IKEA China’s Tough But Necessary Pivot

Just weeks before the start of the Year of the Fire Horse—typically seen as an ill-advised time for radical change—IKEA announced a bold course correction. Beginning February 2, 2026, the company will shutter seven of its large-format “blue box” stores across key cities such as Shanghai, Guangzhou, and Tianjin, etc. This follows closures in Guiyang and Shanghai’s Yangpu district in 2025.

These are not minor outposts. Some of the affected stores are the only IKEA locations in their respective cities. Baoshan store in Shanghai was once the brand’s largest flagship in Asia. The news struck many as a dramatic, almost sacrificial gesture—prompting renewed speculation over whether IKEA is losing its foothold in China.

In response, IKEA moved swiftly to release a public statement. The note emphasized that the closures were strategic and proactive—not driven by failing performance, nor by a loss of confidence in the Chinese market. Rather, the move was part of a broader business optimization across online and offline channels.

Yet concerns are not entirely unfounded. After reaching its peak in 2019, IKEA’s China business has been navigating a long and challenging period of transition. The pandemic throttled foot traffic to physical stores, while consumer preferences evolved at breakneck speed. At the same time, a new generation of digital-native local competitors began encroaching on IKEA’s long-standing value propositions.

Between 2013 and 2019, IKEA’s revenue in China more than doubled—from RMB 6.3 billion to RMB 15.77 billion—far outpacing the brand’s global average growth rate. At the time, China was touted as IKEA’s most promising new growth engine. But since then, performance has reversed course. In the 2024 fiscal year, revenue dropped to RMB 11.15 billion, nearly 30% below its 2019 peak. Compared with 2023, annual sales declined by roughly RMB 1 billion—equivalent to the annual turnover of a medium-sized furniture store disappearing from the books.

What’s more telling is that this drop came despite continued store expansion. IKEA opened four new locations in 2024, bringing its total to 39 across the country. More stores, fewer sales—raising urgent questions about efficiency and viability on a per-location basis.

Within a retail environment now defined by slower growth and fierce competition for consumer attention, pruning underperforming or capital-intensive assets is not only pragmatic, it’s essential. For a mature retailer like IKEA, streamlining its portfolio and reallocating resources toward future-facing formats is a signal of operational discipline—not weakness.<