IKEA Closes 7 China Stores Amid Economic Headwinds (Full Transcript)

[00:00:00] Speaker 1: Crowds rushing into IKEA stores in China, scrambling for clearance deals just ahead of store closures as the Swedish furniture giant shut seven of its 41 locations across the country, including this megastore in northern China, where nearby residents flocked in for one last round of shopping and to say goodbye. IKEA's grand closings pose a worrying sign for China, as the world's second-largest economy continues to face strong headwinds from deflation to a prolonged property slump. In the last two years, IKEA tried to respond by cutting prices in China, mirroring moves it made globally, but sluggish domestic consumption led to the latest drastic step. IKEA China says the closures are meant to, quote, make every square meter work harder to deliver greater value for both our customers and business. The multinational chain has been grappling with weakened consumer confidence, not just in China, resulting in a 1.6 percent fall of its global sales last year. Still, the China closures mark IKEA's biggest retreat since it entered the country in 1998. The company plans to expand its online delivery business and open additional smaller-sized stores in China, but the biggest challenge for IKEA and retailers worldwide remains if the only way to lure bargain-hunting consumers into their stores seems to be by shutting them.