On January 1st, the Beijing Municipal Bureau of Commerce released data showing that during the New Year period, key monitored businesses such as department stores, supermarkets, specialty stores, catering, and e-commerce achieved sales of 2.51 billion yuan. Among them, the growth of catering consumption is strong, with a year-on-year increase of 27.9%. The passenger flow of 60 key commercial districts in the city was 22.175 million, a year-on-year increase of 40.5%. On the day of Beijing's New Year's Eve gathering, the number of passengers reached the peak of the year; From December 6th to January 3rd, Beijing Huiju grandly held the "Gathering for Ten Years, Free Gathering" 10th anniversary celebration event, with the theme of "Picking up the Light Amusement Park", decorating the mall into a dreamy carnival. The scene was crowded with people and lively, with over 7000 parking spaces in short supply. Netizens commented on the drama: 'It feels like a hundred million people have gathered here.'.

Image source: Dianping @ Yuxuan's Gourmet Hut

In sharp contrast, IKEA's stores in China are becoming increasingly deserted and its sales are starting to decline. The decline of IKEA and the popularity of Huiju are accompanied by the helplessness and confusion of "not understanding the darkness of the night during the day".

The fall of internet celebrities

　　Starting from 2022, IKEA has experienced a wave of store closures in China, with IKEA stores in Guiyang, Shanghai Yangpu, and other places closing down. On October 11th of this year, IKEA's franchisor, Ingka Group, released its fiscal year 2024 report. From September 2023 to August 2024, IKEA's total retail sales were 45.1 billion euros, a decrease of 5.3% compared to last year. At the same time, IKEA has also launched price reductions for over 500 of its products. Faced with sluggish performance growth, Ye Sibo, CEO of IKEA brand operator Ingka Group, publicly stated, "To be honest, we have never experienced such a situation since 2008

　　According to the financial report released by IKEA, China was once IKEA's fifth largest market in the world. In 2018, China's sales accounted for 6% of global sales, and the market size was the same as that of the UK. But by 2023, China will only account for 3.6%, dropping to the top ten, and by 2024, this proportion will further decrease to 3.5%.

　　Huiju, along with IKEA, belongs to the Yingka Group. Since 2009, Yingka Shopping Center has entered the Chinese market and strategically cooperated with IKEA. The company is committed to building Huiju into a leader in Chinese party experience centers. Why does IKEA, formerly known as the "top tier" IKEA, need a shopping mall to empower them, as they share the same service philosophy, operational model, and business style? Why is it that even though traffic has reached the doorstep, there is still no way to stop the decline in sales? Based on street interviews with users at Huiju in the past year, in this issue, Zhizhi Research Institute will take you to listen to consumers' thoughts together:

01

Embarrassing brand positioning

A、 Low prices cannot compete with 'flat substitution'
　　A senior executive from IKEA China stated that currently, low-priced and super low-priced products account for about 50% of IKEA China's price matrix. It can be seen that price reduction is already IKEA's trump card at this stage. IKEA's price reduction is also due to the industry's internal competition, and in recent years, local home furnishing brands such as Red Star Macalline and Juran Home have also launched discount promotions in the domestic furniture industry.

　　But for young people who rely on renting a house to make a living, furniture from IKEA that costs hundreds or thousands of yuan still seems too expensive. Small furniture brands such as "Nordic style", "IKEA style", and "Ins style" that offer low prices but have a strong atmosphere on Taobao and Pinduoduo have gained greater advantages in price.

B、 The product does not meet the expectations of high priced customers

　　Due to IKEA's initial entry into the Chinese market, which focused on the positioning of "young people's first home" as a mid to low end furniture, especially with the widespread use of IKEA home decor in the domestic rental market in recent years, IKEA's brand image as belonging to the "cost-effective route" has been further confirmed. The high-end solid wood furniture category has always been considered IKEA's comfort zone. Therefore, whether from the perspective of brand positioning or product design, IKEA finds it difficult to capture the consumption mindset of high-end furniture consumers.

　　To make matters worse, although IKEA claims to prioritize environmental protection, some users have reported that the materials used in its products may not be as advertised, and may even have issues such as odors. The negative feedback on the quality of such products has further raised the threshold for IKEA to enter the high-end market.        

