“IKEA Effect” Hits South Korea with Boom in Furniture Retail Market in 2015

The furniture market in South Korea has seen a surge in sales since IKEA entered the retail sector last year, stimulating consumer tastes for trendy home furnishings and competing with local retailers, South Korean news agency Yonhap reported on Monday.“The rising interest in home interior items has boosted demand for new furniture, driving up sales of furniture makers,” said Kim Kwang-seop, an official at Statistics Korea.

According to Statistics Korea, retail furniture sales have jumped 7 percent since 2014 – the highest growth rate since almost a decade ago – with five trillion won ($4.15 billion) in earnings in 2015.

Though local South Korean furniture retailers initially voiced concerns about losing business to the Swedish-headquartered furniture conglomerate that set up base in the outskirts of suburban Seoul in January 2015, the healthy competition has been a boom for the industry, according to Yonhap, which terms the industry’s revival the “IKEA effect.”

The five largest home furnishing retailers – including Hanssem, Hyundai Livart and Enex – reported a 20 percent upsurge in sales in 2015, with experts also attributing the consumer boom to aggressive advertising by retailers through showrooms in major cities as well as the rising popularity of home renovation TV shows.

IKEA, which has earned $308 million since its launch and has had over 6.7 million visitors, now plans to open up five more stores by 2020, according to Yonhap.