Inside India Newsletter: Ikea Has High Hopes for the Country as It Stares at a Global Slowdown

Why It Matters

India represents Ikea’s long‑term growth engine, providing both a sizable consumer base and a cost‑effective export platform amid a global slowdown. Success there could reshape Ikea’s geographic revenue mix and improve overall profitability.

Key Takeaways

• Aim 30 Indian stores in five years.
• Local sourcing target 50% by 2030.
• Small-format stores expanding, 3‑4 soon.
• India‑EU trade pact enables export hub potential.
• Profitability expected by FY 2028.

Pulse Analysis

Ikea’s strategic pivot toward India reflects a broader industry trend of shifting focus from saturated Western markets to high‑growth emerging economies. While the Swedish giant’s global sales fell to €44.6 billion ($51.7 billion) in FY 2025, its Indian revenue—though modest at ₹18.5 billion ($196.7 million)—is projected to turn profitable by FY 2028. By expanding to 30 stores, including the new Lykli format that blends retail with community spaces, Ikea aims to capture a larger share of the country’s $48 billion furniture market forecast for 2030, positioning itself ahead of fragmented local competitors.

A cornerstone of Ikea’s India playbook is deepening its local supply chain. Currently, 30% of sales derive from domestically sourced raw materials, a share the company intends to lift to half by 2030. The India‑EU free‑trade agreement, finalized in January, reduces tariffs on exports, allowing Ikea to use Indian factories as gateways to European and other markets. This dual‑purpose approach not only lowers production costs but also aligns with sustainability goals by shortening logistics chains and supporting local manufacturers.

Financially, the expansion promises to offset the recent slowdown in Europe and the retreat from China, where Ikea is closing seven large‑format stores. With offline sales accounting for 70% of Indian revenue, the rollout of three to four additional small‑format stores and 30 customer‑meeting points will boost foot traffic and cross‑selling opportunities. If Ikea meets its profitability target by 2028, the Indian market could become a pivotal profit center, reshaping the retailer’s global earnings profile and reinforcing its resilience against macroeconomic headwinds.