Next Year in IKEA? Israelis Don't Buy the Kika Concept

Despite the Hanukkah holiday and year-end sales, offering thousands of items at discounts of 20% to 50%, the place was not humming.

Nearly four months after its much-ballyhooed launch, the Kika furniture megastore seems to be flopping in Israel. People come, amble around, look, touch and leave, in some cases to buy from rival chain IKEA. The main beef seems to be that prices are much higher than expected.

"Prices here are sky-high. I told the workers they should be glad they still have jobs," commented Eli from Herzliya. "Anybody who buys a living room set for NIS 40,000 or NIS 50,000 is a sucker."

Kika - Alon Ron - 28122011
Alon Ron

The first day had proved promising. As the store opened its doors at 10 A.M. on September 6, it was stormed by shoving shoppers, some of whom had been waiting outside since 7:30 A.M. True, Kika had promised a free footrest to the first 100 customers, but still, it augured well.

But a visit to the store on Tuesday - located in Netanya, a short drive (if not convenient walking distance ) from the first IKEA store, which burned down - showed that the frenzy has faded. Despite the Hanukkah holiday and year-end sales, offering thousands of items at discounts of 20% to 50%, the place was not humming.

The parking lot at the entrance was full enough, but the underground parking lot was nearly empty.

The ground floor, where Austria-headquartered Kika sells small items such as glasses and vases, was busy. Not so on the three upper floors that feature bigger items such as kitchens, living room sets, bedroom furniture and closets. Whole areas were bereft of buyers.

There was no difficulty finding a table, or several, at the cafe, and the children's play area was almost empty, an unusual sight during the Hanukkah break when schools are out. There was no line clamoring for the attention of the makeup artist Kika had hired, and the lines at the cash registers were short, with no more than three people at most. Not bad, considering only five of the 11 cash registers were manned at all.

"We're going from here to the IKEA branch in Rishon Letzion and probably will never come back," Moti and Eti Burg from Atlit confided. "The store is attractively arranged but the prices are really high." They'd been looking for a closet but couldn't find one they wanted. They did buy some small items, mainly kitchen gadgets.

Of the dozens of shoppers Haaretz interviewed, only one was satisfied. Most of the complaints had to do with prices, and if there was a common theme to the conversations, it was that next time they'd go straight to IKEA.

"This is a store for rich people only," groused Sigalit, as she browsed through the uppermost floor, the children's section. "We came all the way [to Netanya] from Holon and expected to find bargains like at IKEA, but a couch here costs NIS 50,000. Even the pitchaefkes we put in our shopping cart will stay at the cash register. We're going to leave empty-handed."

When the store opened, its local manager Zvika Goldenberg said it would have a broad range of prices. The concept seems to leave the Israeli shopper clammy: For instance, the bedroom sheet sets for NIS 500 were impressive, but Eti from Netoa didn't like the ones for NIS 100.

Industry observers estimate that Kika is turning more than NIS 200,000 a day midweek and NIS 400,000 on days when it offers special deals, as it has been doing in recent weeks.

A source near Kika claimed that it's turning over more than half a million a day.

IKEA turns over NIS 1.4 million a day.

Kika admits that its concept hasn't caught on yet. "Our mission is to educate the market about price ranges in a single store," says marketing manager Elit Ben Basat Nuriel. "People don't get it. They see a giant store that came from abroad and expect another IKEA, but it isn't." In any case, it's only been around a few months, she says, and Kika did achieve its first goal, which is to create awareness.

Superficial similarities to IKEA are not working in its favor, she admits, but she says the sales of bedroom and living room sets have been skyrocketing.

Ronit and Moshe of Carmiel feel, however, that prices at Kika are higher than the Israeli market in general. "We aren't IKEA or Home Center either," Nuriel told them. But they aren't costlier than Beitili or I.D. Design, she said. Regarding the short lines at the cash registers versus the long lines at IKEA, she said, "We'd rather sell one couch for NIS 20,000 than hundreds of glasses for NIS 2.50 each."

The Kika store is a big one, with 18,000 square meters of floor space. The company is headquartered in Austria and boasts sales of some 1.2 billion euros a year, through 72 stores.