Ikea promises low prices in Thailand

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Dave The Dude

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Ikea promises low prices in Thailand


Lower profit margin on most import items


  • Published: 23/11/2010 at 12:00 AM
  • Newspaper section: Business








Swedish build-it-yourself furniture chain Ikea vows to
offer cheaper products to Thai consumers by cutting its profit margin.


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Ikea’s store in Malaysia. The company plans its conquest of Thailand with an
opening at a mall in Bang Na next November.



It will open its first Bangkok store _ its largest store in Southeast Asia _
next November as part of the new Mega Bang Na shopping centre.


Ikea franchisee Ikano Retail Asia will uphold its parent company's principle
of supplying functional home furnishings at affordable prices.


The company, as required by Ikea, will only be able to sell a tiny proportion
of domestic products, which will account for just 2% of items. The rest will be
imported, casting doubts on how it can maintain low prices in a market where
extensive cheap furniture is available.


Lars Svensson, deputy store manager at Ikea Bang Na, said low prices could be
achieved due to the company's bargaining power as it has over 300 stores
worldwide.


"With more stores, we bring down prices because of economies of scale," he
said. "With import tariffs, life is not easy for us, but we have to fulfil our
commitment to consumers."


The company has conducted in-depth interviews with 500 Thai consumers and
visited 50 homes to study the lifestyles of its potential customers.


Ikea has universal designs that can be sold worldwide. It had turnover of
23.8 billion (979 billion baht) for the fiscal year that ended in August.


Ikea believes its products are practical even if different markets have
different tastes.


Ikea Bang Na, which will have about 7,500 articles, expects to welcome 4-5
million visitors a year. It will have floor space of 43,000 square metres
including a 700-seat restaurant.


Ikano Retail Asia holds the licences for Ikea's business in Singapore,
Malaysia and Thailand. It has two stores in Singapore and one in Malaysia. The
company will add another store in Malaysia and look to tap the market in Vietnam
and the Philippines.


Mr Svensson said there is a possibility of opening a second store in Bangkok
about three years after the launch of the first one. In the next 10 years, it
plans to have three stores covering the whole of Greater Bangkok. Each store
requires investment of about 60 million.
 
Impressions of Ikea quality and prices differs quite a lot from country to country
In UK, for example, Ikea is not dead cheap & low quality (or at least was not 15 years ago)
In other countries its different, and the prices accordingly
I wouldn't touch normal Ikea fare at home

I doubt the averaqge Thai would find Ikea cheap in LoS
 
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Their hot dogs and meatballs were good though, also a good place to stock up on free pencils!
I used to buy stuff from the big store in Croyden and thought it good value and fairly well made but
I have to agree with you about the average Thai not being too interested in the products.
We will wait and see.
 
I have never been so bored with a place in all my life and in two visits never bought a bloody thing, the only thing I got was aching feet in Ikea (Walsall), but my son and his girlfriend think it's the 'bees knees'. :rolleyes:
 
there is a strong enough upper middle class in Bangkok to see this place work...personally I think Ikea is the devil...the wife thinks different and loves my credit card
 
Have not been in an Ikea store but if their quality is anything like an Index store here in Thailand I'll take a rain check.
 
It is nothing like an Index store. The furniture is very hardwearing and practical.
They also do fantastic cheap hot-dogs (well in the UK, they do!)
 
I think it is fair to say having visited and bought items from IKEA all over Europe you get what you pay for. Unfortunately some people can not differentiate between rubbish and quality and some people are frankly just useless at self assembly. I just hope IKEA maintains its generally good standard and does not use Thailand to off load less attractive stock that is not selling in Europe. I think there is one constant across the world that we can all agree on; yes the hotdogs are excellent value.
 
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I think it is fair to say having visited and bought items from IKEA all over Europe you get what you pay for. Unfortunately some people can not differentiate between rubbish and quality and some people are frankly just useless at self assembly. I just hope IKEA maintains its generally good standard and does not use Thailand to off load less attractive stock that is not selling in Europe. I think there is one constant across the world that we can all agree on; yes the hotdogs are excellent value.

Obviously they do not use Thai hotdogs.:smile:
 
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