The furniture retailer is putting over $1.4 billion into an expansion drive in the next year, with the intention to open multiple new locations prior to the close of 2019 and to refresh stores already in existence, the Financial Times reported.
The plan would help “accelerate expansion offline and online,” Anna Pawlak-Kuliga, the company’s top executive in the country, told the outlet. While the company came into China two decades ago and has brought 27 stores to the country, its sales growth has slowed as it grapples with increasing competition from brick-and-mortar stores and eCommerce.
IKEA To Accelerate China Expansion With $1.4B Investment – https://t.co/vqOAyU9H2M
— Global Witness (@FakeWelt) September 27, 2019
China is part of the company’s top five markets, offering revenue of Rmb15.5bn in 2018, a 6 percent increase from the year prior. However, that was lower than the 19 percent growth in 2016, per information the company reportedly offered local media. According to FT, the company’s big-store formats have become less attractive to many shoppers who are used to the convenience of eCommerce.
IKEA is now moving into smaller cities in China, in hopes that newly wealthy shoppers will select its items. The company is also creating a new, small-format store in the nation. As the report noted, thousands of shoppers came out for the opening of IKEA in Zhengzhou (the capital of the Henan province) last month, and the brand reportedly plans to bring more stores into two other provincial capitals.
In other international IKEA news, reports surfaced earlier this year that the furniture retailer opened its first store in the center of Paris in the Madeleine district. The two-level store will employ 140 people, features a restaurant and salad bar, and is said to host cooking classes as well as workshops on furniture repair and home renovation.
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