In a decisive move to address the challenging economic landscape in the world’s second-largest economy, IKEA China has announced the closure of seven large-format stores effective February 2, 2026. The restructuring targets sites in secondary markets and suburban districts, including Shanghai Baoshan, Guangzhou Panyu, and Harbin, as the retailer grapples with a prolonged property slump that has dampened furniture demand. As home prices declined by nearly 10 per cent in 2025 and new home sales projected to decline by another 15 per cent, the Swedish giant is shifting its capital from expansive warehouses to high-density urban centers and digital flagships.
Precision penetration in Tier-I hubs
Rather than a full-scale withdrawal, IKEA is shifting to ‘precise cultivation,’ committing 160 million yuan in FY26 to enhance affordability through strategic price investments. The company plans to open more than 10 small-format ‘Plan and Order’ points over the next two years, specifically targeting Beijing and Shenzhen. A new urban outlet is slated for Dongguan this February, followed by a launch in Beijing’s Tongzhou district in April. This model aims to reduce logistics overhead while meeting the instant-delivery expectations of Chinese urbanites, a market where IKEA’s online business now accounts for over 25 per cent of total revenue.
Digital synergy and omnichannel integration
Launched in August 2025, the retail giant’s partnership with JD.com has become a cornerstone of its resilience strategy, enabling rapid fulfillment across major metropolitan areas. Despite the store closures, IKEA’s omnichannel visitors rose 4.7 per cent to 477 million in the last fiscal year, signaling that while physical footprints are shrinking, brand engagement is deepening digitally. The retailer now focuses on being closer to the consumer through a mix of curation and rapid logistics, notes a market analyst. By integrating its presence on Tmall and JD.com with physical pickup points, IKEA is navigating a supply-demand mismatch that has seen local online furniture brands erode the market share of traditional blue-box outlets.
As a leading global home furnishing retailer, IKEA provides affordable, functional design across 34 remaining physical outlets in mainland China. The brand is currently focusing on ‘Life at Home’ innovations and sustainable, localized product lines to drive a 7 per cent–9 per cent projected revenue recovery in FY2026. Since entering China in 1998, IKEA has evolved from a suburban destination to an omnichannel lifestyle platform.
