IKEA has a 6.3-billion-yuan (US$860 million) plan for investment in China over the next three years, with much of that going on price reduction on over 300 products. The company is also closing its Jing'an City Store in Shanghai.
The market for home furnishings has not fully recovered with retail sales growing only 0.1 percent in the past year. Faced with this situation, many brands have begun to reduce prices.
In addition to being more price-sensitive, consumers are also changing their purchasing channels and buying furniture online. Over the past two years, IKEA has launched WeChat mini-programs, an official app, and a Tmall store with around 50 employees in Shanghai working on live-streaming.
IKEA's store traffic has returned to pre-pandemic levels with plans to introduce a new store type with a smaller footprint where customers can consult with designers. IKEA plans to open five or six such stores in Beijing and Shenzhen.