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Sat, Aug 23, 2003 - Page 12 News List

Ikea to open as many as 20 stores, mostly in Asia

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Ikea, the world's largest home-furnishing retailer, is counting on record store openings worldwide to drive sales growth of about 10 percent next year because demand in Europe may not recover until the end of next year, chairman Hans-Goeran Stennert said.

Economies in Europe, where Ikea makes 77 percent of its 12 billion euros (US$13.3 billion) in annual sales, stagnated in the first half as Germany, Italy and the Netherlands went into recession. Ikea, which has 184 stores worldwide, plans to open 16 to 20 new stores in Asia, Europe and the US next year, the most in its 60-year history.

"During the late 1970s and the whole of the 1980s and 1990s 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."

Asia, together with the Middle East and Australia, now accounts for 4 percent of Ikea's revenue.

The company -- which last week opened its biggest Asian store in Malaysia -- plans to open five to eight new Ikea stores a year in Asia, including Australia, over the next five years. It also plans to open five stores a year in North America, and about 10 shops a year in Europe, including Russia, Stennert said. Some of the Asian outlets will be operated by franchisees outside the Ikea group.

The company, founded in 1943, started by selling pens, wallets and picture frames. Now, it sells designer furniture and kitchen wares at affordable prices.

In May, Ikea said it plans to spend US$600 million to open 10 stores in China by 2010, a six fold increased in its China investments. It also has its eyes on Japan, "a very big market," Stennert said. 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, Stennert said.

Ikea also plans to focus on countries such as the UK, France and Italy, where difficulty in finding land and getting building permits prevented the company from opening as many stores as it would have liked, Stennert said.

The company will probably chalk up sales growth of about 10 percent in the year ending next year Aug. 31, compared with a gain of 5 percent this year, according to Stennert. That's about half the pace at which sales were growing a few years ago. In the three years to August 2000, they increased at an annual rate of about 20 percent.

Ikea's new store in Malaysia drew 39,000 visitors on opening day last week.

The company has invested 300 million ringgit (US$79 million) on the 35,800m2 outlet and an adjoining shopping center that will open in December. The store alone is roughly the size of five soccer fields.

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