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IKEA's low-price strategy remains
( 2003-08-27 09:39) (China Daily)

Swedish home furnishing producer IKEA said it will maintain its low-price strategy and planned to open another two new stores in China in the new financial year.

The news was revealed yesterday at the firm's annual press conference.

"Prices decreased by about 12 per cent in the past financial year," said IKEA China manager Ian Duffy. "Low prices will remain in the coming year to make our products more affordable for IKEA's 8 million customers."

Duffy gave an example, a sofa priced at 2,999 yuan (US$363) in 1999 is now sold at 995 yuan (US$121).

With more local purchases, lower prices are becoming more possible. China is IKEA's main purchasing market and 15 per cent of all home furniture sold by IKEA is made from materials purchased in China, according to Duffy.

"Our low price strategy is also a result of a survey conducted among local residents," said Jerome Deloix, IKEA China sales manager. "After the survey, we decided we should aim at local families with monthly income of 3,350 yuan (US$405) instead of people in higher income brackets."

IKEA's sales in China between September 1, 2002 and August 26, 2003 were 713 million yuan (US$86.2 million), 24 per cent more than the previous year. The opening of the firm's Shanghai store, its biggest in Asia, attracted a record 80,000 visitors within one day.

Duffy added that the record attendance will be a great help to the development of the new store.

Covering 33,000 square metres, the two-storey store, which is four times bigger than the old one, is the first standard IKEA outlet in China.

IKEA will also maintain its aggressive growth strategy in the new financial year starting on September 1. The firm plans to open two new stores, one in Beijing and the other one possibly in South China's Guangdong Province.

Linda Xu, public relations manager of IKEA China, said this could lead to a 50 per cent growth in the company's customer base. "Our targetted consumers are those with lower incomes."

IKEA's aggressive plan includes a total of 10 new stores in Beijing, Guangdong and Shanghai's Pudong District by the end of 2010, according to Garth Collins, IKEA Shanghai store manager.

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