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Ikea is considering closing another store in China

By Laura He, CNN Business

Ikea has already shut one store in mainland China this year and could close another in Shanghai in early July.

The Swedish furniture and home goods chain said Monday that it was considering shutting its store in the Yangpu district of the city in response to changing shopping patterns during the pandemic.

“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,” it said in a statement posted on WeChat.

“However … Ikea China has conducted a comprehensive analysis of the long-term feasibility of Yangpu Store, and is considering not retaining it,” it added.

Several Western companies have recently said they are reassessing their business in the world’s second largest economy, some because of the impact of the pandemic and Beijing’s strict adherence to its zero-Covid policy.

Ikea opened its first store in mainland China in 1998, starting with Shanghai, where it now has five stores, including the one in Yangpu. The company currently has 37 stores in mainland China.

The retailer’s expansion hit a snag earlier this year, as China’s consumer spending took a significant hit from Covid outbreaks and the stringent lockdown measures. Shanghai, the country’s most populous metropolis with 25 million residents, had been under a strict two-month lockdown until recently.

In April, Ikea closed its store in the southwestern city of Guiyang just two and half years after it opened. Sales in the region would be handled on online channels, the company said at the time.

Ikea’s move is the latest in a series of changes big Western companies have made to their businesses in mainland China in recent months. Last week, Nike deactivated its Run Club app in China, and said it would roll out a “localized” platform for Chinese runners in future.

Earlier this month, Amazon announced the closure of its Kindle bookstore in China, as well as the discontinuation of Kindle device sales to retailers.

Airbnb also plans to take down all its listings in the country and concentrate instead on outbound travelers. The company made the decision because of mounting costs that were worsened by Covid-19.

— CNN Business’ Michelle Toh contributed to this report.

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