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. Last Updated: 07/27/2016

Finnish Furniture Firm Enters St. Pete

ST. PETERSBURG -- Vepsalainen, the largest design furniture store chain in Finland, opened its first Russian store late last week and presented plans to give Swedish rival IKEA some competition by opening nine more over the next two years.

The St. Petersburg store, Design House Vepsalainen, covers 2,050 square meters and cost about 500,000 euros ($625,000), the company said.

Unlike IKEA, which sells furniture components that customers can assemble themselves, Vepsalainen is a distributor of European design furniture and follows the "shop in shop" model, offering several brands in the same store.

Timo Vepsalainen, owner of the Finnish company, said he was counting on high demand for high-quality furniture from Russians.

"The preferences of Russians differ to some extent from those of Scandinavians. However, when it comes to high-quality products, then design expressing a clear language of forms is in high demand among Russians. That is exactly what we offer," he said in a statement.

Vepsalainen manages more than 20 furniture shops in Finland, with five new shops to open by the end of 2006. Within the next two years, three more shops will be opened in St. Petersburg. By 2008, Vepsalainen expects to operate a total of 10 furniture shops in Russia.

Beside furniture, the shop offers lamps, rugs, textiles and household accessories. Customers can see ready-made interiors on display, with the same assortment appearing in catalogs. The store also houses a specialized section, Finnish Design, which is used to exhibit furniture from Finnish producers.

"Brands represented in Design House Vepsalainen were chosen by designers who like individuality and elegance," said Raivo Kukka, who is in charge of Vepsalainen's Russian operations.

"In the future, we plan to introduce international design collections onto the Russian market," Kukka said.

Although there is no lack of furniture shops in St. Petersburg, there is an unfilled niche for middle-priced products with unique designs, said Mikhail Podushko, a consumer goods researcher at WorkLine Research, also called Comcom-Spb.

"The market is inundated by standard models and unusual products that are too expensive for the average consumer," Podushko said.

About 5 percent of St. Petersburg residents earning more than $500 per month bought bedroom and living-room furniture over the past 12 months, while 3 percent bought kitchen furniture, according to Comcom-SPb research.

"The most-visited furniture stores are those that distribute the products of different producers -- Great, Akvilon, Mebel-City and Mebelny Kontinent. Among the most popular is IKEA, which offers various interior accessories and household goods, as well as furniture," Podushko said.

IKEA is currently undertaking a huge expansion drive. Its director for Russia and Ukraine, Per Kaufmann, said earlier this month that IKEA planned to spend $2.5 billion on the construction of new IKEA and Mega shopping centers in Russia by 2008, Interfax reported. The company now has five IKEA and three Mega complexes, and new centers are to open in the Novosibirsk, Rostov and Samara regions by the end of the year, Kaufmann told reporters in Perm on Oct. 4, Interfax reported.

IKEA's stores occupy sprawling complexes, and its Russian rivals have followed suit. Podushko noted, however, that those furniture stores tend to suffer from uncoordinated displays.

"The new concept assumes correct organization and the right structuring of the assortment. That will be one of Design House's most obvious advantages," he said.

"Offering finished interiors for view is a potential niche, which is currently quite unoccupied. If the products are affordable, the project could be successful," he said.

Swedwood-Tikhvin, a subsidiary of Swedwood in the Leningrad region, is planning to open a plant on Nov. 15 that will make furniture for IKEA, Interfax reported Friday.

The plant was built at a cost of 15 million euros ($19.1 million), Interfax said, citing a regional administration statement.

The factory will have a capacity to produce 167,700 pieces of IKEA furniture per year. The recoupment period is nine years.

Swedwood is a subsidiary of IKEA.