Ikea Faces Slowest Growth in India Amid Mounting Losses, Plans Expansion

Ikea, the Swedish furniture giant, experienced its slowest sales growth in India since launching its first store in 2018. For the financial year 2023-24, Ikea India reported a modest 5% revenue increase, reaching ₹1,852 crore between August 2023 and September 2024. However, the company’s net loss widened by 15% to ₹1,303 crore, attributed to significant investments in infrastructure and store expansion.

Mounting Losses and Investments

Cumulatively, Ikea's losses in India have climbed to ₹5,550 crore, fueled by expenses on its three large-format stores in Hyderabad, Mumbai, and Bengaluru, a smaller outlet in Mumbai, and the development of supply chains and distribution centres.

Despite the challenges, Ikea remains committed to India’s long-term potential. The company aims to expand its footprint in the National Capital Region (NCR), with planned stores in Gurugram and Noida, part of its ₹10,500-crore investment proposal to establish 25 stores by 2025.

Strategies to Boost Consumer Demand

Amid economic pressures and restrained consumer spending, Ikea has taken steps to attract customers. By leveraging lower raw material costs, the retailer reduced prices of several products by up to 20%, making its offerings more affordable.

Global Performance

Globally, Ikea reported a 5.3% revenue decline, with total revenue dropping to €45.1 billion in FY24 from €47.6 billion the previous year. The reduction was primarily attributed to lower product prices. However, Ikea expanded its retail presence with 56 new outlets worldwide, including in Colombia.

CEO’s Optimism for India

Ikea CEO Jesper Brodin emphasized the company’s commitment to India, highlighting the economic potential of the market. Brodin noted that achieving economies of scale would require the establishment of 8-10 stores across the country, ensuring a robust foundation for Ikea’s growth in India.