The article was amended on 14 September to include a comment from INGKA Holding B.V., of which IKEA China is a part.
IKEA has announced a new investment of 5.3 billion RMB ($768 million) in China, which will go toward its digitalisation programs, enhancing operational efficiency, and new openings of stores and shopping centres.
The funds will mainly be used for further expansion of digital platforms, development of relevant products and solutions, as well as the upgrade of an integrated omnichannel experience, as per Anna Pawlak Kuliga, CEO and president of IKEA China at a press conference on 24 August.
The INGKA Holding B.V., which operates IKEA China, added the group will also announce accelerated investments in China in the renewable energy sector, including wind power.
This additional capital is on top of the “biggest-ever” 10 billion RMB ($1.45 billion) investment that has been allocated to the mainland market in the past three years as part of the company’s efforts to accelerate the transition to online retail following the fallout of the pandemic, and changes in consumer behaviours as a result.
The Swedish home furnishing retailer had to shut down two of its physical stores this year in China, including the one in Shanghai’s Yangpu district earlier in July after the closure of the outlet in China’s Southwestern city of Guiyang in April but the store’s online arm was preserved.
The offline scale-down, however, doesn’t seem to have taken a toll on IKEA’s overall performance. The company clocked a record high sale of €41.9 billion ($42 billion) in 2021 (exceeding pre-COVID levels at €41.3 billion the equivalent of $41.39 billion in 2019), with online sales being the biggest driver. And the Chinese digital marketplace knocked out a year-on-year increase of 74%.
In addition, the company saw an accumulated 230 million visits to its online platforms, which include its official app, the flagship store on China’s e-commerce giant Tmall and the mini program embedded in Tencent’s super messaging app WeChat.
As earlier digitalisation efforts have come to fruition, it naturally incentivises the business to step up its digital push, and live streaming has been at the focus, which is set to increase five-fold by the end of this year following the 200 live sessions recorded in 2021, according to Francois Brenti, vice president at IKEA China.