IKEA to close large China stores as property slump reshapes retail strategy

IKEA is closing a number of its large-format stores in China as it reworks how it reaches customers in a market reshaped by a prolonged property downturn and tougher competition.

The Swedish furniture retailer is moving away from its long-standing blue-box model in some major cities and placing greater emphasis on smaller outlets and faster delivery.

The shift reflects changing housing patterns, weaker demand for home furnishings, and the growing dominance of online shopping in urban China.

Rather than exiting the market, IKEA is repositioning itself to match how and where Chinese consumers now buy furniture.

The company said it will shut seven of its signature big stores, with operations ending on Feb. 2.

The closures affect locations in cities including Shanghai, Guangzhou, and Tianjin.

These stores were designed for destination shopping and large-volume purchases, a format that has become harder to sustain as fewer households move into new homes and spending on home upgrades slows.

Impact of the property slowdown

China’s extended property slump has weighed heavily on furniture demand in recent years. New home purchases have declined, and renovation activity has also cooled in several urban centres.

This has reduced foot traffic at large furniture outlets that rely on customers making significant one-off purchases.

At the same time, local online furniture brands offering lower prices and faster delivery have gained market share.

These players operate with lighter physical footprints and can respond more quickly to shifts in consumer demand.

The combined pressure has made large, out-of-town stores less efficient for international retailers operating in China.

Shift toward smaller stores

While closing some large locations, IKEA plans to expand its presence through smaller format stores.

Over the next two years, it aims to open around a dozen compact outlets in Beijing and Shenzhen.

These stores typically feature curated product selections, design services, and digital ordering rather than extensive on-site inventory.

The smaller formats are designed to be closer to residential areas and public transport hubs. This allows the company to engage with customers who live in smaller apartments and prefer frequent, convenience-led shopping.

It also reduces operating costs compared with maintaining large warehouse-style stores.

Digital channels take centre stage

Following the closures, IKEA will continue to operate 34 physical stores across China, along with two flagship e-commerce shops and additional digital sales channels.

The company said these platforms collectively reach more than 1 billion Chinese consumers.

Online sales and fulfilment now play a central role in the retailer’s China strategy.

IKEA is working with JD.com Inc. to provide instant delivery services across seven Chinese cities.

This partnership is intended to meet expectations for same-day or rapid delivery, which has become standard in China’s e-commerce market.

China’s place in IKEA’s global business

China’s contribution to IKEA’s overall sales has declined over the years, although it remains among the company’s top 10 markets globally.

The retailer has not disclosed detailed financial figures for its China operations in recent years.

The decision to downsize certain stores indicates a recalibration rather than a withdrawal.

By reallocating resources toward smaller stores, digital platforms, and local delivery networks, IKEA is adapting its model to fit a market where housing trends, consumer habits, and competitive dynamics have shifted.