Ikea store located in Gwangmyeong, Gyeonggi Province (Ikea Korea)
Ikea Korea has scrapped its project to establish a multipurpose logistics center in Pyeongtaek, Gyeonggi Province, four years after its initial announcement of housing Asia's largest logistics hub in South Korea.
In its latest audit report, covering September 2023 to August 2024, the Swedish home furnishing retailer announced its withdrawal from the Pyeongtaek logistics project, reclassifying the 102,000-square-meter site for the planned logistics center, valued at 55.5 billion won ($38.6 million), as an asset for sale and recording 860 million won in impairment losses.
In November 2020, Ikea Korea joined four other foreign logistics companies in signing an agreement with Gyeonggi Province, pledging to build Asia's largest automated logistics center in the Poseung industrial complex in Pyeongtaek. The province attracted a total of 750 billion won in investments from five companies.
The decision to withdraw comes amid ongoing changes in the e-commerce landscape and consumer lifestyles, prompting the firm to adopt a more conservative approach after internal evaluations of the plan.
“We are committed to optimizing our fulfillment capacity to enhance our service offerings for both online and offline customers, with a focus on improving efficiency and cost-effectiveness,” an official from Ikea Korea said.
The firm made it clear, however, that its decision was purely business-related and not influenced by recent political turmoil in Korea, as the auditing process was initiated prior to the president's surprise declaration of martial law.
The company first entered the Korean market in 2014 and currently operates four stores, in Goyang, Gwangmyeong and Giheung in Gyeonggi Province as well as in Dongbusan, Busan. Ikea's first store inside Seoul, in Gangdong-gu, is set to open early next year.
After eight years of growth in the Korean market, Ikea faced its first setback in fiscal year 2022, with sales falling 9.4 percent from the previous year's record high of 687 billion won. The downward trend continued in 2023 with a further 3.5 percent on-year decline.
The company has seen a rebound in 2024, posting a 4 percent on-year sales increase and a surge in operating profit from 2.6 billion won to 18.6 billion won.
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