IKEA closes seven big-box stores in China, sharpens shift to smaller formats

by LI Ye

IKEA will close seven large-format stores in China over the coming month, accelerating a move away from capital-intensive big boxes as a prolonged property downturn and changing shopping habits weigh on home-furnishings demand.

The closures span Shanghai, Guangzhou, Tianjin, Nantong, Xuzhou, Ningbo and Harbin. IKEA said customers will continue to be served through nearby stores as well as its website, mobile app, WeChat mini-program and flagship stores on major e-commerce platforms.

IKEA China told Jiemian News the affected stores had served as key offline touchpoints during earlier expansion phases. The decision reflects efforts to cut costs, lift efficiency and reallocate resources toward channels closer to consumers, it said, adding that opening or shutting units aims to raise sales productivity per square meter as part of a broader operating overhaul.

The move highlights pressure on large, land-heavy retail formats in China. IKEA's long-standing model relies on buying land and building megastores to lock in operating costs and coverage. That approach paid off during China's property boom, but has become a drag as the sector cools and new-home deliveries slow, dampening renovation and furniture demand.

Property investment and mortgage lending contracted last year, and sales at large building-materials and home-furnishings malls fell, squeezing margins across the sector and weakening the economics of oversized stores.

Heavy assets also complicate exits. Large IKEA sites are hard to sell or lease quickly given their scale and capital requirements. A store shuttered in Guiyang in 2022 has appeared repeatedly in public property listings without securing a long-term tenant, underscoring the illiquidity risk tied to such assets.

To defend traffic, IKEA has leaned on pricing. In the past two fiscal years it rolled out more than 500 lower-priced products annually and plans to invest 160 million yuan in fiscal 2026 to add over 150 more budget items. The company has said discounts help retain customers but cannot offset structural headwinds.

The closures form part of a broader pivot to smaller, more flexible formats. IKEA said it will shift from rapid footprint expansion to targeted growth, with Beijing and Shenzhen as key test markets. Over the next two years it plans to open more than 10 small stores, including locations in Dongguan in February 2026 and Beijing's Tongzhou district in April, while strengthening online operations.

These compact outlets, focused on design consultation and ordering, allow locations closer to residential areas and transit hubs, with lower upfront investment and faster entry or exit. IKEA has said two to three such stores in a market can complement a traditional big box.

The strategy mirrors IKEA's global push toward city-center studios and planning hubs, first piloted in markets such as London and New York, as it adapts to denser urban living and more digital shopping behavior.

IKEA said the closures do not signal a retreat from China. After the adjustment, it will still operate 34 offline customer touchpoints nationwide, alongside three proprietary digital channels and flagship stores on two e-commerce platforms, and will continue investing in stores, digital tools and last-mile delivery.