IKEA Philippines, the local operator of the Swedish furniture maker, said its future expansion plans would likely hinge on the country’s anticipated increase in the middle-class population.
“We’re looking forward to expanding in the Philippines, no doubt. There are no signed plans yet, but that was the intent ever since we started here,” Max von Bodungen, the store marketing and communications manager of IKEA Pasay City, told reporters last week.
He added that the Philippines’ prospects of reaching upper middle-income status would drive the company’s growth.
“With this upgrade, the middle class getting richer and richer…, we’re looking forward to seeing the growth,” he said.
“Also, the announcement that the Philippines is going to be upgraded to higher middle (income) class, it’s really exciting. Of course, we need a lot of consumers,” he added.
According to the World Bank, an upper middle-income status means having an income per capita range of $4,466 and $13,845, while becoming a middle-class society requires the creation of better-quality jobs, controlled inflation levels, and stimulated economic growth.
“In Europe, we need about 1.5 million people per store, but of course that’s with the (gross domestic product) and the disposable income that Europeans have, and you need something similar in the Philippines to be able to fuel an IKEA store,” Mr. Bodungen said.
He added that IKEA is also planning to expand its delivery service to other areas in the country.
“We’re expanding so you can get delivery and more services, assembly service and installation services in more areas and of course that’s a crucial part to be able to reach the customer better. But as I said, there are no stores within the next year,” he said.
Last year, IKEA Philippines saw revenues increase by 28.3%, driven by a turnover amounting to P8.7 billion. It also reported 17 million visits at the IKEA Pasay location.
The IKEA store in the Philippines is operated by Ikano Retail, one of the 12 IKEA franchisees globally. It also operates in Singapore, Malaysia, Thailand, and Mexico. — Adrian H. Halili
