By Choi Sung-jin
When IKEA opened its first shop in Gwangmyeong, Gyeonggi Province, on Dec. 18, 2014, Korean furniture makers were gripped by "IKEA-phobia." A month later, the share price of domestic market leader Hanssem plunged 27 percent to around 110,000 won ($94).
A year has passed since then and industry watchers are now talking about the "IKEA effect." The accumulated number of visitors to the local offshoot of the Swedish furniture company reached 10 million, with yearly sales estimated to be around 200 billion won.
The sales of Korean furniture makers are expected to rise too. Hanssem's sales are expected to jump 30 percent from last year and its share price is hovering around 250,000 won.
Hanssem and four other big domestic furniture companies registered combined sales of 2.3 trillion won in the first nine months of this year, up 19.8 percent from a year ago. "IKEA has sharply expanded the base for Korea's furniture industry," said an industry executive.
Market watchers also cite the "catfish effect," meaning a catfish in the pond forces other smaller fish to become more diligent and stronger. The arrival of the global market leader prompted its domestic competitors to aggrandize their shops, enhance service networks and increase the ratio of direct selling to consumers, they said.