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People's Daily Online>>China Business

Assembling ideas for Ikeas in China

By Tang Zhihao (China Daily)

10:19, February 16, 2012

Ikea's store in Pudong district, Shanghai, which is the Swedish home products company's largest outlet in Asia and the second-biggest in the world. (China Daily Photo)

Retail president looks to increase outlets of maker and designer of home products

SHANGHAI - Gillian Drakeford, Ikea China retail president, is keen to see her company make the most of what the market has to offer here.

"There are so many opportunities, and you can see the opportunities out there. The biggest challenge is to prioritize the opportunities. One thing we find is the more we do, the more we see," said Drakeford. "You should not be satisfied with what we have today. You should be always moving and you are on the way if you are."

The dynamic market conditions in China do impose great pressure on her. However, the positive sales growth rate in the country and foreseeable huge market potential make her life not altogether demanding and a little bit exciting.

"I think it is a much more positive environment here than some environments my colleagues are faced with overseas. They are working with negative growth from economic slowdowns or other reasons. I do not have that problem because this market is about growth," said Drakeford.

Drakeford started to work with Ikea, the Sweden-based international home products company, in Hong Kong at the end of 1998. She is living with her family in Shanghai now. Drakeford said she began to understand Chinese culture and Chinese lifestyle after living in Hong Kong for four years. Attracted by the fast-changing economic environment in China, she decided to cross the border to experience it first hand. Her first position at Ikea on the Chinese mainland was as a store manager in Beijing.

"I was thinking about what to do next after I left the United Kingdom. I was really interested in the Chinese mainland's development, speed and positive approach. I just wanted to be a part of the history and to be a part of change. It is something that excites me," said Drakeford.

Having worked in China for some nine years now, Drakeford has observed the changes in Chinese lifestyles and the increasing desire for a quality life. Many brand-name companies consider China to be a key business destination to support business growth.

A report from Deloitte Touche Tohmatsu Ltd suggested that annual revenues from commodities in China reached 15 trillion yuan ($2.35 trillion) in 2010, an increase of about 14.8 percent from 2009.

Ikea entered the Chinese market in 1998 and now operates 10 stores around the country. As a global retailing giant, Ikea was criticized for being too conservative in developing in China. However, the Swedish company said the market strategy is good for creating a solid customer base and good for the management to better understand the Chinese market.

From 2011, Ikea said it would accelerate expansion in China because it has successfully tested the water. Ikea said it has a better understanding of the market and is ready to move fast to capture more of it, not only in mega cities but also in some second-tier cities.

Drakeford said she was satisfied with results from the new store that opened in Pudong, Shanghai, last June and added outcomes were within expectations.

"We are happy with the performance. We can see we are converting many visitors to customers. They spent what the customers spent so the basket size is extremely strong. Quite often, basket size takes time to build. It is interesting with this store that almost immediately the basket size in this store was similar to the biggest basket size in Beijing and the other Shanghai store," said Drakeford. "This is a new market, new visitors and new customers, so there is very little cannibalization of the store in the Xuhui district of Shanghai."

In the 2010 financial year, Ikea China reported sales revenue of 4.9 billion yuan, an increase of some 20 percent from the previous year. Some 31 million customers visited Ikea stores in China in 2010, an increase of 20 percent on 2009. Some stores in China ranked as the most profitable stores on Ikea's global map.

Like many other companies in China, localization is a process that Ikea has considered carefully. At the same time, Ikea is seeking a balance between Chinese culture and Ikea values. Drakeford said that the motto "be very Ikea" is one of the factors that contribute to its success.

"We might have functions or products that are right for Chinese people or for new countries, but they always have the identity of being Ikea. They are always simple in design and functional," said Drakeford.

The idea was also promoted in designing Ikea's personnel policy and helps the company choose the right people. She said Ikea would not compromise in selecting the right person.

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Canada at 2012-02-1670.36.49.*
We bought two IKEA bedroom dressers. Very little weight in the drawers causes the bottom of the drawer to fall out. The odour in one dresser was awful. I put my clothes in plastic bags but the clothes still smell of the awful odour.

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