Ikea has posted its slowest sales growth in India since opening its first store six years ago, with a 5% increase to ₹1,852 crore in FY24. This growth contrasts with a general slowdown in discretionary spending across lifestyle categories. The company's net loss widened by 15% to ₹1,303 crore in FY24. Since its entry into India, Ikea has accumulated a total loss of ₹5,550 crore, driven by investments in distribution centres, city outlets, and three large-format stores, each covering the size of approximately four football fields.
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'Ikea in India has maintained strong sales growth despite no price increases and even lowering prices on certain products in FY24,' said a company spokesperson. 'Our losses primarily reflect the significant investments we are making towards our omni-channel growth. We remain committed to opening more stores and serving 200 million people by 2025 with our high-quality, affordable product range.'
In February 2023, Jesper Brodin, global chief executive officer of Ingka Group, the company that owns Ikea, remarked, 'The sooner we can reach that, the better.' He emphasised that the initial phase focused on sourcing and laying the groundwork, with plans to expand into major cities. 'We are measuring and planning to serve 1.4 billion people. The economic outlook for India looks promising,' he added.
Ikea began sourcing from India as far back as the 1980s and now works with over 60 suppliers, mainly in textiles. More than a decade ago, the Foreign Investment Promotion Board (FIPB) approved Ikea's ₹10,500-crore investment proposal to establish 25 stores by 2025. Since then, Ikea has opened three large-format stores in Hyderabad, Mumbai, and Bengaluru, along with a smaller city store in Mumbai. The company aims to open larger stores in Gurugram and Noida in the National Capital Region shortly.
Since opening its first store in Hyderabad in 2018, Ikea has outperformed local rivals such as Urban Ladder and Pepperfry in its first year of operations at that location. During FY24, Ikea's paid-up share capital was increased by ₹600 crore, bringing it to ₹4.615 crore.
'When we think of India, we think in terms of scale,' Brodin told ET in February. 'In terms of investment priorities, India ranks one, two, and three. We have consciously chosen that we cannot afford to be in the start-up phase in multiple markets. But India is our top priority now.'
Source: retail.economictimes.indiatimes.com