IKEA Targets Emerging Markets and Local Sourcing, Plans New Investment Phase in India

FDT Bureau

IKEA, after fulfilling its initial commitment of Rs10,500 crore in India, is now planning the next round of investment to expand its presence further in the country. This previous commitment, approved in 2013, aimed to establish 10 stores within a decade and is on track to be completed with ongoing projects in Delhi-NCR set to open in 2025​. Know more about it on FURNITURE DESIGN AND TECHNOLOGY (FDT).

The next phase of investment, described by IKEA India’s CEO Susanne Pulverer as big and bold, will focus on leveraging the significant growth potential in the Indian market. IKEA aims to tap into the rising consumer trend of home improvement and upgrades among young Indians. The company is particularly looking at strengthening its presence in the South and West regions of India and exploring potential new markets in cities like Lucknow, Chandigarh, Pune, Chennai and Kolkata​.

Additionally, IKEA reportedly plans to enhance its local sourcing strategy, aiming to increase the percentage of locally sourced products, which currently stands at around 33 per cent. This effort aligns with IKEA’s sustainability goals and commitment to providing affordable products for Indian consumers. The focus will be on sourcing materials such as textiles, plastics, metals, stainless steel, mixed materials, handicrafts and locally produced wood-based furniture​​.

Despite the impressive sales growth of 61 per cent to Rs 1,768 crore for the financial year ending March 2023, IKEA reported a loss of Rs 1,134 crore. This loss is attributed to the costs associated with expanding into new markets and investing in infrastructure. Nevertheless, the company’s strategic expansion and commitment to the Indian market signal its long-term vision and confidence in the region's growth prospects​​.

(Image for representational purpose only)