A month has passed since the world's largest furniture maker IKEA opened its first store in Korea on Dec. 18 last year. The store, near the KTX station in Gwangmyeong south of Seoul, has drawn more than 1 million visitors so far. Now the initial fever seems to be cooling slightly and customer numbers are shrinking to a more manageable size, and rival furniture stores in the area are seeing earnings recover slightly.

People shop in the IKEA store in Gwangmyeong, Gyeonggi Province on Wednesday.

◆ Sales On Wednesday, the lines stretching around the corner were gone, and so was the traffic jam in front of the parking lot. Although the store was still bustling with customers, the number has fallen from 40,000 a day to around 18,600 a day. The store generates an estimated W400 million in revenues a day during the week and around W1 billion at the weekend (US$1=W1,084). Annual turnover is projected at just short of W200 billion. The 34,000 sq.m Costco store just down the street generates W250 billion in annual revenues, and the IKEA store measures 59,000 sq.m. That clearly produces less revenue per square meter, but furniture is bulkier than plastic wrap and canned beans. Still, there are suggestions that the initial rush of customers was mostly due to curiosity, and not everyone came away with a significant purchase. The rival furniture stores nearby are slowly seeing sales recover. Some 8 km away from the IKEA store is Gwangmyeong's furniture district, which is home to 29 stores. Lee Sang-bong (58) of the local furniture store cooperative said, "Earnings fell up to half of usual levels from some six months ago as customers waited for the IKEA store to open, but big-brand stores are seeing their sales recover." Still, mid- to low-priced furniture makers, which are IKEA's main rivals, are fighting a hard battle.

Left: People wait in line to enter the IKEA store in Gwangmyeong, Gyeonggi Province on Dec. 18, 2014, the opening day.; Right: The IKEA store in Gwangmyeong, Gyeonggi Province is quiet on Wednesday morning.

◆ Prices IKEA's products are undoubtedly cheap and cheerful, with a chest of drawers going for W39,900 or a child's bed for W190,000 including the mattress. And the restaurant in the store sells a plate of pasta for just W2,900 and a soft drink for W1,500. One visitor in her 30s said, "The products are half the price of the furniture in other shops." But many products are a whopping 10 to 20 percent more expensive than in IKEA stores in the U.S., Japan or China. An IKEA spokesman claimed overall prices are not that different because other products are cheaper than overseas, but the gap has led to criticism that the furniture giant, like many foreign companies, is overcharging Korean customers. Customers also have some trouble getting used to the flat-pack self-assembly principle that allows IKEA to keep prices low, though the store does offer an assembly service for those who want to pay for it.

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