Ikea’s 1st Philippine store may open within four to six years
SWEDISH HOME furnishing retailer Ikea may open its first store in the Philippines in the next four to six years, a company official said.
Ikea Southeast Asia Market Development Manager Georg Platzer said the company’s entry in a new territory would usually take about anywhere between five to seven years.
“The franchisee started to investigate the market conditions here already two, three years ago before we decided to come here. That was the moment when we saw already the future of this country, and the decision was to come. And then you can count four to six years from this moment on, that’s the same for every market,” Mr. Platzer told BusinessWorld on the sidelines of the Philippine Retail Summit ( PRS) at SMX Aura in Taguig City.
Ikea’s entry into the Philippines was first revealed last February. The Swedish brand was franchised by local firm Ikano (Philippines), Inc.
Sy- led SM Prime Holdings, Inc. is set to build the store within the SM Mall of Asia Complex in Pasay City.
Products to be sold in the Philippine store will be shipped from Ikea’s distribution center in Shanghai, which serves as the central facility for the Southeast Asian market and the Asia-Pacific region, including Australia and Indonesia.
Mr. Platzer noted there has been strong interest in Ikea here due to the Filipino consumer’s familiarity with the brand.
“Many people know Ikea already, you have many people working overseas where they have already shopped in Ikea, and then they share in the experience with the relatives back home. We’re preparing a fun day out for the people and this is what also the Filipinos abroad, they recognize and like it for this reason,” he said.
Asked what challenges the company sees in entering the Philippines, Mr. Platzer pointed to the lack of infrastructure and efficient mass transport systems here, compared to Hong Kong, Singapore, and Shanghai.
“Infrastructure isn’t easy here in the Philippines... That’s going to be a challenge to reach more consumers in a more easy way. The road infrastructure for transporting goods, connections to the islands, if we also want to reach consumers down in the south or other islands,” Mr. Platzer explained.
The Ikea executive attributed the company’s expansion in Southeast Asia to the rising middle class in the region, which has provided growth opportunities in the retail industry.
“It’s a market with a growing middle class except in Singapore, but the rest of the countries here is fantastically growing. More and more people can afford to go to shops, whether it’s online or in stores. So I think it’s consumption- driven economies. Here in the Philippines 70% of the GDP is coming from consumption, so I think it’s the perfect growth for retail,” Mr. Platzer said.
In a presentation delivered during the PRS, Mr. Platzer said Ikea’s vision is to provide products to many people by offering the lowest price with the assurance of good quality.
“Our prices are as low as possible in every market we go. So if you do a good job with the taxes here in the Philippines by enabling businesses have an easy entrance for goods and customs duties, we will be able to keep prices very low. This is our intention,” he said.
Ikea currently has more than 403 stores across 49 countries, expanding at a pace of 20- 25 stores each year. In Asia, Ikea has 47 stores.