IKEA has high hopes for India as it faces global economic slowdown

Hello, this is Priyanka Salve writing from Singapore.

Welcome to the latest edition of Inside India. A one-stop-shop for the story and developments of the world’s fastest growing large economy.

This week, we take a closer look at IKEA, the world’s largest furniture retailer, and its big plans for India, which has struggled with weak sales in key markets and store closures in China.

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IKEA, the world’s largest furniture retailer, is experiencing a slowdown in sales worldwide. And while Swedish companies are closing some large stores in China, they are also expanding into neighboring India.

IKEA India CEO Patrick Antoni has appeared in a playful Instagram reel teasing the launch of a store in India, a “priority market” for the company. There are currently six IKEA stores in India, and the company aims to have around 30 stores within five years, including large and small stores and online delivery pickup points.

IKEA sees India not only as a potential major retail market, but also as a potential export hub with the support of the India-EU Free Trade Agreement signed on January 26th.

Furthermore, Antoni said that 30% of the company’s sales in India currently come from locally sourced raw materials, and the company aims to increase this number to 50% by 2030. This growing local sourcing ecosystem, strengthened by growing domestic demand and export-friendly policies, positions India as an increasingly strategic location for IKEA.

“India is a long-term market for us and we are building with the next 100 years in mind,” Antoni told CNBC in an email interview. He added that the India-EU trade agreement signals a “strong economic link between two important markets”, which could enhance India’s role “as a production and export hub within our global network”.

India’s furniture and home decor market was valued at more than $25 billion in 2024 and is projected to reach $40.8 billion by 2033, according to IBEF, an organization backed by India’s Ministry of Commerce. But IKEA predicts even faster expansion, with the market expected to reach $48 billion by 2030, and the company hopes to seize that momentum.

Globally, IKEA’s retail sales have declined over the past two years, falling to 44.6 billion euros ($51.7 billion) in the year ending August 31, 2025, from 45.1 billion euros a year earlier. Europe accounts for over 70% of sales, followed by North America (17%) and Asia (approximately 9%).

Meanwhile, growth in China, the company’s other major market, has slowed sharply. IKEA will close seven large stores in the country to focus on smaller stores as the housing market slows and competition from online retailers hits.

“We are moving from scale-based expansion to precision-driven penetration,” the Swedish retailer said.

According to IBEF, India is dominated by small furniture and interior manufacturers, and no domestic brand operates on the scale of IKEA. And while home sales have shown strong growth since the pandemic, they will slow slightly in 2025, according to data from real estate consultancy Knight Frank.

“We are really inspired by the possibilities,” Antoni said, noting that evolving lifestyles and expanding real estate categories are creating new opportunities.

IKEA’s India sales grew by about 6% in the financial year ended August 2025, with furniture being the main category, the company said. The company’s EBITDA excluding fixed costs also improved by more than 10%.

India’s current contribution to IKEA’s global revenue (Rs 18.5 billion ($196.7 million)) remains small, but the company expects its retail operations in the country to be profitable by the financial year ending August 2028 and is doubling down on its expansion plans.

IKEA currently operates three large stores in Hyderabad, Navi Mumbai and Bangalore, as well as urban stores in Mumbai and West Delhi. Its newest store, Pune, opened earlier this month.

The new format store, known as Lykli, is scheduled to open in “late 2025” in the northern city of Gurugram, which the company describes as a “key destination for entertainment, social connection and retail therapy,” complete with office facilities and community space.

The company did not provide details about the planned opening of the store, but said Gurugram will be its first large-scale store in north India, followed by another Likli store in Noida, Uttar Pradesh.

Antoni said the in-store “touch and feel” experience is critical for IKEA in India, where offline stores generate 70% of sales, while e-commerce accounts for 30%.

IKEA’s expansion strategy will prioritize six key markets: Mumbai, Delhi National Capital Region, Bengaluru, Hyderabad, Pune and Chennai.

Last year, IKEA India recorded around 110 million “customer interactions” and the Swedish company is now hoping to grab a bigger share of their wallets.

—CNBC’s Anniek Bao contributed to this article.

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