picture source/IKEA China official website
announced store closure!
The trend of offline store closings has swept across IKEA.
Since 2022, IKEA has been performing a farewell scene in China's retail market:
On April 1, 2022, IKEA China announced the closure of Guiyang offline store .
In July 2022, IKEA China announced the closure of Shanghai Yangpu store .
html Two stores have been closed in a row for 23 months. What happened to IKEA, the world-famous furniture brand? In addition to IKEA, many large supermarket stores across the country have also been closed. The annual report of A stock Easyhome pointed out that 10 franchised home furnishing stores have been closed.Has the offline retail “closing trend” swept home furnishing giants?
The Shanghai Yangpu store opened less than 2 years ago
IKEA China announced that it had closed its Shanghai Yangpu store in early July. This withdrawal means that the country's first "small IKEA" has become history.
Picture/IKEA China Information Center
According to the official caliber, the reason for the closure is "a combination of the continuously changing consumer behavior preferences of customers in the mall's service business district, as well as IKEA's overall layout in the Shanghai market." For IKEA, the IKEA Yangpu store is China's first small-scale IKEA and an important part of IKEA's "urban store" strategy in China.
But many netizens learned that there is an IKEA in Yangpu only after hearing the news of the store closing.
Yangpu IKEA store first opened in March 2020. The store is located on the first and second floors of Area B of Guohua Plaza. In March 2021, the store underwent a renovation and upgrade of the home furnishing showroom and reopened in July 2021. In other words, the actual operating time of the IKEA Yangpu store is less than 2 years.
IKEA China stated that this layout adjustment enables IKEA to conduct business in the Shanghai market in a flexible and resilient manner. The IKEA Shanghai airport project is continuing to advance and is part of Ingka Group’s recently announced global investment of 3 billion euros.
Customer flow is lower than expected or the store owner may close due to
On the official public account, IKEA China pointed out the main reasons for closing the Shanghai Yangpu store: market changes, uncertain factors caused by the epidemic, consumer preferences, and its own reasons.
Picture: IKEA Shanghai Yangpu Store, Source/Times
"This is part of IKEA China's transformation plan, and it is also a normal and common business behavior in the retail industry." On June 17, IKEA China told a reporter from Time Weekly.
"The inability to accurately introduce the huge passenger flow of Wujiaochang business district may be the main reason why the IKEA Yangpu store cannot operate as expected." On June 17, Cui Wen (pseudonym), a brand person who has long been concerned about urban business, told a reporter from Times Weekly.
Guohua Plaza, where the IKEA Yangpu store is located, is less than 1.5 kilometers away from the Wujiaochang core business district, but the passenger flow it can handle is actually not large.
"Without the influence of the core business district, even if it is located in the sub-center of the city, the people that IKEA Yangpu District really radiates are still the same as those that ordinary community commercial entities can radiate." Cui Wen pointed out.
stores closed in 43 months
On April 1, 2022, IKEA announced the closure of its offline stores in Guiyang. This is the first time IKEA has closed a store in the Chinese market in 24 years.
On social media, many people believe that IKEA is giving up not just Guiyang, but the entire Guizhou.
Two stores have been closed in three months. IKEA, which has been operating in China for more than 20 years, is showing some signs of fatigue as it enters 2022.
Picture/IKEA’s main stores in China, source: up advocate Vocalbox chorus
In 1998, IKEA opened the first IKEA store in mainland China in Shanghai. In the past 20 years, it has operated 35 home furnishing stores in China (excluding IKEA Guiyang) , 2 experience centers and 3 Huiju shopping malls.
"The first factor affecting the operation of offline physical stores is the migration of consumption habits to online. IKEA's dilemma represents the embarrassing situation faced by most Chinese offline stores : Even if the experience is maximized, if consumption The changes in consumers' lifestyles cannot be reversed, and the downward trend of store customer flow will be difficult to stop. Peng Jianzhen, secretary-general of the China Chain Store and Franchise Association , once said publicly.
What factors are behind the frequent store closures? Will the wave of offline store closures spread to other cities?
IKEA announced: Global price increase
IKEA said in 2022 that companies will increase prices by an average of 9% in various markets due to increasing transportation and raw material costs.
IKEA said in a statement that companies continue to face severe transportation and raw material constraints, resulting in rising costs , It is expected that the situation will not make any breakthrough in the foreseeable future, and the supply chain disruption will continue until 2022.
netizen posted a picture on the community platform, "Why did you increase the price of the IKEA Malm six-drawer cabinet so outrageously? How many months has it been?" It was still 999 yuan before, but now it’s 1,499 yuan. Is it rising too fast? . "
Picture/Netizens posted pictures on social platforms.
Searched from the IKEA Tmall official flagship store and found that the price of the white oak Malm six-drawer cabinet in the store is indeed 1,499 yuan.
