In an online press conference that just finished last quarter, the furniture and home products retailer leader IKEA announced that they would launch a virtual flagship store on Tmall, one of the largest e-commerce platforms in China. This is the first time that IKEA had decided to partnered with a third-party platform to provide products and solutions to their consumers since 77 years ago when it was founded.
‘This decision would provide Chinese consumers with a new contact of IKEA in a digital environment.’ Anna Pawlak-Kuliga, the President of IKEA China, said that last August, IKEA launched the ‘Future Plus’ development strategy, primarily focusing on channels and digitalization for the Chinese market. The launch of IKEA’s official shopping App joining the Tmall platform meanwhile is another critical step for the whole strategy.
China is one of IKEA’s key markets around the world. Since the opening of the first store in Shanghai in 1998, IKEA has successively arranged 30 standard stores, one smaller store, two experience stores in China, also set up the “IKEA China Digital Innovation Centre” in Shanghai. Up till now, China has become the only market with complete IKEA value chain except for Sweden, involving product designing, testing, production, procurement, storage, distribution, retail, shopping centres, digital innovation, etc.
The global outbreak of COVID-19 has inevitably affected IKEA due to its immersive experiences, and some offline stores have yet to reopen.
However, according to Anna Pawlak-Kuliga, IKEA can still well-meet the shopping needs of Chinese consumers at any time and anywhere by adjusting the working mode of offline stores and diversifying online channels.
In the past two months, the COVID-19 has had a significant impact on the consumer market and the retail sector. Demands and sales of household and discretionary social items have declined during the outbreak, according to a report “The response and transformation of consumer industry under the COVID-19 shock” released by Bain & Company and Alibaba.
‘The COVID-19 has put much pressure on brands and companies. ‘If a brand can break through the limitations of their traditional thinking mode and growth mode and realize a real digital transformation, it is highly possible to turn crisis into opportunities.’ Deng Min, the global partner and chairman of China consumer products business at Bain Capital, said that in the face of the COVID-19 challenge, multinationals need to fully assess the importance of the Chinese market in their global development vision so that they can make the reasonable judgment at this particular time.
Strict prevention and control policy has made some multinational companies feel the great vitality of China’s online market, which is dominated by online shopping and take-away. Their online sales in China rose in February from a year earlier, according to the cosmetics giant L’Oreal.
The potential of China’s online market incredibly highlighted during the epidemic and has also prompted multinational giants in related fields to accelerate their deployment.
In this February, PepsiCo announced a definitive agreement to acquire Hangzhou Holmes foods in almost £582 million. The acquisition is also has seen as an essential step for Pepsi to increase its market in China, as Holmes owns the country’s leading online snack brand, BE&CHEERY.