House-proud Koreans embrace decor as IKEA, rivals tap singles

Hanssem Co

04/02/2016 07:42

* Rise of single households drives spending on home decor 
    * New TV shows, classes teach decorating 
    * IKEA to open five more stores in South Korea by 2020 
 
    By Hooyeon Kim and Joyce Lee 
    SEOUL, Feb 4 (Reuters) - 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  009240.KS , with sales 
of more than $1 billion in 2014, saw a 31 percent 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  004170.KS  Jaju chain opened 
10 stores in 2015, bringing its total to 149. 
    Swedish giant IKEA  IKEA.UL , whose single store on the 
outskirts of Seoul generated $260 million in its first year, 
expects to spend 1.2 trillion won ($997 million) to open five 
more South Korea stores by 2020 - one more than earlier planned. 
    South Korea is following a path seen in the United States 
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," she said. 
    Home decorating shows known as "jipbang" have been 
proliferating on TV, including "Old House, New House" and "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 9 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  HMb.ST  H&M Home, and came despite 
economic growth that slowed to 2.6 percent in 2015, from 3.3 
percent. 
    Korea Investment & Securities figures the domestic furniture 
market is worth about 8 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 percent last year from 20 percent in 2005, 
according to Statistics Korea, and is forecast to reach 31 
percent in 2025 as younger people delay getting married and 
having children in the fastest-ageing 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 percent 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," she said.   
($1 = 1,204.0200 won) 
 
 (Editing by Tony Munroe and Stephen Coates) 
 ((hooyeon.kim@thomsonreuters.com; +82-2-3704-5647; Reuters 
Messaging: hooyeon.kim.thomsonreuters.com@reuters.net)) 
 
Keywords: SOUTHKOREA IKEA/