Investing in Japan
IKEA Japan KK (Mr. Peter List)
Mr. Peter List, President and CEO of IKEA Japan KK (Ikea’s vision on the background)
Ikea is a major furniture manufacturer founded in Sweden, and opened its first Japanese store in 2006. Since then, IKEA Japan has opened eight stores across the country including those in regional cities, and announced its plan to have 14 stores by 2020. IKEA Japan has been actively expanding its store network by forming strong relationships with local communities. We interviewed Mr. Peter List, President and CEO of IKEA Japan, to find out about the company’s view on its business in Japan.
Ikea’s vision is “to create a better everyday life for the many people,” and the company has built its stores in Europe, North America and Asia. Ikea in Japan opened the first store in 2006 in Funabashi City, Chiba, and since then, the company has opened stores not only in the Kanto region, but also in regional cities, emphasizing good relationships with local communities. The company has announced its plan to have 14 stores in Japan by 2020 and been actively expanding its store network. We interviewed Mr. Peter List, President and CEO of IKEA Japan KK (hereinafter, Ikea), to find out about the company’s view on its business in Japan.
What are Ikea’s strengths?
Our strength is very much about our vision. We are always continuously on our way to meeting our vision, “To create a better everyday life for the many people.” So it means that we’re not just selling furniture, we’re actually creating a better everyday life for the many people, and that inspires me in my work to come to work every day.
That is also our culture and values. We started in the Småland region in the south of Sweden. In this region, the ethics of work, the togetherness and the passion to achieve something were very strong and everybody worked together and worked very hard towards a common goal of helping that village grow and develop. Those things still live today in Ikea even though we’ve grown into a global company.
Benefits in operating business in Japan?
Japan is the second biggest retail market in the world. It also has the third largest GDP in the world. These two factors alone make it very appealing. Also, there is very high literacy level in Japan as well.
In addition, many people live in small spaces in Japan and we have a lot of business experiences for areas with small space living like Japan, for example, New York, Paris, London, and so we have opportunities to apply that know-how that we acquired in other countries into Japan.
Any inventions or difficulties when localizing products/services to meet Japanese market demand? Any examples of products/services developed in Japan and sold in the markets of other countries?
The Japanese consumers value service, so we had to think about how we offer low-priced products to them but at the same time, how we also add service. And we introduced something called the “Tebura de box.” This is a box where you could post all your products and then we would send it to your home. We introduced this service because many people come by public transport to an Ikea store. We really tailored that to the Japanese consumers who come to an Ikea store by train or bus, and that actually now has been copied around the world.
Another one is that we have unique Ikea products relevant in the Japanese market. For example, we used to make our sofas in the same size around the world, but we made them smaller so that they fit life at home in Japan. I have visited homes across Japan so that we can develop our product range that is unique but relevant for Japan, based on their life styles and opinions. And it’s a trend, and people like to have these sorts of products anywhere in the world. Not only sofas but also chopsticks and firmer mattresses, and cooling products developed in Japan are sold around the world. The Japanese market plays an important role in growing Ikea globally. So we can say that it’s been a win-win relationship.
Any difficulties you had when entering the Japanese market?
When entering the Japanese market, we have issues such as restrictions on the acquisition of land for large-scale retail stores, regulations on product certification and labeling introduced only in Japan, and restrictions on the importation of food products that we offer at our restaurants. If we can see more mutual recognition and relaxation of regulations in the future, that would bring a great benefit not only to the company, but also to the Japanese consumers.
Reasons for and benefits of opening stores in regional cities?
In order to create a better everyday life for the many people, we have opened our stores across Japan. In addition to the four stores in the Kanto region, we have stores in Kobe City in Hyogo, Osaka City in Osaka, Kasuya-gun in Fukuoka and Sendai City in Miyagi. We are very careful where we place our stores. Regarding IKEA Fukuoka Shingu, we selected the place which is next to a train station and we could also have lots of parking spaces.
Among our stores in regional cities, IKEA Sendai, that’s a bit of a unique decision we made. We had been discussing opening a store in Sendai and planned to do so sometime after 2020, but after the Great East Japan Earthquake in 2011, we decided to really support the region, and brought that store forward by about 10 years, because good neighbors are a very important part of Ikea’s concept. Maybe they don’t want to buy anything today, and that’s okay, but if they come and visit us, it’s a fun day out, and they get ideas and inspiration. They eat in a restaurant and just maybe they might buy something small to take home with them. But when they think of furniture, the next time they need a bed or a sofa, then they have Ikea in their mind and that’s what we want to do to help provide a better everyday life.
We are planning to open more stores in the regional markets such as Hiroshima and Maebashi in Gunma. We also place importance on the Nagoya suburbs, which is one of the mega markets, and are developing a plan to open our first store in the Chubu region.
Did you ask the authorities for help when opening stores in regional cities?
We want to build a relationship with the local community, and that is not only when we open a new store. Opening a new store creates a lot of visitation and traffic, so working in harmony with the local community as well as the authorities is important. When building a relationship, we explain what Ikea is and make sure that any concerns from the community are listened to so we are a true neighbor and a good partner, which takes a long time.
We actually are very lucky. We’ve been approached by many authorities saying please bring Ikea to us. But our business model is a store of 20,000 square meters plus. So we need a big piece of land, and then also we need a lot of people to live in the area to bring an Ikea store there, so it takes time to make a decision. On the other hand, I feel very lucky that our vision and our business idea is something they want in their areas, and we have lots of good relationships with the authorities in areas where we have already opened a store, as well as with those in areas where we are planning to move into.
Any plans for future business development?
Ikea wants to become accessible for many people, and today, we have eight stores across Japan, but we would like to have 14 stores by 2020. After 2020, we would like to have more stores and launch an e-commerce business as well, to be able to offer items at even more affordable prices.
How do you feel about the Japanese life environment?
I love living in Japan. From a small child, I had this ambition to live and work in Japan, always fascinated by the culture of Japan. It’s a beautiful country and everything is seamless, and everything works at the right time. And the respect people have for each other and the caring society are now part of what really helps me live my life in Japan. I am inspired daily by what I see when I go shopping, the culture, the beauty, the people and the food.
|1943||Founded in Småland region of Sweden|
|2002||IKEA Japan founded|
|2006||First Japanese store, IKEA Funabashi and second Japanese store IKEA Kohoku opened|
|2008||IKEA Kobe, IKEA Tsuruhama and IKEA Shinmisato opened|
|2012||IKEA Fukuoka Shingu opened|
|2014||IKEA Tachikawa and IKEA Sendai opened|
IKEA Japan KK (Japan subsidiary)
|Business:||Selling of DIY furniture and interior goods|
|Parent company:||INGKA Holding B.V.|
|Address:||(Head office) 2-3-30, Hamacho, Funabashi-shi, Chiba|
Parts of this interview can be viewed on the "CEO Voices in Japan" section of the Ministry of Economy, Trade and Industry website. "CEO Voices in Japan"