Summary of Key Points
After recently closing 7 large stores, IKEA has commissioned JLL to sell its self-owned properties in 8 cities, including Shanghai and Guangzhou (which have been cleared and are rent-free, ready for immediate delivery). The aim is to dispose of non-operating assets, recoup funds, and optimize operations. In the future, IKEA will shift from expanding with large stores to focusing on more targeted, localized strategies. The company plans to open 10 smaller community-based stores in Beijing and Shenzhen within two years and will also collaborate with JD.com and Taobao for instant retail services to counter the pressure posed by e-commerce on physical retail.
What is IKEA Selling? And Why Now?
What IKEA is selling this time are not furniture items, but 8 properties it acquired in cities such as Baoshan, Shanghai; Panyu, Guangzhou; and Zhongbei, Tianjin (corresponding to the 7 closed stores, plus possibly one in Guiyang). These properties have been emptied and are rent-free, allowing buyers to use them immediately for purposes such as converting them into shopping malls or warehouses.
The main reasons for selling now are twofold:
1. Disposing of “idle assets”: Keeping these vacant properties incurs maintenance and property management costs; it’s more profitable to sell them.
2. Optimizing operations and recouping funds: IKEA views this as part of “optimizing its omnichannel ecosystem” – in other words, using the money to invest in more profitable ventures, such as opening smaller stores or developing online businesses.
Why Were the Previous Large Stores Closed? What Challenges Did They Face?
IKEA used to operate large, spacious stores (covering several thousand to tens of thousands of square meters), but these 7 stores encountered various issues:
- Location problems: Some stores, like those in Baoshan, Shanghai, and Panyu, Guangzhou, were located in less desirable areas with poor accessibility or insufficient foot traffic.
- High costs: The high rent, utilities, and employee salaries for large stores became a significant financial burden when sales were low.
- E-commerce competition: Consumers have become accustomed to buying furniture online (through platforms like Taobao, JD.com, and Pinduoduo), where prices are transparent and delivery is convenient, diminishing the appeal of IKEA’s in-store experience.
- Price competition: Other brands (such as Uniqlo, Muji, or local furniture stores) frequently offer discounts, making IKEA’s pricing less competitive.
Closing these stores was a way to minimize losses.
Will IKEA Stop Operating Large Stores in the Future? Instead, It Plans to Open “Community-Based Small Stores”
Currently, IKEA has 36 outlets in China (33 large stores, 1 experience store, and 2 design centers). The future direction includes:
- Moving from a broad presence to a more consumer-centric approach: IKEA plans to open over 10 smaller stores in Beijing and Shenzhen within two years, located near residential areas for easier access and convenience.
- Complementing large stores: These small stores will focus on selling frequently used products (such as storage containers and kitchen utensils) and will serve as pick-up points or experience centers for online orders, working in conjunction with larger stores and online platforms.
In other words, IKEA is shifting from a “wait-for-us” model to a “we-visit-you” approach.
How Does IKEA Respond to the Challenges of E-commerce?
Physical retail has been struggling in recent years due to the rapid growth of e-commerce. In 2026, the top 100 Chinese e-commerce companies generated sales of 2.21 trillion yuan (equivalent to 6 billion yuan per day), with giants like JD.com and Alibaba dominating the market. IKEA needs to adapt:
- Implementing instant retail: By partnering with JD.com and Taobao for flash sales, customers can place orders on their phones and have products delivered quickly (e.g., within an hour) to address the issue of waiting for deliveries.
- Diversifying platforms: IKEA will expand its presence beyond its own app by opening stores on popular platforms like JD.com and Taobao to reach a wider audience.
The essence of this strategy is to integrate online and offline services, ensuring that customers can experience IKEA products both in physical stores and online.
Behind This Transformation: IKEA’s “Major Strategic Shift”
Previously, IKEA relied on large stores and low prices to succeed. However, the market has changed: consumers are more fragmented (e.g., making purchases while watching videos) and demand immediate fulfillment. IKEA’s new approach focuses on efficiency rather than scale:
- Closing unprofitable stores and selling idle assets to reinvest in more efficient operations.
- Opening small stores in communities to capture local traffic in the “last mile” of sales.
- Engaging in instant retail to compete with e-commerce platforms.
This shift is not a sign of IKEA’s decline but an adaptation to new market trends. Just as people now prefer convenience stores over large supermarkets, IKEA is adapting to consumer preferences.
In summary, IKEA’s sale of assets, closure of large stores, and opening of smaller stores are all part of its efforts to survive and thrive in a changing market. For consumers, this may mean more convenient shopping options (with closer and faster deliveries), although the one-stop experience offered by large stores might decrease. This is a necessary trade-off for physical retail businesses.