World's biggest Ikea opens in Philippines after Covid-19 induced delay

The Ikea houses a two-level 270,000 sq ft store, dining area and showroom; warehouses; an e-commerce facility; and a call centre.
The Ikea houses a two-level 270,000 sq ft store, dining area and showroom; warehouses; an e-commerce facility; and a call centre.PHOTO: IMAVJAVIER/INSTAGRAM

MANILA (BLOOMBERG) - Ikea opened its biggest store in the world in the Philippines, with the new 730,000 sq ft facility in Manila a cornerstone of the home-furnishing giant's expansion plans in Asia.

Thursday's (Nov 25) opening was feted with an event held at the store's cafeteria and attended by Philippine Trade Secretary Ramon Lopez and Foreign Minister Teodoro Locsin. Ikea's cult-favourite Swedish meatballs were served to some attendees, and they were accompanied for the big day by a special Philippine twist - adobo sauce.

Ikea is sticking to Covid-19 protocols after the store's opening was delayed amid the pandemic, with an online booking system that is full for the next two weeks, according to store manager Georg Platzer. Customers have to wear masks and observe distancing.

The spread houses a two-level 270,000 sq ft store, dining area and showroom; warehouses; an e-commerce facility; and a call centre. It is on property leased out by SM Prime Holdings' Mall of Asia.

Its opening comes as Ikea has expanded its e-commerce presence, which proved timely during the pandemic, with online orders now accounting for 26 per cent of its global sales.

The company, which has more than 460 physical stores in about 60 markets, is planning to add nearly 60 more locations in the current financial year.

And it is not just looking towards Asia: It will take its first step into South America this spring, opening a branch in Santiago, Chile.

Mr Platzer said the Philippines had "been the right spot on our map for the longest time".

"It was always a plan to come to the Philippines," he said. "It's a very good growing economy, growing middle class and domestic environment that's good for us as a home furnishing retailer. I think it's about time to open it, finally."

Household spending fuelled the Philippine economy's recovery last quarter, with consumption expected to grow further in the fourth quarter as virus curbs are eased in time for the holidays. However, output is not expected to return to pre-pandemic level until the later half of 2022.

The Manila store was initially scheduled to open in 2020, but faced delays due to Covid-19 movement restrictions and the disruption of construction material supplies. It is part of a move to expand in Asia, with the brand recently unveiling its second store in India.

The Philippine debut comes despite Ikea forecasting a more difficult year ahead in 2022, due to logistics logjams and price spikes of raw materials brought about by the pandemic. Despite the supply crunch and challenges keeping stores and warehouses stocked, the company managed to report record sales last year.

Chief executive officer Jon Abrahamsson Ring of Inter Ikea, the brand's worldwide franchiser, told Bloomberg in October that his vision was to make Ikea "even more affordable" by shifting a larger share of new products to a lower price segment.