Paul Koraua: Forsyth Barr retail analyst on IKEA's projected market presence

Swedish flat-pack furniture giant IKEA opened in Auckland today with a more mild turnout than expected.

But, as customers are expected to flock to the new store in the weeks leading up to Christmas, questions over it's potential market domination arise. 

Forsyth Barr retail analyst Paul Koraua believes IKEA may put positive pressure on other companies to perform better for their customers.

"I think it's a good thing for the end consumer because a lot of these retailers are going to be working on their products, working on their pricing, working on the ranging," he told Heather du Plessis-Allan.  

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Episode Transcript

Speaker 1 (00:00):
Good afternoon. Finally, after all the waiting and the traffic
warnings and the excitement, Ikea has opened in Auckland, and
given how much we fizzed for it, analysts are expecting
it's going to have quite an impact on retail in
New Zealand. Paul Karawa is a retail analyst at full
Scythe by High Paul Hi, Paul, has it been a
successful launch day or a little bit disappointing given the

(00:20):
numbers who actually turned up after all that hype?

Speaker 2 (00:23):
Yeah, I think because of all the hype, a lot
of people have steed away from going and missing the
cow today. I think the real tell tale sign will
be how it performs through the weekend and in the
lead up to Christmas. And so while maybe we haven't
seen the numbers that we thought we were going to
get today, I think it's going to show over the
next few sort of weeks.

Speaker 1 (00:45):
The six percent of the market that you'll pretare of
the retail market that you're predicting it's going to take
seems quite a big number for something that's just started.

Speaker 2 (00:53):
Yeah, socent of the sort of industries that they play in.
And so this is in the home furnishing sort of
my department store market and this comes from stats to
New Zealand and the number of the actual number on
that was one hundred and nineteen million. That's sort of
what we thought IKEA was going to do and the
way we think about it, as you know, the thirty
four thousand square meter store, based on some of the

(01:14):
sales denities that they run in Australia, their sales per
square meta, you can sort of back up where you
think it's going to it's going to fall out. And
I think based on some of the feedback we've got
from some people who work there, that that number seems
to be in and around the right number.

Speaker 1 (01:29):
Yeah, and did you see the warehouse has already started
hustling hard today.

Speaker 2 (01:33):
I have not seen it. No, I haven't.

Speaker 1 (01:36):
It is it is quite a thing to watch, Paul.
But I mean this would be an indication, This would
be a sign, wouldn't of how ike will impact competition?

Speaker 2 (01:45):
Yes, No, absolutely. I think it's a good thing for
the end consumer because a lot of these retailers are
going to be working on their products, working on their pricing,
working on their ranging to you know, when what they
believe is their fair share of the market, and you know,
the upshot for the consumers, you're going to have access
the better prices, better products and you know, more affordable
range of goods. So you know, watching this competition happen,

(02:07):
I think will be a good thing for New Zealand.

Speaker 1 (02:10):
Now do you see IKEA opening in New Zealand as
a sign of success that they see a market here,
that they see enough buying power here to come and
establish here.

Speaker 2 (02:19):
Yeah, absolutely, I think it's the market that they've been
looking at for a while. I think, you know, understanding
how you know, the New Zealand market sort of operates,
they've been working on for for a long time and
so they actually into a number of New Zealand households
to figure out, you know, the sort of products that
New Zealand consumers think they're under serviced in where they're
not getting the right price on certain products, and that's

(02:39):
sort of what they've been focusing on. So their engine
is actually a little bit smaller than that you might
see in another country, but they've really brought the things
specialized to what they think that keries need. And I
think the other interesting point is that they've actually opened
up nationwide distribution from day one, and this is something
that you know they don't typically do when they open
into a new market. But understanding how excited Quiris, not

(02:59):
just in Auckland are about the opening of our care.
They've made it accessible for everyone to caution zill and
to have access to these products.

Speaker 1 (03:07):
Yeah, Paul, listen, Thanks very much for talking user Paul Karrawa,
who's the full soyth Bar retail analyst. For more from
Hither Duplessy Allen Drive, listen live to news talks they'd
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