Analysis of IKEA China's Omnichannel Strategic Transformation After Missing the E-Commerce Golden Period

Based on the collected materials, I will write an in-depth analysis report on IKEA’s omnichannel strategic transformation for you.

As the world’s largest home furnishing retailer, IKEA once achieved brilliant results in the Chinese market. In 1998, IKEA opened its first store in mainland China in Xuhui, Shanghai, and instantly ignited market enthusiasm with products such as the RMB 39 Lack side table and the RMB 9.9 Fargrik cup. On the opening day of the Beijing Siyuanqiao store in 2003, 35,000 people poured into the store, setting an industry record [1].

However, IKEA appeared hesitant amid the global e-commerce wave. In 2008, 82-year-old founder Ingvar Kamprad used his veto power to block IKEA’s investment in online sales, as he was worried that online sales would divert in-store foot traffic [1]. This decision caused IKEA to miss the golden decade of China’s e-commerce development from 2008 to 2018.

Data shows that from 2016 to 2018, IKEA China recorded three consecutive years of declining sales growth rates. While local home furnishing brands rose rapidly with the help of e-commerce platforms, IKEA only launched its online mall covering 35 domestic cities in October 2018, at least two years later than domestic competitors [1].

IKEA China’s performance has continued to decline from its peak:

Falling from RMB 15.77 billion in 2019 to RMB 11.15 billion in 2024, IKEA China’s sales dropped by nearly 30% [1]. Globally, IKEA’s parent company Ingka Group saw its global revenue drop 5.5% year-over-year to €41.864 billion in fiscal year 2024, while its net profit plummeted 46.5% year-over-year to €806 million [1].

Facing this predicament, IKEA launched an omnichannel strategic transformation, including full-scale deployment of online channels, adjustment of offline stores from “closing small stores and expanding large stores” to “precision layout”, and digital capability building.

IKEA is accelerating the construction of a multi-level online channel system:

• Official Platforms
  : Official website, IKEA APP
• Social E-Commerce
  : WeChat Mini Program, WeChat Official Account
• Third-Party E-Commerce
  : Tmall Flagship Store, JD.com Flagship Store
• Instant Retail
  : Local life platforms such as Meituan and Ele.me

As of fiscal year 2025, IKEA’s online channels have covered 301 cities across the country, with online accounting for 25.7% of total sales [2]. In fiscal year 2025 (September 2024 - August 2025), the total omnichannel visitor count reached 477 million, a year-over-year increase of 4.7%, while online sales grew 2% year-over-year [2].

IKEA China is transforming from “closing small stores and expanding large stores” to “precision layout”:

• Announced in January 2026 the closure of 7 stores in Shanghai Baoshan, Guangzhou Panyu, Tianjin Zhongbei, Nantong, Xuzhou, Ningbo, and Harbin [3]
• Closed experimental small-format stores such as Shanghai Yangpu Store and Jing’an City Store

• Open more than 10 small-format stores within the next two years
• The Dongguan store is scheduled to open in February 2025
• The Beijing Tongzhou store is scheduled to open in April 2025

• The area of small-format stores is 60% smaller than that of traditional large stores
• Locations focus on core business districts or communities
• Strengthen the transformation of the “Future Home Experience Space” concept

IKEA continues to invest in digital transformation:

Globally, IKEA has invested more than €1 billion in automation and digitalization, including robot warehousing, AI-driven demand forecasting, and distribution route optimization systems [4].

1. Increased Online Penetration
   : The proportion of online sales increased from less than 10% in 2019 to 25.7% in 2025 [3]
2. Omnichannel Traffic Growth
   : Omnichannel visitor count reached 477 million, a year-over-year increase of 4.7% [2]
3. Low-Price Strategy Taking Effect
   : In fiscal year 2024, low-priced products accounted for 38% of total sales, with sales volume growing over 70% year-over-year [1]
4. Brand Digital Transformation
   : Reach young consumer groups through live-streaming sales, social media marketing, and other methods

1. Intensified Local Competition
   :
   • In the 2024 Double 11 Tmall home furnishing sales rankings, the top three were Yeswood, Lin’s Woodworking, and Sleemon, while IKEA only ranked 7th [1]
   • Local brands leverage “thousand-yuan pricing to tap into high-end material dividends”, directly impacting IKEA’s cost-effective positioning
2. Lagging Product Updates
   :
   • New product development cycle is as long as 3-6 months
   • Swedish designers first came to China in 2018, resulting in insufficient response to Chinese market demand [1]
3. Pressure on Store Sales per Square Meter
   :
   • The average daily sales per square meter of traditional large stores has dropped below RMB 100
   • Rent in fringe areas of core cities has increased by over 300% in a decade [3]

IKEA China has clearly entered a new phase shifting from “scale expansion” to “quality growth”:

1. Focus on Core Markets
   : Designate Beijing and Shenzhen as key pilot cities [2]
2. Asset-Light Operations
   : Develop in synergy with Ingka Group’s Livat Shopping Malls to achieve resource sharing [3]
3. Continuous Price Investment
   : Invest RMB 160 million in fiscal year 2026, of which about 70% will be used for price reductions of popular products [2]

1. Enhance Localization Capabilities
   : Establish product design and development teams closer to the Chinese market
2. Supply Chain Optimization
   : Strengthen cooperation with local Chinese suppliers to reduce costs
3. Improve Membership System
   : Build closer customer relationships through digital tools
4. Experiential Retail
   : Leverage the scenario experience advantages of offline stores to complement online channels

After missing the e-commerce golden period, IKEA is seeking a performance turnaround through omnichannel strategic transformation. Despite challenges such as the rise of local brands and changes in consumer habits, IKEA still has the potential to achieve strategic transformation in the Chinese market by virtue of its strong brand influence, supply chain capabilities, and global resource advantages.

Key success factors include:

• Accelerate the pace of digital transformation
• Enhance product localization
• Optimize store network layout
• Strengthen price competitiveness
• Build omnichannel collaboration capabilities

IKEA’s transformation path provides important insights for traditional retail enterprises: in the digital era, only by proactively embracing changes and continuously innovating can market competitiveness be maintained.

[1] CBNData - “IKEA’s Performance Slump: Where Did ‘Nordic Style’ Fail?” (https://www.cbndata.com/information/293819)

[2] Shanghai Daily - “IKEA to Close 7 China Stores Amid ‘Retail Strategy Shifts’” (https://www.citynewsservice.cn/articles/shanghaidaily/news/ikea-to-close-7-china-stores-amid-retail-strategy-shifts-ekdqjxqm)

[3] Huxiu - “Closing 7 Stores in a Row: Is IKEA Collapsing in China?” (https://www.huxiu.com/article/4824398.html)

[4] Digital Defynd - “IKEA’s Financial Goals & Strategy [2025]” (https://digitaldefynd.com/IQ/ikea-financial-goals-strategy/)