The retailer chose the site in New Monks Farm just over five years ago, in 2016, and said much had changed since then.
A spokesman said that the retail market had evolved considerably and customer shopping habits were changing fast, with more and more people shopping online – a trend which has accelerated over the last 12 months as a result of the pandemic.
Richard Rands, market expansion manager at Ikea UK & Ireland, said it had ‘not been an easy decision’ to pull the plug on the project.
He said: ‘Today, we are operating in an incredibly fast-changing retail environment and customer shopping habits aren’t as they once were.
‘Although we know that there is great potential in Sussex, we no longer believe that an Ikea store on the outskirts of Lancing is the optimum way to reach customers in the region.
‘We understand this news may disappoint some and we remain committed to serving customers in Lancing in the best possible way, through both our online offer and home delivery service, as well as our remote selling and planning facilities.’
Ikea said it remained committed to growth in the UK and as part of its ‘omnichannel strategy’ to meet customers whenever and wherever they choose, adding it ‘continues to put all its energy into its existing stores, investing in its online offer and exploring new formats’.
The firm said the land in Lancing will be advertised for sale in due course as part of an open bidding process.