IKEA Asia revenue portion to triple

By Kirby Chien

BEIJING (Reuters) - Sweden's IKEA said on Friday the contribution from Asia-Pacific to the group's total sales could triple to 10 percent within six years, creating a huge challenge for the world's largest furniture retailer.

"It's possible," Ian Duffy, IKEA president for Asia Pacific, told Reuters in an interview.

"That is very significant, and the group is growing as well."

Privately owned IKEA plans to add six new stores in the Asia-Pacific region next year -- three in China and three in Japan -- on top of the nine stores IKEA now manages in the region.

The IKEA group also has eight stores operated as franchises in Taiwan, Singapore, Malaysia and Hong Kong.

But that pace of growth is new to IKEA and posing challenges. "We face the increasing challenge of growing rapidly and at the same time having to keep our existing business in the best possible shape," the 20-year IKEA veteran said ahead of Reuters' China Summit next week.

The effort and expense needed to train an expanding staff to maintain a high standard of service is one reason IKEA looks primarily at organic growth rather than acquisitions for expansion.

"It would be difficult to integrate," he said.

But that organic growth has made Asia-Pacific IKEA's fastest growing market and China is spearheading that expansion.

The Beijing's store is set to become IKEA's largest selling in volume terms in the next two years, and the company is building an even larger store in Dalian, on China's east coast, scheduled to open next year.

Overall sales in China are rising 40 percent annually, fueled by the 14 million customers that visited IKEA's four mainland stores last year.

To support that expansion plan, China also is growing as a supplier to IKEA. In China, 70 percent of goods sold in volume terms come from the mainland, while globally the percentage is only about 18 percent.

CHINA LEADS CHARGE

The new stores will help sustain already strong Asia-Pacific revenue growth.

"You can say Asia-Pacific turnover will double this year," he said, without providing details.  Continued...