Swedish home furnishings major IKEA is doubling down on India as a strategic growth market. It has committed investments of $2.2 billion (over ₹20,000 crore) over the next five years as it accelerates store expansion, strengthens its digital presence and deepens local sourcing. The renewed push marks IKEA’s second phase of growth in India, signalling rising confidence in the country’s long-term consumption story.
Aggressive Store Expansion Across Key Indian Cities
IKEA plans to expand its physical footprint from the current six stores to nearly 30 outlets across India, focusing on major urban markets such as Delhi-NCR, Mumbai, Bengaluru, Hyderabad and Chennai. The expansion is expected to unfold in phases, balancing large-format stores with smaller city-specific formats to optimise capital efficiency. The strategy reflects a recalibration from IKEA’s earlier slow rollout in India, which was impacted by high real estate costs, complex regulations and pandemic-related disruptions.
Online-First Model Marks Strategic Shift
In a significant departure from its global playbook, IKEA is adopting an online-first strategy in several Indian markets, launching e-commerce operations ahead of brick-and-mortar stores. Cities such as Chennai and Coimbatore are among the first to see digital rollouts. E-commerce already contributes over 30% of IKEA India’s revenues, a figure that is expected to rise as urban consumers increasingly prefer home delivery, app-based shopping and flexible fulfilment models. The online-first approach allows IKEA to test demand, build brand familiarity and optimise logistics before committing to capital-intensive physical stores.
India as a Global Sourcing and Manufacturing Hub
Beyond retail, IKEA is also scaling up local sourcing and manufacturing in India, positioning the country as a key supplier to its global network. The company plans to double sourcing from India, focusing on furniture, textiles and home accessories. This strategy supports cost optimisation, supply chain resilience and sustainability goals, while aligning with India’s push to emerge as a global manufacturing hub. Increased local sourcing also helps IKEA hedge against currency volatility and global trade disruptions.
Financial Performance and Market Potential
IKEA India has reported steady revenue growth, with sales rising to around ₹1,860 crore in FY25, even as the broader retail sector faced demand moderation. The company believes India has the potential to become one of its top global markets over the next decade, driven by urbanisation, rising disposable incomes and a young, aspirational consumer base. India’s organised furniture and home décor market remains under-penetrated, offering IKEA significant headroom for long-term growth.
Challenges Remain
Despite the ambitious expansion, IKEA continues to face challenges, including- high logistics and last-mile delivery costs, intense competition from local furniture players and online-only brands, complex regulatory and compliance requirements and diverse regional consumer preferences across India. However, analysts note that IKEA’s calibrated expansion, omni-channel focus and emphasis on affordability could help it navigate these hurdles.
Long-Term Play on Indian Consumption
IKEA’s India strategy is based on a long-term bet on consumption-led growth, combining physical retail, digital platforms and domestic manufacturing. As the company fine-tunes its India-specific model, its success could serve as a blueprint for other global retailers looking to crack the complex but high-potential Indian market.