IKEA Korea said on Wednesday its sales fell 10 percent this fiscal year in the first decline after entering Korea in 2014, as more customers held back spending on home decor goods amid virus restrictions.
The Swedish furniture maker’s Korean arm said it reported 618 billion won ($444.3 million) in sales in the fiscal year ended August 2022, compared with 687.2 billion won in the same period last year.
“Considering the COVID-19 situation, revenge spending situation and availability situation during this fiscal year, this is an outcome we are very happy with,” said Fredrick Johansson, National Retail Manager, IKEA Korea, citing various challenges such as rising material costs and supply chain disruptions.
The company blamed the first sales decline on lower spending on home furniture, with more customers spending time outdoors after Korea lifted most COVID-19 restrictions in mid-April as part of efforts to return to pre-life. -pandemic.
While IKEA Korea’s physical stores saw sales falter, its online and remote channels showed robust performance.
Sales from its online and mobile shopping platforms increased 12% from the previous fiscal year, while its remote channels ― consisting of telesales channels, chat rooms and video call consulting services ― increased 18.5% from to the previous 12-month period.
IKEA Korea did not report operating income or net income for the period quoted. IKEA said it will focus on strengthening its “omni-channels” so customers can order, buy and access consulting services from multiple touchpoints in addition to its offline retail stores.
The furniture maker also plans to strengthen its “IKEA for business” service, a furniture consulting service aimed at small and medium-sized business owners, to double its share in the next fiscal year.
Company executives also mentioned the possibility of lowering prices on popular products once supply chain bottlenecks and raw material price inflation are resolved in the near future.
In August, IKEA Korea increased its retail prices by an average of 3.5%, citing an increase in production costs.
“IKEA Korea has set fiscal year 2023 as the omnichannel leap year. We, as home furniture leaders with deep knowledge, will continue to make our best efforts to enable more people to create happier and more sustainable lives at home,” said Johansson.