IKEA bets on online growth in China with JD.com launch

LONDON (Reuters) -Swedish budget furniture retailer IKEA opened a digital store on Chinese ecommerce platform JD.com on Friday, as it expands its presence on third-party online shopping sites in China to draw in new customers with cut-price products.

Western retailers are experimenting with new formats and channels to take a bigger slice of China's highly competitive ecommerce market, as the government expands policies meant to revive consumer spending.

IKEA, known for wooden bookshelves and beds, launched a 2,999 yuan ($417.50) gaming chair and 3,999 yuan gaming desk specially for JD.com - much more expensive offerings than its top-selling BILLY bookcase priced at 249 yuan.

But IKEA also plans to offer special discounts to mark the opening of the store which will sell 6,500 products, and use JD.com's logistics network to deliver to homes.

JD.com is the second Chinese ecommerce platform IKEA has joined, after opening a store on Alibaba's Tmall in March 2020.

"We will continue the great work we are doing (on Tmall), but now we are also adding JD.com as another channel to reach and acquire customers," said Tolga Oncu, retail operations manager at Ingka Group, the biggest IKEA franchiser, which runs IKEA stores in China.

One in five new IKEA customers in China came from Tmall in the last financial year and that trend is going up, according to the company.

IKEA has also expanded its store network in China, with three new openings since September 1 last year, bringing the total number to 40.

The JD.com launch is part of a 6.3 billion yuan ($877.03 million) investment Ingka plans in China by 2027. IKEA entered China in 1998 and the country was for several years in its top five markets by revenue, but has shrunk.

China's share of Ingka Group's overall sales has been flatlining, at 3.5% of global sales in the 2023-2024 financial year and 3.6% in 12 months before that. Ingka will report results for its 2024-2025 financial year, which ends on August 31, in October.

($1 = 7.1833 Chinese yuan renminbi)

(Reporting by Helen Reid; Editing by Kirsten Donovan)