Ikea stated that although China’s economy shows signs of stress, the country is still a key growth market for the low-cost furniture shop.
For a few years, China was the fifth-largest market by revenue for Ingka Group, which runs most Ikea stores worldwide. But it has now dropped to tenth place, making up only 3.6% of global sales in the fiscal year that finished on August 31, 2023.
CEO Jesper Brodin told Reuters that Ingka Group is still committed to China, even though some Western companies are trying to cut their ties to the country, which has been slowly recovering from the pandemic.
“There is no middle way, you have to either believe and invest or you don’t, and in our case we are committed to China and the growth and development,” Brodin, who visited China last month, said in an interview.
China isn’t as important a market for Ingka Group as it used to be. In the 2022 fiscal year, China made up 4.3% of world sales, but in 2018, it made up 6%, the same share as the UK. There are 537 Ikea shops worldwide, and 37 are in China.
In the 2023 fiscal year, 697 million people went to Ikea shops, which is 7.4% more than the previous year. Brodin said the growth rate was much higher in China because shops were reopening and people were shopping again.
Based on sales over the past few weeks, Ingka thinks China could become one of its top five markets again.
Tolga Oncu, in charge of Ikea Retail at Ingka Group, said China is a big chance because of its size.
“Considering the size of the home furnishing industry in China and our existing market share, I am not, from the Ikea point of view, concerned so much about what’s happening in the macroeconomics,” Oncu said.
He ignored economic data that showed weaker customer demand and high youth unemployment in China.
“Normally in these circumstances, Ikea outperforms the rest,” Oncu said.
Brodin also said that China is a significant market for new store tools. He said that Ingka is trying out live shopping on social media in China, where livestreaming as a shopping tool is becoming very popular. The company wants to bring live shopping to all of its markets.
“This is interesting if we can reach people in a new way,” he said.
Ikea stated that although China’s economy shows signs of stress, the country is still a key growth market for the low-cost furniture shop.