Ikea will close seven stores in mainland China, as the multinational furniture retailer grapples with the country’s weak property market and sluggish consumer spending, which have dampened demand for its goods.
Following a comprehensive review, Ikea China said the seven stores would cease operations from February 2. These are located in Shanghai’s suburban Baoshan district, Guangzhou, Tianjin, Nantong and Xuzhou in eastern Jiangsu province, Ningbo in eastern Zhejiang province and Harbin in northeast Heilongjiang province.
“The closing of these stores is linked to economic headwinds, as well as a highly developed online sales market in China – a trend that has squeezed the survival space of physical retail outlets,” said Fan Xinyu, assistant professor of economics at Cheung Kong Graduate School of Business in Beijing.
Founded in Sweden in 1943, Ikea on Wednesday said it would shift its focus from scale expansion to targeted in-depth cultivation that would see it open more than 10 small-format stores over a two-year period, with Beijing and Shenzhen as key locations.
One new small-format store was expected to open in Dongguan, in southern Guangdong province, next month, while another would launch in April at Tongzhou district in Beijing, according to the world’s largest furniture and home furnishing retailer.
“Ikea’s decision to close some of its standard-sized stores and open small-format outlets indicates a shift away from large-scale expansion,” Fan said. “Instead, it will focus on catering to the precise demand of targeted customer groups.”
“Ikea has been known for its immersive in-store experience. Small-format stores will help it amplify this strength that can’t be simply replicated by online channels.”
