Ikea, the renowned budget furniture retailer, reaffirms its dedication to China, considering it a pivotal growth market, as emphasized by executives at Ingka Group, the largest owner of Ikea stores worldwide.
Although China has transitioned from being among the top five markets by revenue for Ingka Group to the tenth position, contributing to 3.6% of global sales in the 2023 financial year, CEO Jesper Brodin remains unwavering in their commitment. Brodin states, «There is no middle way; you have to either believe and invest or you don’t. In our case, we are fully committed to China’s growth and development.» This commitment persists despite the trend of some Western companies seeking to reduce their exposure to China due to its slower post-pandemic recovery.
The importance of China as a market for Ingka Group has shifted over the years. In the 2022 financial year, it represented 4.3% of global sales, down from 6% in 2018 when it was on par with the UK. With 37 Ikea stores operating in China as part of a global network of 537 locations, the company has made a remarkable impact.
In the 2023 financial year, Ingka Group witnessed a 7.4% increase in visits to its Ikea stores, with China experiencing even more significant growth. The surge followed store reopenings and the return of eager shoppers.
Ingka Group recognizes China’s potential to once again rise among its top five markets based on recent sales performance. Tolga Oncu, head of Ikea Retail at Ingka Group, underscores China’s vast opportunities in the home furnishing industry, highlighting that the size of the market is a key attraction.
Even amid concerns of weaker consumer demand and high youth unemployment in China, Oncu expresses confidence in Ikea’s ability to outperform economic challenges. He remarks, «Normally in these circumstances, Ikea outperforms the rest.»
China is also a focal point for Ingka Group’s exploration of new retail technologies. CEO Jesper Brodin highlights the growing trend of social media livestreaming as a shopping channel in China, indicating that the company is actively experimenting with live shopping in the Chinese market with plans for global expansion. Brodin notes, «This is interesting if we can reach people in a new way.»
In conclusion, despite the evolving economic landscape, Ikea’s commitment to the Chinese market remains unyielding. This commitment aligns with the company’s growth and innovation strategies, ensuring its continued global success.