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Ikea has expansion plans in Thailand, Vietnam, Philippines

Dec 02. 2015
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By Watchiranont Thongtep

The N

After the opening of its first pick-up and ordering point (PUP) in Asia yesterday in Phuket, Swedish furniture retailer Ikea has set its sights on having three large-format stores in Bangkok and five to six PUPs nationwide within five years.

Meanwhile, Ikea is also looking for business partners in Vietnam and the Philippines to capitalise on the urbanisation in Southeast Asia.

Mike King, retail manager of Ikea Singapore, Malaysia and Thailand, told The Nation yesterday that the company will have to go through the territory application process which could take years before the expansion starts.

The company is reportedly interested in opening branches in Manila and Ho Chi Minh City.

King said there was plenty of space for the home-furnishing market in this region. Therefore, Ikea plans to open a new typical style outlet-covering 40,000 square-metres, in which Ikea had secured territory right, every year from now on

Patrice Dreano, store manager of Ikano (Thailand), a franchisee of Inter Ikea Systems, said the expansion plan in this country was mainly driven by higher incomes and the rise of middle-class consumers in line with urbanisation.

The company currently operates Ikea Bangna at the Mega Bangna shopping complex. It plans to open its second Greater Bangkok store occupying 40,000sqm inside Central WestGate shopping complex in Bang Yai, Nonthaburi. It says it needs one more location, expected to be in northern Bangkok, to serve increasing demand both within the city and in surrounding provinces by 2020.

Rangsit Plaza Co chief executive officer Pimpaka Wanglee, who owns and manages Future Park Rangsit, confirmed that the company was negotiating with Ikea on opening an outlet at Future Park.

Dreano said the opening of the new stores would have little impact on the operation of the Bang Na branch. In terms of visitor numbers, Bang Na could see a decline of 2-3 per cent, but the new PUP store would create further opportunities in the southern provinces.

"By having a new PUP, we expect to see at least a 10-per-cent increase in terms of sales next year," he said.

Located at Bypass Biz Town in Phuket, the PUP store has a total area of 2,615sqm and cost more than Bt175 million. It targets both Thais and foreigners.

PUP store manager Takurng Banjonruk said that from an internal survey, the company found that quite a number of customers from Phuket and other southern provinces have shopped at the Bang Na branch in Bangkok. In fact, of total customer traffic from the Northern, Northeastern and Southern regions, about 40 per cent came from the South.

Ikea sees a huge opportunity in the southern provinces, particularly in Phuket, which is enjoying a tremendous growth in the real-estate and tourism sectors.

Dreano said his company was studying the possibility of setting up new PUP stores in other provinces. Within five years, about four or five new PUP stores could be available to customers upcountry. Ikea’s first PUP store was established in 2001 in La Palma, in Spain’s Canary Islands. Currently, there are 21 PUP locations in Spain, Greece, Turkey, Norway, Finland, Puerto Rico, the Dominican Republic, the United Arab Emirates, and now Thailand.

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