On winter mornings in several Chinese cities this month, former IKEA megastores resembled train stations on the first day of Spring Festival travel. Seven large outlets that the Swedish retailer announced would close in early January staged extended clearance sales, opening up showrooms and display pieces for customers to take away. The result was scenes of frantic queuing, fierce jostling and shoppers dismantling beds, lamps and shelving like people salvaging mementos from a vanishing landscape.
The rush was not merely theatre. Shoppers crossed city lines to find sofas, side cabinets and tableware discounted and even physically removable from showroom sets. Early-bird customers carted off items small and large, while later arrivals wrestled over the remaining pieces. Staff were stretched thin trying to maintain order and keep track of inventory; some fixtures and even staff uniforms were lifted amid the chaos, underscoring how poorly conventional retail operations handle sudden, liquidation-driven demand.
The spectacle of IKEA’s “clearance carnival” is memorable precisely because it feels like a replay of a now-outmoded retail model. Large-format home furnishing malls that once animated family trips and big post-move purchases have been suffering for years. Market leaders have seen occupancy rates slip below the commonly cited health threshold of 95 percent; between 2021 and 2024 the major players’ average rental uptake lingered in the high 80s to low 90s percent range. The financial toll has been acute: household names in the sector have reported severe losses and reorganisations in recent years.
IKEA’s retreat is playing out against a backdrop of corporate distress and consolidation: long-established domestic chains that once dominated China’s home‑furnishing landscape have reported sharp reversals. One leading mall operator that once boasted a peak market value of roughly 260 billion yuan has announced a multi-hundred‑billion‑yuan projection of net losses for 2025. Other group executives and founders in the industry have died amid the turmoil, feeding a sense that the sector’s heyday is over.
Yet the story is not only one of decline. The market is fragmenting and reconstituting around different formats and players. International lifestyle brands such as MUJI have expanded in China, adding stores and boosting profitability driven in part by home products. Domestic newcomers and fast-scaling chains that blend online and offline sales have also prospered: a comparatively young Chinese home‑furnishing brand has grown its network to over 1,300 physical outlets and overtaken IKEA China in sales, with estimated 2025 revenues above 200 billion yuan. Mid- and high‑end local labels are opening curated outlets in major cities, and a proliferation of mall-based “lifestyle” shops caters to urban renters who buy small comforts rather than whole-bedroom suites.
These structural shifts reflect deeper changes in Chinese consumer behaviour and urban life. Rising urban rental rates, more frequent household moves and a younger generation that prizes convenience over long-term ownership make the suburban big-box model less attractive. E‑commerce and flexible, small-format physical stores allow shoppers to assemble a home in fragments — scented candles, lamps and organisers purchased online or from mall kiosks satisfy the psychological need to ‘improve’ one’s living space without committing to bulky furniture.
For investors, landlords and policy-makers the implications are clear. Large-format showrooms and traditional furniture malls face continued pressure to repurpose space, renegotiate rents or pivot to mixed-use and lifestyle concepts. Brands that succeed will be those that master omnichannel fulfilment, small‑format retailing and rapid product turnover; those that cannot adapt risk becoming the next clearance anecdote. IKEA’s own move — closing some big stores while planning to expand small-city footprints — demonstrates adaptation rather than retreat, but the dramatic clearance scenes remain a vivid reminder that retail habits and real estate economics in China have entered a new phase.