Ikea’s India operations reported a modest 5 per cent growth in revenue, reaching Rs 1,852 crore in financial year 2023-24 (between August 1, 2023 and September 30, 2024), marking the slowest expansion since the Swedish furniture giant opened its first store in the country in 2018. The company’s net loss widened by 15 per cent to Rs 1,303 crore due to significant investments in infrastructure and store expansion.
The cumulative losses in India now total Rs 5,550 crore, driven by expenditures on three large-format stores in Hyderabad, Mumbai, and Bengaluru, a smaller store in Mumbai, and the development of supply chains and distribution centres. Despite economic challenges and restrained consumer spending, Ikea reduced the prices of several products by 20 per cent, aided by lower raw material costs. The retailer aims to expand its footprint in the National Capital Region (NCR) with planned stores in Gurugram and Noida, part of its Rs 10,500-crore investment proposal approved over a decade ago to establish 25 stores by 2025.
Globally, Ikea faced a 5.3 per cent decline in revenue, recording 45.1 billion euros in FY24, citing lower prices as the primary factor. In FY23 it recorded 47.6 billion euros. However, the company expanded its retail operations with 56 new outlets in various markets, including Colombia.
Ikea CEO Jesper Brodin expressed optimism about India’s economic potential and reiterated the importance of scaling operations in the country, stating that achieving economies of scale would require establishing 8-10 stores.
Ingka Group, however, noted that Ikea also benefited from a shift in consumer behaviour during this period. With a global property market slowdown denting confidence, many households opted for more affordable options, which worked to Ikea’s advantage.
Looking ahead, Ikea’s ongoing investments in price adjustments and its focus on affordability are expected to play a crucial role in sustaining growth during uncertain economic times.
