiate salary levels
between countries due to different income levels and income tax rates. Johansson commented: “We want
to pay fairly, and that is important. We never had the intention to be the highest paying company. We are
generally very union friendly, and we want to work together with the union to address co-workers’ needs.
However, some unrealistic demands by union representatives have been impossible to accommodate.”
HOW TO MOVE FORWARD?
The deepening economic crisis hit low-income Koreans particularly hard, and IKEA Korea launched
various initiatives to mitigate the impacts on vulnerable individuals. Internally, it set up an emergency fund
for employees who were in acute need of financial help. Externally, it provided community support in lowincome areas by financing the construction of new facilities, such as playgrounds.
The company also announced plans to enhance its sustainability efforts. It planned to increase the
proportion of plant-based food on menus in its restaurants to 42 per cent in 2023 and increase the ratio of
electric vehicles used for truck deliveries to 60 per cent. IKEA Korea also opened Sustainable Living Shops,
which introduced eco-friendly home furnishing products, and Circular Hubs, a trading platform for
recyclable products.
Kyeongha Min, “IKEA’s First ‘Negative Growth’ since Entering Korea: Impact of Decreasing Housing Transactions,” etnews,
September 14, 2022, https://www.etnews.com/20220914000283.
7
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For the company’s long-term vision, management thought it important to continue positioning the home as
the most important place in the minds of Koreans, who were still spending a relatively small part of their
incomes on home furnishing. In Korea, the proportion of disposable incomes spent on furnishing was 2.1
per cent after the pandemic, while it was higher than 5 per cent in some European countries. Clearly, there
was further long-term growth potential in the Korean home furnishing market.
Johansson went back to his company’s business reports and took a deep breath. Were the recent initiatives
sufficient to turn the tide, counter strong competition, and set IKEA Korea on a path to renewed growth?
Or did something else have to be done? At the same time, what could Johansson do to engage better with
employees and the labour union?
This document is authorized for use only by Christopher Moy in Managing in a Global Economy, Fall 2024 MASY1-GC 1200 103 taught by LAWRENCE DELSON, HE OTHER from Aug 2024
to Dec 2024.
For the exclusive use of C. Moy, 2024.
Page 10
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EXHIBIT 1. IKEA’S ANNUAL GLOBAL REVENUE
50
US$ billion
40
30
20
10
0
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
Note: IKEA = Inter IKEA Systems B.V.
Source: “Annual Revenue of the IKEA Group Worldwide from 2001 to 2022,” Statista, accessed September 7, 2023,
https://www.statista.com/statistics/264433/annual-sales-of-ikea-worldwide/.
EXHIBIT 2. IKEA SALES PRICE COMPARISON ACROSS COUNTRIES
FOR SELECTED FURNITURE ITEMS, 2014
Standard score = (investigated price – average price) / standard deviation
Sweden
1.70
South Korea
1.10
Australia
0.79
Great Britain
0.56
France
0.36
United States
0.33
Japan
0.04
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Note: IKEA = Inter IKEA Systems B.V.
Source: Aram Kim, “IKEA Sales Price in Korea, the Highest Rank among OECD Countries,” Yeonhap News, March 19, 2015,
https://www.yna.co.kr/view/AKR20150319086551030.
This document is authorized for use only by Christopher Moy in Managing in a Global Economy, Fall 2024 MASY1-GC 1200 103 taught by LAWRENCE DELSON, HE OTHER from Aug 2024
to Dec 2024.
For the exclusive use of C. Moy, 2024.
Page 11
W33909
EXHIBIT 3. KOREA RETAIL MARKET FORECAST BY RETAIL CHANNEL
250
KRW trillion
200
150
100
50
0
2021
2022
E-commerce
2023
2024
2025
Offline
Note: KRW = Korean wan.
Source: Soohyun Oh and Sungyong Hong, “Distribution Transformation in Two Years . . . Online Overtakes Traditional Stores,”
Maeil Business Newspaper, January 16, 2022, https://www.mk.co.kr/news/business/10186065.
EXHIBIT 4. IKEA’S AUGMENTED REALITY MOBILE SERVICE USAGE
Note: IKEA = Inter IKEA Systems B.V.
