The Swedish furniture brand will finally arrive in the region hand in hand with the Chilean conglomerate Falabella. A great business opportunity for Ikea, according to experts, but also challenges, such as adapting to increasingly sophisticated Latin American consumers with different cultures.
South Americans are getting closer to being able to walk through the immense exhibition halls of Nordic-style furniture and decoration of Ikea , one of the largest retail brands in the world. But what are its opportunities in Peru and the region? We will analyze it here.
As recalled, the furniture company announced its final arrival in South America at the hands of the Chilean conglomerate Falabella, four years after the alliance between the two companies to develop and operate the first stores of the firm in Chile, Colombia and Peru . The project will begin in 2022 with the opening of two stores in Santiago de Chile, as reported by Peru Retail.
Why does Ikea generate so much expectation?
Ikea was founded in 1943 and is dedicated to the manufacture and retail sale of furniture and decorative objects and household items. Its stores have around 25,000 square meters and have large display areas, which are traversed in a kind of maze that finally leads to the pick-up and purchase area.
It currently has a presence in 28 countries and, according to the YouGov ranking , it is the seventh among the most recognized global brands, along with companies such as Nike, Facebook, Google and WhatsApp
For Juan José de la Torre, CEO of Raven, a consultancy specialized in business disruption and acceleration, part of Virtus Partners, Ikea places the customer at the center and has been able to productize the product innovation process, package it , and bring it to market. at an affordable price.
“Its value proposition will generate a positive impact in the South American market. From the customer's point of view, it will allow him to access designer and functional products at a reasonable price. And, from the market point of view, Ikea will lead its local competitors to innovate and refine their value propositions”, says De la Torre.
South America will mark a milestone for Ikea
In 2021, the company generated sales of around US$ 47,632 million and, according to its financial statement report for the same year, stated that the "biggest milestone next year will be the opening of Ikea Chile in Santiago, which will bring Ikea closer to the many inhabitants of South America. In April 2021, on the other hand, it opened its first store in Mexico and they are preparing a second one this year.
“The company enters an ideal post-pandemic context, where there is a growing trend around home improvement, for which the demand for this type of product is and will be great. And, considering the pricing strategy that Ikea manages, it has everything to win”, said the strategy director of the branding company Futurebrand and mentor of Endeavor, Josefina Cox.
Despite the opportunities, the executive believes that the challenge for the Swedish corporation is to develop a brand and communications strategy aimed at the Latino consumer that, in recent years, has changed “not only due to the pandemic, but also due to social changes that as a region we are living”.
De la Torre agrees that Latin American consumers have evolved and are more sophisticated. Given this, he says that, due to "the characteristics of the Chilean, Peruvian and Colombian markets, they will be a good test market to extend Ikea's value proposition throughout Latin America."
Peru waits for Ikea
As we mentioned in a previous publication, the Ikea project in South America includes the opening of at least 9 stores between Peru, Chile and Colombia. The furniture giant in the world will arrive in our country thanks to Falabella and will present a different format from the one it occupies internationally.
Ikea is recognized for having large rooms under the stand alone or direct street model, very common in countries like the US However, the first two Ikea stores in Chile will be inside commercial establishments. It is expected that this new model would also be replicated in its stores in Peru and Colombia.