If your impression of IKEA is still about "opening a popular store", you may need to re-understand IKEA through this article.
Recently, at the IKEA China 2023 fiscal year kick-off meeting, IKEA China’s president, vice president and other senior executives announced that after fulfilling its tens of billions of investment commitments in the past three years, IKEA China’s parent company Ingka Group plans to invest another 5.3 billion. Yuan will be used to further accelerate the digital transformation of to , accelerate the layout of offline stores, and launch more new series of products.
March 20, 2018, Ballymun, Dublin, Ireland - IKEA Dublin store. IKEA is the world's largest furniture retailer.
This is said to be a good thing to be optimistic about the Chinese market, but many people have raised questions about whether IKEA can win back Chinese consumers. What happened to
? The origin of
is that in the past four months, IKEA has successively closed its Guiyang store and Shanghai Yangpu Mall.
Many people regard this as a sign of "IKEA's low point in the 25 years since it entered the Chinese market."
IKEA has 36 stores in China. Closing two of them may not seem like a big adjustment, but it is the first time in the history of IKEA China.
Let’s take a look at IKEA’s entire marketing model to see what problems it has.
first, product.
If you look at the IKEA store as a whole as a product, although IKEA's products are popular, the types are too single.
html Most of the 136 stores are standard stores, which are what we know as large stores. It is said that in the future, it will expand various store types such as city stores, small stores, and "future+" experience stores. The Yangpu store is a small store, but it failed after many explorations and efforts.
Of course, the failure of one store does not mean that the exploration is aborted. If the product is too single, it will face the current situation of being attacked by many brands.
Vilnius, Lithuania - October 27, 2018: IKEA store in the ancient street of Vilnius. Interior view of the furniture room in an IKEA store
Such as Oppein , Sofia , Gujia , Manhua and other leading home furnishing companies that have been listed, or home furnishing distribution companies such as Easy Home, Red Star Macalline, Fusenmei Giants in the field, or emerging Internet home brands such as Lin's Wood Industry , Genji Wood Language and so on.
Another problem is that in the wave of intelligence, people's mobile phones have become completely intelligent. Electric vehicles are leading the intelligence of the automobile industry. Xiaomi and other brands have already begun to explore the intelligentization of homes. In the future, it is difficult to predict whether those smart but not smart products in IKEA stores will be completely abandoned by China's young consumer groups. Whether IKEA can maintain its positioning of "young, fashionable and environmentally friendly".
Second, channels.
First, the failure of small stores means that the reality we have to face is that the market is sinking and channel penetration is blocked. That is to say, in addition to the existing 34 stores, if you want to open stores, you will be cautious in first-tier and new first-tier cities, and second-tier cities. The model Guiyang and Yangpu stores in third- and fourth-tier cities did not succeed, and they need to be piloted again before they can be rolled out.
It is said that IKEA’s project plans for Wuhan Optics Valley No. 2 store and its project plans in Taiyuan have been shelved. According to industry insiders, IKEA, which has a small number of stores, has begun to close offline stores, and many city project plans have aborted. These all show the challenges IKEA encounters in offline traffic.
Vilnius, Lithuania - October 27, 2018: IKEA store in the ancient street of Vilnius. Interior view of the furniture room in an IKEA store
Second, IKEA’s online and offline integration capabilities are worrying.
According to the relevant person in charge of IKEA, "In fiscal year 2021, IKEA China's online sales increased by 74% compared with the previous fiscal year, and the number of visits to IKEA's own online channels in the Chinese market reached 230 million times. As of early August 2022 In the fiscal year, IKEA China’s online channels showed a growth trend, with an increase of more than 20% year-on-year in the previous fiscal year.”
However, IKEA launched e-commerce at the end of 2018, with a late start and a small base.IKEA's two major domestic competitors, Easyhome and Red Star Macalline, had already begun exploring online channels as early as 2013.
Last year, Juranzhijia’s intra-city website had an average of 192,000 daily visitors, 758,000 online customers, and guided transactions of 13.3 billion yuan; Red Star Macalline, under the strategy of “integration of home decoration and home decoration, online and offline integration”, Achieved revenue of 15.513 billion yuan, a year-on-year increase of 8.97%, and net profit of 2.047 billion yuan, a year-on-year increase of 18.31%.
Changsha IKEA home
Wang Jianguo, an Internet strategy expert in China's home furnishing/design industry, said: "If you only regard the Chinese market as part of the international market, you may have made a strategic mistake. In the Internet era, IKEA will use its past advantages Complete copying may cause discomfort. The domestic market is quite special, and domestic companies are integrating online and offline much faster than international companies. If IKEA’s investment is not fully integrated into the local market, it will be ineffective to some extent.”
To sum up, whether IKEA can win back Chinese consumers is actually exaggerated and is a bit of a headline. IKEA's development in the Chinese market has been hampered by the epidemic, but its appeal to consumers is still there. The author's wife and her best friends often choose Huiju and IKEA for weekend gatherings. But IKEA’s confusion and anxiety when looking at the future are exactly where the Chinese home furnishing brand’s entry point and focus lie.
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