Some netizens also said, "I like it. The price of my four-drawer cabinet suddenly increased by 300 yuan. I’m glad I bought it earlier. "
IKEA Tmall flagship store customer service said that the news of price increase is true. customer service responded to the reason for the price increase:
IKEA has used various methods to balance the impact of the substantial increase in costs of the entire supply chain, and try to maintain Product prices are stable, but are being affected by the current transportation situation and raw material constraints. As for various industries around the world, IKEA is no exception. The prices of raw materials, transportation and logistics have continued to rise, so the prices of some commodities have also been adjusted accordingly.
IKEA's growth is weak. Can it continue to play in the Chinese market?
Ai. Media Consulting report shows that in fiscal year 2015, sales growth reached 27. After peaking at 9%, IKEA China's retail sales growth rates were 14%, 9.6% and 8.01% respectively from fiscal 2017 to 2019. China is one of IKEA's most important markets, but its performance has shown a trend of weak growth. makes people wonder: Can IKEA continue to play in the Chinese market?
According to Beijing Business Daily, the growth of the Chinese market is weak. At the same time, IKEA has been repeatedly punished by market supervision authorities.
On March 12, 2020, IKEA (China) Investment Co., Ltd. was fined by Shanghai for "producing and selling products that do not meet national standards and industry standards for protecting human health and personal and property safety." The Municipal Pudong New Area Market Supervision and Administration Bureau imposed a "confiscation of illegal income of 24,504,950 yuan and a fine of 473,428,020 yuan" "Administrative penalties; on July 23, 2021, for "violating the provisions of Article 28, Paragraph 2 (2) of this Law and publishing false advertisements", the Shanghai Municipal Administration for Market Regulation imposed a "fine of 1.7251791 yuan, Ordered to stop issuing "administrative penalties.
" Currently, IKEA is facing two major difficulties. First, the products are not particularly cost-effective compared with domestic products; second, the rapid popularity of whole-house customization has weakened IKEA's design advantages. "Lai Yang, a member of the Expert Committee of the China Chamber of Commerce, said, "Among IKEA's foreign home furnishing products, their main features are cost-effective and DIY-friendly, but this is not an absolute advantage in China. Many domestic brands The price is very cheap. IKEA is regarded as a high-end product by middle-class families. As consumer purchasing power increases and internationalization deepens, truly international high-end brands gradually enter the Chinese market, and domestic brands are also moving towards high-end, creating a diversion from IKEA's market.
Wang Jianguo, an Internet strategy expert in China's home design industry, also believes, " The proportion of young people buying domestic high-quality products and national fashion products is getting higher and higher. Chinese consumers' aesthetics, environmental protection, performance, etc. are also constantly upgrading. If IKEA If you cannot keep up with 'China's speed' and 'China's confidence' in terms of R&D innovation, deepened services, brand reputation, cultural integration, etc., you will be left behind sooner or later."
Home Furnishing Stores Are Frequently Closing
The first store of Homearch, a home furnishing brand under Alibaba , will close in less than a year after opening.
Public information shows that from Alibaba 's selected home furnishing brand homearch operating company Chongqing Lielie Network Technology Co., Ltd. Announced , Chongqing Xingguang 68 Plaza store will officially cease operations from July 15, 2022.
Chongqing Xingguang 68 Plaza store is homearch’s first store in the country. It was launched in December 2021. It has been less than a year since its opening. The store spans three floors with a total construction area of 6,000 square meters, and the store displays 3,000+ household products.
announced that due to the company's business adjustment needs, will close the Homearch Chongqing Xingguang 68 store from July 15, 2022.
Picture source/Chongqing local forum
Enterprise Chacha data shows that Chongqing Lying Network Technology Co., Ltd. was established in August 2021. The legal representative is Ji Qing, and the registered capital is 5 million yuan. Taobao (China) Software Co., Ltd. indirectly 100% owned.
The annual report of Juran Home, a listed company, revealed: 10 stores were closed in one year
The A-share listed company Juran Home disclosed the store closures in its 2021 annual report, closing a total of 10 franchised home furnishing store stores.
Picture source/2021 annual report of listed companies
Price increases have become industry keywords
Domestic home furnishing companies have also issued price increase notices recently. According to Securities Market Red Weekly news, in the recent wave of price increases for home building materials companies, companies such as Mona Lisa, New Pearl Group, Sofia , Shangpin Home Delivery , Zhibang Home Furnishing, Dinggu Jichuang and other companies All have price adjustments.
"Red Weekly" found that behind the price increases of home building materials companies' products, their net profits and gross profit margins fell to a low point in the first quarter of this year, and at the same time they encountered a surge in bad debts by some supply chain companies. Some people in the industry said that even if the price of increases, it will be difficult to cover the increased costs of home building materials companies.
At the same time, due to the difficulty in cashing out bad debts, the B-side business began to be abandoned by many building materials companies. In addition, this round of price increases will also be transmitted to the real estate terminal, squeezing the profits of real estate companies, and may cause the cost of home buyers to increase by 3% to 5%.
It’s not just the home furnishing industry. According to incomplete statistics, in 2022, “price increase” has become a keyword in many industries.
Source: IKEA China WeChat official account, Times Weekly, Beijing Business Daily, Securities Market Red Weekly, Qichacha, listed company announcements, Xiaohongshu community, public information
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Editor of this issue Jiang Peipei
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