Analysis of IKEA China's Store Adjustment and Challenges in the Community-Oriented Transformation of Home Furnishing Retail

On January 7, 2026, IKEA China officially announced that it will close 7 offline stores starting from February 2, 2026, including

[1][2]. This is the largest store adjustment since IKEA entered the Chinese market, attracting widespread attention from the industry.

Meanwhile, IKEA announced that it will open

within the next two years, including the Dongguan Store opening in February 2026 and the Beijing Tongzhou Store opening in April 2026, clearly sending a signal of strategic transformation from “scale expansion” to “targeted deep cultivation”[1][2].

---

Despite the strong influence of the IKEA brand, the profitability of some stores has continued to be under pressure. IKEA’s single-store investment and operating costs are relatively high; when store foot traffic and sales cannot cover costs, the cost-effectiveness of continued operation drops significantly[3]. Relevant data shows that IKEA has faced operational pressure in global and Chinese markets since 2023, and has had to adopt price reduction strategies multiple times to maintain market share. In fiscal 2024, it launched over 550 low-priced products, over 500 in fiscal 2025, and plans to invest 160 million yuan to launch over 150 low-priced products in fiscal 2026[3].

However, the price reduction strategy has dual effects:

• Positive Effects
  : Sales of small items (such as sockets, storage products) increased by over 70%, and customer foot traffic and brand awareness improved to some extent
• Negative Effects
  : Price reductions for large furniture and classic products were not significant, failing to effectively drive overall sales growth[3]

IKEA’s decision to close stores is not an isolated incident, but the result of multiple market factors working together:

Driving Factor	Specific Impact
Real Estate Market Adjustment	China’s real estate industry has entered a period of in-depth adjustment, directly impacting home furnishing consumption demand[3]
Shift in Consumer Behavior	Young people’s consumption concepts have changed, with more optional consumption channels available, putting IKEA under pressure to “demystify” its brand[3]
Intensified Channel Competition	Emerging channels such as local home furnishing brands, e-commerce platforms, and live-streaming e-commerce have diverted a large amount of foot traffic[4]
Rising Costs	Rents, labor, and operating costs continue to rise, squeezing the hypermarket model[4]

Behind IKEA’s store closures is a microcosm of the accelerated iteration of China’s retail industry. According to the 2025 China Retail Channel Evolution Trend report released by Nielsen IQ,

[1]. Factors such as rising urbanization, deepening aging, shrinking household sizes, smaller shopping baskets, and the rise of instant shopping have jointly spawned strong demand for “proximity consumption”[1].

IKEA has chosen to proactively adjust by closing inefficient stores, optimizing resource allocation, and shifting its focus to small-format stores and mall-based stores that are more in line with market trends. This reflects its keen insight and rapid response to changes in China’s consumer market[1][2].

---

Community-oriented transformation is not simply “small-storeization”; it requires precise judgment of store location, coverage, and target customer groups. IKEA’s competitor Nitori aggressively opened stores in Chinese shopping malls in previous years, but has now hit the brakes — some mall-based stores have been closed or downsized, and some no longer sell furniture products[1].

This indicates that:

• The number of mall-based stores is not the more the better; there is a boundary to market coverage[1][3]
• There are significant differences in consumption capacity and habits across different cities, requiring differentiated layout strategies
• There is a large gap between shopping mall foot traffic and actual store entry rates and conversion rates

Shifting from large-scale warehouse-style stores to small-format stores and mall-based stores means a fundamental transformation of the operational model:

Dimension	Hypermarket Model	Community Store/Mall-Based Store Model
Product Structure	Comprehensive, covering full-category home furnishing products	Focused, high-frequency, portable products
Inventory Management	High inventory turnover, warehouse-style display	Precise replenishment, fast turnover
Service Model	One-stop shopping experience	Focused on instant services and partial home renovations
Sales per Square Meter Requirements	Relies on high foot traffic and high average transaction value	Pursues high sales per square meter and high repurchase rates

Although IKEA has advantages in brand, supply chain capabilities, and store network resources, the refined operation of small-format stores and mall-based stores still requires in-depth cultivation to adapt to changes in consumer shopping behavior[1][3].

