SEOUL, Feb 4, 2016:
Ikea was onto something when it opened its first South Korean store, its largest anywhere, in late 2014.
Home furnishing chains are a bright spot in a sluggish South Korean economy, tapping demand from the rising share of people who are living alone and spending more to make their dwellings attractive and comfortable.
Local market leader Hanssem Co Ltd, with sales of more than US$1 billion (RM4.16 billion) in 2014, saw a 31% increase in revenue for the first nine months of 2015 and a doubling in its share price for the year as it opened 27 of its larger stores in 2014 and 2015.
Shinsegae Co Ltd’s Jaju chain opened 10 stores in 2015, bringing its total to 149.
Swedish giant Ikea, whose single store on the outskirts of Seoul generated US$260 million in its first year, expects to spend 1.2 trillion won (RM4.15 billion) to open five more South Korea stores by 2020 – one more than earlier planned.
South Korea is following a path seen in the US and Japan, with people spending more on home decoration as per-capita GDP rises, analysts say.
“Four or five years ago, people thought home decorating was only for rich people,” said Ock Soo, 32, who founded webzine Rooomers and conducts decorating classes attended mostly by singles.
“Now home decoration is for everyone, as more people are living alone and for longer periods.”
Home decorating shows known as “jipbang” have been proliferating on TV, including Old House, New Houseand My Room’s Dignity, both of which debuted in December.
A fast-greying South Korean population and heavy household debt, at 1.7 times annual disposable income, make property investment less attractive, prompting homeowners and renters to spend instead on making their existing dwellings more liveable.
South Korea’s working-age population is set to peak this year.
“People no longer see houses as an investment but as an object of utilisation,” said Lee Gwang-soo, an analyst at Mirae Asset Securities.
“People start decorating their homes because they now have to ‘live’ in them.”
Last year, South Koreans spent 12 trillion won on home interior decoration including floors, walls, doors, kitchen and bathroom fixtures and labour, up from about nine trillion won in 2014 and forecast to grow to 27 trillion won by 2017, according to Mirae Asset Securities.
Those figures exclude furniture and off-the-shelf items, which make up the bulk of sales at retailers like Ikea and H&M Hennes & Mauritz AB’s H&M Home, and came despite economic growth that slowed to 2.6% in 2015, from 3.3%.
Korea Investment & Securities figures the domestic furniture market is worth about eight trillion won, with kitchen items counting for another 3-4 trillion won.
The share of single-person households in the country rose to an estimated 27% last year from 20% in 2005, according to Statistics Korea, and is forecast to reach 31% in 2025 as younger people delay getting married and having children in the fastest-aging industrialised country.
People living on their own spend a larger share of their incomes on consumption, including decoration.
Yoon Seol-hee, who is 25 and works as a designer for a large South Korean company, said she spent 5-10% of her income on housewares.
“I like to decorate my own space to look like a nice café, and my kitchen to look like a restaurant.”