Ikea Is Closing Down?
In what amounts to an exceedingly shocking maneuver, Ikea announcing its decision to close down a portion of its business.
It’s no secret that a lot of brick-and-mortar retail businesses are struggling nowadays. Unless you happen to be shopping in an outlier like Target or Walmart you’ll likely notice that stores are not as full on any given day compared to even just five years ago. In fact, many experts are predicting that shopping malls as we know them will soon cease to exist. Even retail giant Kohl’s could very well go the way of the dodo bird. Now, according to CNN, Ikea is being forced to take a good hard look at its business, too.
Thankfully, Ikea’s woes seem limited to China for now. The Swedish Furniture manufacturer relayed that it will likely shut down the Ikea Store that it currently operates in Shanghai’s Yangpu district. Ikea detailed that there were multiple factors that led to the conclusion that they will most likely have to shut down the store. First, there has been a massive shift in how consumers shop following the onset of the pandemic. Second, Shanghai has been subject to particularly strict Covid-19 lockdowns because of numerous instances where cases had surged. These repeated lockdowns severely impacted sales at the Ikea in the Yangpu district. The closure of the Yangpu district store will mark the second Ikea store closure in Shanghai.
Ikea explained its rationale via a statement the company posted to WeChat. “In order to better meet consumers’ growing demand for online consumption and services, as well as the further preference for convenient delivery accelerated during the epidemic, Ikea China will introduce customer touchpoints in the Shanghai market,” read the statement. The statement went on to detail that Ikea did not arrive at its probable decision to close the store in Shanghai lightly. The company emphasized that they came to the conclusion after “a comprehensive analysis of the long-term feasibility of Yangpu Store.”
Interestingly enough, Ikea isn’t the only big retail conglomerate to start pulling some of its presence out of the Chinese market due to falling sales. Airbnb relayed that it decided to end operations in China after demand fell significantly because of tight travel restrictions and continuous lockdowns. And even more interesting is that it’s not just businesses with a physical presence that are restructuring their relationship with Chinese consumers. Nike announced that it was discontinuing its popular Run Club app. And Amazon announced its decision to completely shut down its Kindle store in China. Although, in Nike’s case it did disclose that shutting down the Run Club app would be temporary. The fitness behemoth outlined that it plans to reformat the app to better tailor it to its Chinese audience.
Overall, Ikea shutting down stores and the pattern of retail closures in China, in general, is symptomatic of the greater shift in consumer shopping habits worldwide. To be honest, the way people shop had been changing for quite some time. However, the pandemic served to accelerate the rate at which businesses were forced to recognize and react to it. In the coming years, it is very likely that in-person shopping and the number of brick-and-mortar stores still thriving in their physicality will begin to look measurably different. It is simply the dynamics of the principle of cause and effect.
