The game is not itself a store or advertising a real store. It is an entirely different product category. Parody is still legal and allowed as fair use, the likeness is the point. This is hardly the most egregious example that I have seen.

Ultimately, these matters would likely be decided in court. IANAL either but it seems like the game maker would have a strong case. Among the things IKEA would have to prove is actual harm and confusion, who would seriously argue that? That doesn't mean IKEA couldn't make it impossible to fight with their unlimited legal resources, I can understand not wanting to spend a chunk of your life on that.

Two things can be true at once: this is the most creative marketing in recent memory and genuinely funny, and IKEA destroyed someone's work simply because they can.