Swedish home-furnishing retail giant Ikea is upbeat about its Middle East operations as it formally launched plans to open a 32,000-square-metre store in Abu Dhabi’s Yas Island, which will be operational by early next year.
In a video interview with Alrroya.com, Mile Franicevic, acting group director of Al Futtaim Retail, revealed that the company has plans to expand Ikea’s Middle East presence with the opening of stores in Oman, Qatar and Egypt in the coming years.
“Our next project after Yas Island is in Doha [Qatar]. We’re [also] in negotiations with Ikea of Sweden to secure franchise rights for Ikea in Egypt. Hopefully that will materialise by 2012,”
Franicevic said.
Ikea currently has five stores in the Middle East, all located in the Gulf region – three in Saudi Arabia (Jeddah, Riyadh and Dhahran), one in Kuwait and two in the UAE (Dubai Festival City and Abu Dhabi’s Marina Mall).
Franicevic clarified that the Ikea Marina Mall store will be relocated to Yas Island once it becomes operational. “We will not operate both [Abu Dhabi shops] concurrently,” he said.
Famous for its flat-pack DIY (do-it-yourself) furniture, Ikea has over 300 stores in more than 35 countries worldwide,
according to its website.
GCC market share remains strong
Despite the prevailing financial slowdown, Franicevic said the combined performance of Ikea’s UAE stores proved to be better than its other outlets in the GCC.
“The results that we have managed to produce between [Abu Dhabi and Dubai] in 2009, given the economic circumstances, were far better than what was produced in Kuwait and Saudi,” he said, without giving specific sales or profit figures.
He added that the Ikea brand has managed to keep a significant market share in the regional retail industry. This, he said, has been evident in the marketing strategy employed by them which is different from that of their competitors.
“Given the reaction of our competitors in the last 12 months – where they have been on continuous part-sale or discounts – I think, indicates that they are under stress,” he said.
Franicevic refused to divulge sales statistics, but confirmed that the footfall in its Dubai store had reached 3.5 million in 2009 while Abu Dhabi was at 1.2 million. The Yas Island store is expected to attract at least 1.3 million shoppers in its first year of operations.
The international press had reported that Ikea’s global performance has been favourable despite the credit crunch. The firm posted a hefty pre-tax profit of $29 billion (Dh107 billion) covering the fiscal year ending in August 2009. Despite the crisis, the store was also able to open 15 branches worldwide last year.
Franicevic said Ikea remains committed to its philosophy of providing its customers with everyday products at low prices.
Once branded by the foreign media as a “global cult brand”, the Swedish retailer has attracted loyal followers since it was established in 1943 by 17-year-old Ingvar Kamprad. It has made a name for itself by sourcing its products from various parts, maximising raw materials and production methods while keeping costs low.
View related video:
Ikea breaks ground in Yas island
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I guess that to get the home loans from creditors you must present a good reason. However, one time I've received a small business loan, just because I was willing to buy a building.