Ikea to close seven shops in China amid competition, weak demand

[BEIJING] Ikea will shutter seven of its signature blue-box furniture stores across China and pivot to smaller outlets, as the Swedish retailer grapples with the country’s prolonged property slump and rising competition from local rivals.

Operations will end at stores in cities including Shanghai, Guangzhou and Tianjin from Feb 2, the company said in a statement. Over the next two years, it plans to open around a dozen small format stores in Beijing and Shenzhen.

Following the closures, Ikea will still operate 34 physical stores, two flagship e-commerce shops and other digital channels in China, reaching more than one billion Chinese consumers, the company said. The restructuring is aimed at directing resources to channels closer to consumers.

The move comes amid weakening demand for Ikea furniture in recent years as China’s property crisis curbed new home purchases, while lower-priced online brands have eroded Ikea’s market share in the country.

Shifting to smaller stores aligns with the furniture giant’s global strategy of bringing outlets closer to customers and speeding up delivery.

Ikea said it’s also working with Chinese e-commerce giant JD.com to enable instant delivery of its products across seven Chinese cities.

China market’s contribution to Ikea’s total sales has slipped over the years, but still remains among its top 10 markets. The company has not disclosed financial figures for China in recent years. BLOOMBERG