Source: “IKEA Apps,” IKEA, accessed September 7, 2023, https://www.ikea.com/ch/en/customer-service/mobileapps/#6f254e20-867a-11eb-99f0-93776650d90f.
This document is authorized for use only by Christopher Moy in Managing in a Global Economy, Fall 2024 MASY1-GC 1200 103 taught by LAWRENCE DELSON, HE OTHER from Aug 2024
to Dec 2024.
For the exclusive use of C. Moy, 2024.
Page 12
W33909
EXHIBIT 5. HANSSEM’S ANNUAL REVENUES AND OPERATING INCOME, 2017–2021
2,500
2,231
2,066
2,063
1,929
2,000
KRW billion
1,698
1,500
1,000
500
141
56
56
93
69
2018
2019
2020
2021
0
2017
Annual revenues
Operating income
Note: Hanssem = Hanssem Co. Ltd.; KRW = Korean wan.
Source: Dawon Han, “Change in Ownership and Performance Deterioration; Realization of Hanssem’s Blueprint,” Sisa
Journal-e., May 2, 2022, http://www.sisajournal-e.com/news/articleView.html?idxno=268492.
EXHIBIT 6. REVENUE AND OPERATING INCOME OF TOP 10 FURNITURE COMPANIES IN KOREA
IN KRW, 2019
Company Name
Revenue
Operating Income
Hanssem
1.702 trillion
55.9 billion
Hyundai Livart
1.238 trillion
23.8 billion
IKEA Korea
503.2 billion
Undisclosed
Enex
363.6 billion
−2.8 billion
Fursys
304.7 billion
25.1 billion
Ace Bedding
277.4 billion
49.9 billion
Illum
239.5 billion
15.4 billion
Daelim B&CO
236.4 billion
4.1 billion
Simmons Bedding
203.8 billion
10.6 billion
Sidiz
192.8 billion
8.6 billion
Note: Hanssem = Hanssem Co. Ltd.; Hyundai Livart = Hyundai Livart Furniture Co. Ltd.; IKEA Korea = IKEA Korea Ltd.; Enex
= Enex Co., Ltd.; Fursys = Fursys Inc.; Ace Bedding = Ace Bed Co., Ltd; Illum = Illoom Co., Ltd.; Daelim B&CO = Daelim
B&Co Co. Ltd.; Simmons Bedding = The Simmons Bedding Company; Sidiz = Sidiz, Inc.
Source: Deokjoo Lee, Soohyun Shin, Byungjoon An, Heeseok Choi, and Jonghwa Lee, “Hanssem and Hyundai Livart Ranked
First and Second in Sales . . . Fursys Aspiring to Take Third Place,” Maeil Business Newspaper, April 19, 2020,
https://www.mk.co.kr/news/business/9302628.
This document is authorized for use only by Christopher Moy in Managing in a Global Economy, Fall 2024 MASY1-GC 1200 103 taught by LAWRENCE DELSON, HE OTHER from Aug 2024
to Dec 2024.
For the exclusive use of C. Moy, 2024.
Page 13
W33909
EXHIBIT 7. IKEA KOREA’S ANNUAL REVENUES
800
35
31.2
29.2
700
661
687
30
619
25
600
472
500
400
12
345
15
365
10
6.7
5.7
300
20
503
5
4.9
0
200
-5
100
-9.9
-10
-15
0
2016
2017
2018
Revenues (KRW billion)
2019
2020
2021
2022
Annual increase of revenues (per cent)
Note: IKEA Korea = IKEA Korea, Ltd.; KRW = Korean wan.
Source: Seyoung Byun, “IKEA Korea’s Growth Plan through ‘Omni-Channel + B2B Enhancement’,” The Bell, September 14,
2022. https://www.thebell.co.kr/free/content/ArticleView.asp?key=202209141413032320107367&lcode=00.
This document is authorized for use only by Christopher Moy in Managing in a Global Economy, Fall 2024 MASY1-GC 1200 103 taught by LAWRENCE DELSON, HE OTHER from Aug 2024
to Dec 2024.