IKEA is now tapping the demand among increasingly frugal Chinese shoppers for low-priced products, revealing plans to invest US $38 million every year into developing a range of low-cost furniture items that will hit Chinese shelves by August 2025.
Wood Central understands that IKEA’s Chinese subsidiary made the announcement at a product strategy presentation last week to coincide with the start of its fiscal year. The unit will offer more low-priced, sleep-related items such as wooden kitchens, bed frames, and storage items.
With consumer sentiment in China chilled by high youth unemployment and a real estate slump, IKEA now aims to grow by developing products that appeal to a frugal mindset. The company emphasised that it will continue to invest to improve cost-performance in a meaningful way, to help Chinese consumers live better daily lives.
In a survey of more than 1,000 young Chinese consumers, about 60% of respondents said they always or often compare prices before purchasing. The figure was significantly higher than the 17.8% who said they rarely or never compared prices before a purchase and the 21.9% who said they compared prices for large purchases. IKEA opened its first mainland China location in Shanghai in 1998 and currently operates 35 stores nationwide.
The company consumes vast amounts of wood for its furniture production, relying heavily on wood-based materials such as particleboard, plywood, and veneer, which require immense quantities of timber. As a result, IKEA has become the third-largest consumer of wood in the world, just behind Home Depot and Lowes.
In 2023, it used 14 million cubic metres of timber in its retail products—about 1% of global lumber production. More than 70% of wood comes from the European Union – with more than 50% coming from Poland (32%), Lithuania (10%) and Sweden (10%) alone.
At the same time, IKEA acknowledges the need to preserve forests and minimise their ecological impact. To achieve this goal, it has implemented several initiatives to ensure the wood used in its products is from responsible sources. One of the most essential steps is IKEA’s commitment to only using wood from verified sources certified by the Forest Stewardship Council. The FSC certification ensures that the wood is sourced sustainably and meets rigorous environmental and social standards.
- To learn more about how IKEA is now navigating the global slowdown in retail, click here for Wood Central’s special feature.
