Ikea will stick to its plan to open a third outlet in Singapore
Retail giant Ikea has taken a multimillion-dollar hit in Singapore after having to close its two stores due to the shutdown, but the Swedish firm is sticking to its growth strategy with plans to open a new outlet next year.
The move flies in the face of the severe downturn that the pandemic has inflicted on retailers here, but the company sees long-term prospects here.
Mr Sebastian Hylving, Ikea property and expansion director for South-east Asia and Mexico, told The Straits Times: "Singaporeans know and love Ikea and there is room for us to grow. We started thinking about expanding as far back as 2015."
He also noted that Ikea's own surveys suggest that the brand is more recognised here than in almost any other country in the world. Its two stores in Alexandra and Tampines get seven million visits a year in total.
The new 70,000 sq ft store will be spread across three floors of the Jem mall and open in the second quarter of next year.
It will be smaller than the other two outlets, but still offer Ikea's full range of products and a restaurant, although it will not have a playground or built-in warehouse. This smaller store concept within a shopping centre will be the first of its kind in the region. Other cities with small concept stores include Moscow and Macau.
Though he did not disclose exact figures, Mr Jaap Doornbos, Ikea retail director for Singapore and Vietnam, said sales in the past two months have been "hit harder than at any time in more than 40 years of operating in Singapore" and revenue losses "stack up into the millions".
But "Ikea South-east Asia is a robust company and we can weather these tough times better than most".
Mr Doornbos also noted that Ikea has benefited from Covid-19 restrictions that have kept many people working from home.
Online turnover has more than tripled in the past two months from pre-Covid levels. Sales of office chairs and desks alone shot up 31 per cent compared with the same time period last year.
Mr Doornbos said: "The growth in our online business is likely to be lasting, but we know that most of our customers still also want the chance to test out the sofa, lie on the bed or just talk to a co-worker about their home furnishing dreams.
"We are opening this third store in Singapore for good reasons. It brings us closer to our customers, provides added convenience, makes it easy for people to drop in and shop on the spot. We believe those reasons will hold true long into the future, despite the tough times we all face today."