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IKEA Indonesia opens second store, more to come in 2020
Sweden-based furniture store IKEA plans to open new outlets in Greater Jakarta and West Java next year as part of its long-term expansion plan in Indonesia
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weden-based furniture store IKEA plans to open new outlets in Greater Jakarta and West Java next year as part of its long-term expansion plan in Indonesia.
The company, which opened its second outlet in Sentul City, Bogor, West Java on Nov. 28, intends to open two more outlets in 2020, one in Cakung, East Jakarta and another in Bandung, West Java.
PT Hero Supermarket president director Patrik Lindvall said that the company chose Sentul City because it was more accessible to Bogor residents who had yet to be covered by the first store in Alam Sutera, Tangerang.
In a 2014 interview with The Jakarta Post, IKEA said it wanted to reach two-thirds of the 28 million Greater Jakarta residents by 2024. By opening the new store, IKEA has reached half of its target to open two new stores every five years until 2025.
“We are also planning to open two other stores in Jakarta Garden City in Cakung, East Jakarta and Bandung, West Java before the end of 2020,” he said during the opening ceremony of the Sentul City outlet.
He said that the company would invest up to US$100 million to build the 35,000-square-meter outlet in Bandung, which would be built on a 4.4-hectare plot of land.
The Sentul City outlet is less than half the size of the planned Bandung store with only 15,345 sq m, not including a warehouse, since it was a conversion of a closed Giant Supermarket.
“Since it is a conversion, the construction work can be completed faster and we also hired Giant’s former employees so we can market it in a short time,” Lindvall added.
The IKEA operation in Indonesia is run by the Hero Group, which has six business divisions consisting of Hero Supermarket (a premium quality supermarket), Giant Ekstra and Giant Ekspres (hypermarkets), Guardian Health and Beauty (pharmacies), Starmart (convenience stores) and IKEA (home furnishings).
This year, the group had closed six Giant Ekspress and Giant Ekstra outlets in Greater Jakarta. A year before, it closed 26 of its stores and laid off 532 employees from its food business segment because of a sharp decline in business performances.
In the first quarter, this year, Hero Supermarket booked total revenues of Rp 3.06 trillion ($216.17 million), almost unchanged from Rp 3.04 trillion in the same period last year. Despite the significant income, the company suffered losses of Rp 3.5 billion in the first quarter, declining from Rp 4.1 billion in the same quarter last year.
The company’s director Hadrianus Wahyu Trikusumo said in a previous interview that Hero would continue to open more Guardian and IKEA outlets as they were the more rewarding business units, in addition to improving its food business.
Reiterating Hadrianus, Lindvall also said that IKEA and Guardian would be the focus of the company because the two brands could support Hero’s future growth while at the same time optimizing the food retail business.
“IKEA’s growing online and offline base will help strengthen Hero’s other businesses,” he told the press, adding that the group has no plans to convert more closed stores into IKEAs.
Globally, IKEA operates 400 stores in 52 countries, with sales totaling to 38.3 billion euro ($42.1 billion) in 2018.
