Ikea vs Kmart: Battle for NZ's millennial heart

COMMENT:

A war for the hearts, minds and wallets of millennial shoppers is about to break out with the arrival of Ikea on New Zealand's shores.

The Swedish big-box store is finally making its way to this country after years of Kiwis pleading for it to come.

And as couples battle with each other over the best way to assemble Ikea's frustratingly fiddly flat-pack furniture, Kiwi shops now have to battle yet another big overseas competitor.

One player that should be worried is Kmart, whose popularity has surged in the last five years after offering semi on-trend homeware at rock-bottom prices.

Through a mix of better product sourcing, smarter store layout and social media, Kmart transformed itself into a retailing force on both sides of the Tasman.

So much so that when the Wesfarmers-owned chain opened a store in Rotorua in May, eager shoppers camped out overnight for the wonders that awaited them.

Kmart, however, will struggle against both the brand cachet and the price-power which Ikea wields.

Before it even touched down here, a New Zealand Facebook page of fans for the Almhult-headquartered company had more than 19,000 likes.

Ikea, too, is a pop-culture phenomenon and is name-checked in countless films and TV shows.

And its store layouts are also seen as genius – at least when it comes to compelling people to buy their products.

In short, what Kmart does well, Ikea can probably do better.

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Ikea's launch here (and there's no signal of when it will actually open) may also put the likes of the Warehouse and Briscoes under pressure.

If that is the case, investors aren't yet bothered by the move.

The Warehouse Group's shares are up 0.49 per cent today at $2.04 (despite a falling market) and Briscoe shares were unchanged at $3.42.

Spare a thought, though, for the entrepreneurs who parallel import Ikea products into New Zealand. While Kiwis waited for Ikea to get here, they saw a gap in the market and seized it.

It's hard to see how they can survive when the real deal comes to town.