u, Tianjin, Ningbo, Harbin and several cities in eastern Jiangsu province. The closures will reduce the retailer’s brick-and-mortar footprint to 34 stores nationwide, even as it maintains other outlets in the same towns and accelerates its push online. A housing-led slowdown forces a reset The move hints at a sober reassessment of China’s retail fundamentals. A prolonged property downturn has wiped out household wealth, weakened demand for new-home furnishing and pushed consumers into a more defensive spending mode. Retail sales growth has slowed for six consecutive months, and furniture, closely tied to housing transactions and renovation cycles, has been among the most exposed categories. Ikea’s expansion in China was long anchored in cavernous suburban warehouses, designed for destination shopping by first-time homeowners willing to spend hours browsing and loading flat-pack furniture into cars. But slower home sales, rising urban density and changing mobility patterns have eroded the viability of that model. China, which accounts for about 3.5 per cent of Ikea’s global sales, remains a sizable market, but it is no longer the growth engine it once appeared to be. Instead of chasing scale, the company now faces a more complex challenge: how to remain relevant in a market where demand is flatter, competition is fiercer, and consumer behavior is evolving quickly. From scale to “precision-driven penetration” The store closures, however, are paired with a clear strategic pivot towards what the company calls “precision-driven penetration”. “We will shift from scale expansion to precise cultivation, exploring Beijing and Shenzhen as key markets, and opening more than ten small stores in the next two years,” the company said in its statement. New locations in Dongguan and Beijing’s Tongzhou district are expected to open in the first half of this year. Industry experts saw this shift as part of a broader recalibration underway among multinational retailers in China. As mobility patterns change and urban density increases, the economics of sprawling big-box formats have weakened, particularly in peripheral districts where footfall is harder to sustain.  Smaller stores, by contrast, have lower operating costs, reduce reliance on destination shopping and bring curated assortments closer to dense residential catchments. They also align with Chinese consumers’ shopping behavior, which prioritizes smaller items and more frequent, lower-value transactions. Crucially, these compact formats offer flexibility. They can function simultaneously as showrooms, consultation spaces, order hubs and last-mile fulfillment nodes, tightly integrated with digital channels rather than competing with them. Digital reach and price discipline take center stage Meanwhile, the company continues to expand its online presence through its own platform as well as flagship stores on JD.com and Tmall. A dedicated JD.com store launched last August was designed to accelerate online sales growth, which now accounts for a rising share of Ikea’s China revenue, particularly for accessories and small furniture. Price has become an equally critical lever. In its 2026 financial year, Ikea China plans to invest 160 million yuan ($22.9 million) and cut prices on more than 150 products, 70 per cent of which are bestsellers. Over the past two years, the company has invested 673 million yuan to roll out more budget-friendly ranges.  However, competition has intensified from both domestic furniture players and online-first platforms that operate with faster supply chains and leaner cost structures. While Ikea retains advantages in scale, sourcing and brand recognition, those strengths matter less if pricing drifts out of sync with consumer expectations.  A strategic market, even without hypergrowth China remains strategically important beyond top-line sales. It is Ikea’s largest global sourcing market, deeply embedded in its supply chain and cost base. That makes a full retreat neither feasible nor desirable. Instead, the company is opting for selective consolidation, exiting underperforming locations while reinvesting in formats and cities with clearer paths to profitability. In China, growth is no longer guaranteed, and scale alone is no longer a shield. The challenge now is resilience: building a retail model that can flex with economic cycles, shifting housing patterns and evolving consumer priorities. Further reading: Ikea’s US expansion plan: New stores, lower prices and a major NYC flagship.