H&M and IKEA Prepare to Enter Ukrainian Market

Thursday, May 31, 2018

In a further boost for Ukraine's perception to prospective foreign investors, two more mega-brands are ready to enter the Ukrainian marketplace this year.

As further indication that 2018 is shaping up as a good year for business in Ukraine, two more foreign mega-brands have announced plans to enter the Ukrainian market.

Along with low-cost Irish airline Ryanair and Dutch sports manufacturing giant HEAD, IKEA and H&M from Sweden are now planning to start business in Ukraine this year too.

Business Boost

The Cabinet of Ministers confirmed that IKEA and H&M will both open their first stores in Ukraine within a year.

The entering of the marketplace by these two retail giants is creating a base of optimism and consumer confidence for Ukraine among economic analysts and prospective investors.

Deputy Prime Minister for European and Euro-Atlantic integration, Ivanna Klympush-Tsintsadze, welcomed the news, after a meeting in Stockholm with Swedish Foreign Minister Margot Wallström.

"Ukraine is an attractive place for many Swedish companies that want to expand their business,” she said. “This year, well-known Swedish companies IKEA and H&M will enter the Ukrainian market.”

The minister noted that Swedish companies have historically been highly intolerant towards corruption in the marketplace. Their arrival in Ukraine should be seen as a positive signal to other prospective foreign investors with such anxieties, she concluded.

Growing Partnerships

In the last year, bilateral trade between Ukraine and Sweden has increased by 4.2 percent, now amounting to $511 million annually.

In recent years, the Swedish chain of furniture stores and household goods IKEA made several attempts to enter the Ukrainian market. In 2007 the company planned to build a large shopping center in Kyiv, and invest around $1 billion in a network of shops throughout Ukraine.

A breakdown in negotiations over land allocation put a stop to these plans. In 2010, IKEA sold its assets in Ukraine - two wood processing factories and a furniture factory.

Recently, the company confirmed that it is almost ready to open for business in Ukraine.

Resellers Under Threat

IKEA's partner in Ukraine will reportedly be PJSC Mandarin Plaza. The company already has multiple large retail centers like Lavina Mall, Blockbuster Mall and other shopping and entertainment centres all over the country.

Goods from IKEA and H&M are already available in Ukraine, despite the absence of official shops.

Internet resellers already deliver IKEA’s furniture from countries like Poland, however, on average it takes two weeks to wait for the order to be delivered to Ukraine.

A different scheme has been in place for clothes retailer H&M, with their clothes here sold from outlets stocking older collections.

These small retailers are likely to face some problems with the arrival of the official retail brands.

The IKEA Group is the world's largest retailer of furniture with 361 stores in 29 countries. H&M meanwhile is the second-largest global clothing retailer, just behind Spain-based Inditex (parent company of Zara).