02

Do you want the joy of DIY?

Or efficiency?

　　When IKEA entered Shanghai in 1998, there were almost no furniture brands in the Chinese market that adopted the DIY (Do It Yourself) assembly model, and IKEA's "do it yourself" concept appeared both fresh and unique. At that time, China's furniture manufacturing industry was dominated by regional small factories and workshops, lacking nationally renowned brands.

　　In terms of product design, traditional Chinese solid wood furniture is mainly used, with a heavy and retro furniture design that emphasizes durability and quality. IKEA's "Nordic minimalist style" has impressed consumers;

　　At the same time, in terms of product production cycle, the long waiting time has also been crushed by IKEA's "immediate pickup" model; After sales service is even more difficult to effectively guarantee. At that time, there was a general lack of comprehensive after-sales service, and when quality problems occurred, consumers often had difficulty obtaining quick repairs or returns.

　　Therefore, back then, it provided an efficient model for the upgrading of China's furniture industry in terms of shopping environment, product design, delivery cycle, and after-sales service.

　　However, in recent years, Chinese consumers have become increasingly inclined towards fast, convenient, and on-demand shopping methods: after placing an order on e-commerce platforms filled with various styles, customers can enjoy home delivery or even on-site installation services within a week, while also having reliable after-sales support. At this time, IKEA's large stores and shopping experience that requires time to slowly select and assemble may not fully conform to this trend.   

03

Weak Internet
Shopping experience "aging dragon clock"

　　Many consumers feedback that IKEA has shortcomings in "shopping process and experience" in terms of Internet.

　　This is also a common issue for many traditional retail brands in their digital transformation. IKEA's experiential shopping model, with offline stores as its core, was once an important factor in its success. However, in the context of the rapid development of digitalization and online consumption trends, the problem of insufficient integration of offline and online services and inadequate technical support has become particularly prominent.

　　IKEA's stores have a large area and a wide variety of products, but they lack in store navigation tools. More than half of consumers have given feedback, and employees are not familiar with the location of products in the store. They can only provide a rough area range, and there are still many obstacles to picking up small items. Consumers may need to spend a lot of time shuttling between various exhibition halls to find specific products, especially first-time customers who may lose their direction.

　　Some products may not be displayed clearly or in the expected area for consumers, further increasing the complexity of shopping.

　　For mature brands like IKEA, online channels are also an extremely important platform for purchasing. However, IKEA's online platforms (official website or app) are relatively outdated in terms of user experience and have various problems.

　　For example, the product classification is not clear enough, and the pictures or descriptions of some products are not detailed enough, which affects consumer decision-making; The search function is weak, making it difficult for consumers to quickly find the products they need through keywords; Some products have not been launched, resulting in consumers being unable to find products in offline stores on the website.

　　Meanwhile, the quality of delivery services has always been a pain point in user feedback, especially in the delivery of large items. Some consumers have reported that the waiting time for IKEA's online orders is too long, especially for bulk furniture products, leading to a decrease in shopping experience. Especially in some big cities, IKEA's delivery efficiency may have a certain gap compared to e-commerce platforms such as JD.com and Tmall, which makes some consumers more inclined to choose more convenient shopping methods.

　　In addition, compared to the flexible and convenient return and exchange services brought about by the overall upgrading of the domestic logistics industry, IKEA has always been characterized by self pickup and bulk commodities, but some consumers have reported that its return and exchange policies are not flexible enough. Some consumers have reported that the return and exchange process is complicated, especially for large items that require personal attendance or complicated logistics, leading to dissatisfaction after shopping.

　　Both online and offline combination punches are slightly weak in the rapidly developing Chinese market.

Gee's suggestion

　　The development of enterprises is like that of people, 'sailing against the current, if you don't advance, you will fall behind'. Multinational enterprises such as IKEA, if they want to remain competitive in the era of "Internet plus", only pay attention to the development rhythm and market rules of the local market, such as using intelligent in store navigation, optimizing online platform experience, strengthening online offline integration, using big data to accurately operate and other ways to improve consumers' shopping process and experience. This can not only attract more consumers, but also achieve sustained growth of the brand in the digital age. Only in the context of global industrial upgrading can we maintain our position advantage.