Given Kanye West's record of saying insentives things and behaving in an erratic manner, IKEA has every right to use caution to partner with him. IKEA's brand is the bread and butter of their business. In order to continue to reach their target market and continue their brand equity, IKEA needs to protect how it is perceived in the market place. If Kanye does not hold IKEA's brand standards, they should not partner with him.
A rejection from IKEA does not necessarily mean that a collaboration may never happen with Kanye West. IKEA may simply be looking at how best to create a furniture line that would still fit their brand and quality. After all the company has to make sure that whatever they product would be appealing to their client base and ultimately profitable for them.
Seeing that Kanye West has a less than favorable reputation among large segments of the population, it would probably be in IKEA's best interest as a company to not collaborate with the controversial artist. It is uncertain what ideas Kanye has in regards to the collaboration but in my opinion there are many other artists that are more reputable with whom the retailer can potentially collaborate.
Kanye is not good for the IKEA brand. He is unstable and not the image that they want to portray. They are built on simplicity and affordability. Kanye would bring some good things to the brand, but overall he would make too many changes that would not suit them and their products.