Current home furnishing retail channels are characterized by “online concentration, offline dispersion”. Online channels are dominated by Taoxi, JD.com, Pinduoduo, Douyin, and Xiaohongshu, covering the vast majority of mainstream consumer groups[4]. Offline channels are more diversified and fragmented, including home furnishing malls, shopping centers, community stores, whole-home customization companies, design institutions, and other forms.

This pattern brings multiple challenges to traditional home furnishing retailers:

• Increasing Online Penetration
  : The proportion of online sales for high-unit-price, large, and high-decision-making home furnishing products continues to rise[4]
• Fragmented Traffic Entrances
  : The influence of traditional offline stores is continuously weakened[4]
• Compressed Middleman Profits
  : Increased industry transparency has further compressed middlemen’s profit margins[4]
• Rising Customer Acquisition Costs
  : Diversified channels have pushed up overall customer acquisition costs

IKEA faces another major challenge in the Chinese market: the deepening of localized operations. Compared with local home furnishing brands, IKEA needs to better align its product design, pricing strategies, and channel layout with Chinese consumers’ demands for instant and proximity consumption[1].

Specifically:

• Product Adaptation
  : Develop more products suitable for small Chinese apartments and household structures
• Pricing Strategy
  : Maintain brand positioning while offering more competitive prices
• Service Upgrade
  : Provide more flexible delivery, installation, and partial home renovation services
• Digital Experience
  : Strengthen online-offline integration to enhance omnichannel shopping experience

---

From the perspective of industry development trends, home furnishing retail channels are undergoing profound changes:

1. Channel Community-Oriented
   : Community stores and mall-based stores have become key layout focuses, pursuing “proximity and high frequency”[1]
2. Format Integration
   : Home furnishing malls are developing toward more integrated formats, with stable area for experience-based formats[4]
3. Service-Oriented Transformation
   : The circulation of building materials products is shifting from “specialization” to “sales networkization”, or transforming into service providers[4]
4. Whole-Home Customization Development
   : The whole-home model has become an industry consensus, with enterprises deeply laying out the whole-home customization field[5]
5. Digital Empowerment
   : AI technology and intelligent design have become key investment areas for enterprises[5]

In the face of the above challenges, home furnishing retail enterprises need to adjust their strategies from the following aspects:

Strategic Direction	Specific Measures
Channel Optimization	Close inefficient stores, deepen high-value markets, and focus on in-depth operation of target customers[4]
Product Innovation	Develop products suitable for small apartments, easy to deliver, and highly portable
Service Upgrade	Provide value-added services such as instant delivery, partial home renovation, and home furnishing consultants
Digital Transformation	Build omnichannel digital capabilities to improve operational efficiency and user experience
Cost Control	Streamline SKUs, optimize supply chains, and source directly from manufacturers to reduce costs

---

IKEA China’s closure of 7 stores is a landmark event in the transformation and upgrading of the home furnishing retail industry. It indicates that the traditional “hypermarket + standardized products” model is declining, replaced by more flexible, consumer-centric community-oriented and scenario-based retail models.

For home furnishing retail enterprises, the core challenges of community-oriented transformation include:

1. Store Layout Risks
   : Need to balance foot traffic, coverage, and rental costs
2. Operational Model Restructuring
   : Shift from “comprehensive” to “focused” to improve sales per square meter and operational efficiency
3. Intensified Channel Competition
   : Online and offline diversified channels divert traffic from traditional stores
4. Increased Localization Requirements
   : Need to deeply understand and meet Chinese consumers’ demands for instant and proximity consumption

Looking ahead, the home furnishing retail industry will enter a

(2025-2028). Enterprises that successfully achieve channel evolution, refined operation, and digital transformation will gain an advantage in the new round of competition[4][5].

---

[1] 36Kr - IKEA Closes 7 Stores in One Go, It’s No Accident (https://www.36kr.com/p/3629136049205760)

[2] The Paper - IKEA China to Close 7 Stores Starting from February (https://www.thepaper.cn/newsDetail_forward_32333259)

[3] Xinpinlue Finance - Analysis of IKEA China’s Closure of 7 Stores (https://www.36kr.com/p/3629136049205760)

[4] iResearch - 2025 China Home Furnishing and Decoration Industry Development Research Report (https://aigc.idigital.com.cn/djyanbao/)

[5] Interpreting 2025 Mid-Year Reports of Home Furnishing Enterprises: Five Signals Reveal New Industry Trends (http://www.smile2012.com/html/2025/jiajubaogao_0905/16161.html)