Retail analyst explains why Ikea might not be keen on NZ stores

IKEA has been conducting market research with local retail consulting firm RCG. Photo / Getty Images

IKEA is known for its cheap flat-pack furniture but one retail analyst says it may not open stores in New Zealand as prices here would likely be higher.

The Swedish furniture company was earlier in the year conducting market research here with local retail consulting firm RCG.

RCG said it had not heard from IKEA since and was not privy to its plans.

RCG associate director Andy Florkowski said there was a market for the furniture chain in New Zealand, evident by such new entrants to the market as Nick Scali, which opened its first New Zealand store in Auckland on Boxing Day last year.

"There's definitely opportunity in the Kiwi market," Florkowski said.

"There's more competition, which is placing a little bit more pressure on some of the Kiwi furniture retailers, and that may be having an impact."

But Florkowski said it was hard to know if increased competition was affecting its decision making.

Retail analyst Chris Wilkinson said some of the cheap products IKEA is known for could end up being more expensive in New Zealand if it opened local stores.

"In New Zealand, they wouldn't have that benefit of scale that could compromise their range and value proposition as products may be more costly to sell, with that difference then needing to be passed on," Wilkinson said.

"Auckland's scale is getting close to delivering the opportunity for IKEA. However, it does seem to rely on being able to achieve a network - each with a large audience, that may be more challenging."

He said IKEA was focused on opening more stores in its existing markets.

"This has been a clear strategy in Australia and the UK," he said.

"Retail is highly dynamic currently, so things could change rapidly. If it does and they announce they're opening that would be a welcome move from consumers, but certainly place additional pressure on those retailers in these categories."

IKEA has more than 400 stores in 49 countries.