Czechs love IKEA. The company therefore wants to strengthen its position on the Czech market – this is the strategic decision of one of the biggest furniture retailers in the world. In the coming five years, the Swedish chain wants to add two new stores in the Czech Republic and to increase its retail space by more than 30,000 square meters.
IKEA is planning biggest changes in Prague, where it is going to place one of its biggest stores in Europe, with an area of 35,000 square meters. It is going to build a new store only a few metres away from its current store in Prague’s Zličín. It already has similar giant centres in Russia and Germany.
“The current retail space of 22,000 square metres in Zličín is not sufficient any longer,” said IKEA’s president Anders Dahlvig in an interview with HN. The investment should amount to CZK 2.5 billion. The company is going to rent its current store.
New store for good revenues
“Only five years ago, such a big investment would not be possible in the Czech Republic. However, we have good revenues in the Czech Republic, so we can invest in this way,” said Andrew North, head of Czech branch, adding that the company has already found areas, where it could build another store.
IKEA now has four stores in the Czech Republic and in the economic year 2008, which ended in August this year, its net profit has increased to CZK 645 million. The total revenues of its stores, including restaurants and the sale of food, have increased by 1 billion to CZK 6.8 billion year-on-year.
That is also why IKEA wants to offer more services in the Czech Republic. Together with its financial partners, the company wants to offer advantageous health insurance and other financial services to the members of its IKEA club, where half a million of Czechs and Slovaks are registered. These services should be on the market already in the second half of the year. “We also want to issue co-branded payment cards IKEA in cooperation with MasterCard or Visa. Right now, we are in the middle of a tender,” said North, adding that the firm is also looking for a possibility to offer services of a virtual mobile operator in the Czech Republic, like the British IKEA.
Crisis is playing into our hands
In contrast to other businesses, IKEA is definitely not complaining about the financial crisis. “On the contrary, the crisis is playing into our hands. Material is getting cheaper and the pressure on wage increase has been falling. Our competitors are experiencing much bigger problems,” Dahlvig said. The company therefore expects that it will reduce prices of its products this year, and it is even planning to take over suitable stores of its competitors that have falled out of the race in some countries.
Other local furniture retailers haven’t been complaining about the crisis either. “The year 2008 was successful for our company, and we were not affected by the financial crisis in any way,” said Marek Tajbl, the marketing director of Asko Nábytek adding that the company wants to continue in its expansion this year. “I can say that the expansion will not concern only big towns, but also smaller towns on the regional level,” Tajbl said.
Kika also wants to strengthen its position on the market by opening new stores in Olomouc and Liberec this year. Sconto nábytek doesn’t want to fall behind either. “We believe that we will manage to open another store in the Czech Republic at the end of 2009 and we will be getting ready for another expansion in 2010,” said Roman Púry, Sconto nábytek’s director.