IKEA has had to close seven large stores in China. It is the symptom of a much more important trend

The real estate market was the great economic engine in China, but currently it is plunged into a deep crisis from which it does not seem that it will come out soon. Houses are not sold and, consequently, not as much furniture is sold either. If we add to this an increasingly strong online market and competitors with very aggressive prices, it is not surprising that IKEA is not doing very well.

Seven fewer stores. IKEA China has announced which will close seven of its stores on February 2. These are seven large stores, known as ‘blue box’, located in Shanghai, Guangzhou, Tianjin, Nantong, Xuzhou, Ningbo and Zhejiang. After the closure, there will be 34 more operational stores in the country.

Change of strategy. IKEA emphasizes that “we will move from large-scale expansion to focused development.” Its strategy is to move away from large stores and focus on local commerce. They plan to open ten small stores in the next two years, starting with the Dongguan store scheduled for next February. This strategy contrasts with the one they are following in other countries like the United Kingdom either USAwhere what they are closing are some small stores opened after the pandemic.

Competence. As we said, the Chinese real estate crisis is one of the reasons why sales have fallen, but not the only one. The Swedish giant faces other difficulties, such as the emergence of new local competitors that offer Much lower prices and much faster deliveries. In this context, it makes sense that IKEA wants to focus on small stores and strengthen its online channel. In fact, recently They opened a store on JD.com.

Online presence. In statements to South China Morning Posteconomist Fan Xinyu, attributes the closure to “a highly developed online sales market in China, a trend that has reduced the survival margin of physical points of sale.” It is estimated that in 2024 in China They delivered 5,400 packets per secondmaking it the largest online marketplace in the world. In this sense, we can say that in China it is more common to place an order online than to go to a large store such as IKEA.

IKEA China. The Swedish company opened its doors in China in 1998 and went on to open 41 large stores. The company has not published financial data, but China continues to be among the ten markets where they sell the most. According to ReutersChina accounts for 3.5% of all IKEA global sales.

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