Yana Bodourova,
Konstantin Nikolov
Kapital weekly newspaper
Issue 32, 2008

After a close to two-year search for a suitable piece of land for the first Bulgarian store of the IKEA home-furnishings chain, a site has finally been found. And plans are for it to be operational by early 2010.

News from the beginning of August has it that the Greek company Fourlis, which holds the rights to the Swedish company for Bulgaria, has signed a contract for the acquisition of a parcel of close to 60 decares. Its address? At the intersection of Sofia's ring road and Bistrishko Chaussee, in the Malinova Dolina area, information that has since been confirmed by Georgios Alevizos, financial director at Fourlis.

"Our plan foresees the first store being opened at the beginning of 2010, with an area of more than 25 000 sq m," Alevizos said to Kapital. For comparison's sake, the IKEA store in Thessaloniki is half that size.

The business of the Greek representative of the chain will be developed through a company recently registered in Sofia, called House Market Bulgaria. Through this society, land has also been purchased. The seller of the land is another Greek company - Danaos Development. Information from the brokers who confirmed the deal with the Registration Agency says that the sum paid for the parcel was more than 2.52 million leva.

Branch specialists commented that the amount was significantly below market value, with the deal being explained by plans of Danaos to build a large commercial complex on the land next to the IKEA. The announced project is to comprise large stores, cinemas, restaurants and offices situated on a constructed area of 150 000 sq m.

"It's not a surprise that the price is lower than the one they would receive from a different investor. But everywhere in the world, IKEA stores are retail destinations and the first such in Bulgaria will make any project in the vicinity successful," a project manager in the business property sector said.

Sources have told Kapital that included in the sales contract is for IKEA and the Danaos retail centre to open their doors at almost the same time, and for the start date of construction of the two to be in September this year.

Less expensive
Lovers of the Swedish brand will be pleasantly surprised - the investors have promised that prices here will be cheaper in comparison with Greece. "We put our faith in the Bulgarian consumer. At the moment, personal income in the country is not high, but it can only increase from here. For this reason, the prices that we will set will be lower than those in our Greek stores," Alevizos said.

The items offered in the Sofia outlet will be the same as those offered in Greece. "The general catalogue will be the same as for Greece and will gradually be enlarged," he also said.

For now, the company is not announcing information about the store's expected annual turnover.

"The targeted revenues in our five-year business plan are based on a conservative estimate, because the Bulgarian market is just now starting to take off, but we reckon that IKEA products will be met with great success in Bulgaria," Alevizos said.

The Greek company, which also holds the rights to the chain in Cyprus, is not limiting its Bulgarian presence to setting up shop in Sofia. "Our idea is to have two or three in Bulgaria. The second will be on the Bulgarian Black Sea, between Bourgas and Varna, and about the third, we're not yet sure," he said.

From Sweden via Greece
It has already been two years since Fourlis signed a contract with the Swedish Inter IKEA for the rights to develop the international chain in Bulgaria. The search for a suitable plot of land retarded the company's initial plans, according to which the first store here should have been operational as of 2008. Over this period, potential addresses for the store changed every couple of months. First it was going to be in the Lyulin borough of Sofia, which was nearer to the Serbian market and where there was already an established base of furniture stores. Then there arose such information - unofficial, albeit - that one of the two representatives of the chain in Turkey - Multi Development - had succeeded in bumping the Greek Fourlis. A location was even determined - in Mladost IV, above Business Park Sofia. A few months ago, however, Fourlis announced that it had closed a preliminary contract for land, but did not specify where. At the same time, Fourlis began to search out a managerial team, posting requests with headhunting agencies.

"To design a desk which may cost $1000 is easy for a furniture designer, but to design a functional and good desk which shall cost $50 can only be done by the very best." Thus said Ingvar Kamprad, founder of IKEA, and the citation summarises exactly the company's business strategy.

All things considered, in not too long a time, we will be able to see for ourselves whether this model will also succeed in Bulgaria.