IKEA India could turn profitable by the end of FY28. “Our ambition is that by the end of FY28. We should be profitable,” Patrik Antoni, CEO, IKEA India, said.
But this would be a challenge and would depend on how well and efficiently they expand and add 25 stores across the country, increase sales, and build love for the IKEA brand, Antoni said. They will need strong cost control, efficient fulfilment centres, lower prices, better training for the 2,500 employees being added, and overall improved operations, Antoni said. As sales increase, fixed costs will be shared more broadly, which will help profitability, he said.
Road to Black
The company reported losses of Rs 1,325 crore in FY25 (September to August) and a similar figure the previous year. Increasing local sourcing would reduce prices, but Indian suppliers must upgrade and scale up to match the efficiency of suppliers from China, Poland, Mexico, Japan, and the United States. IKEA has sourced textiles, plastic, and metal products, but has not yet succeeded in the wooden furniture segment in India. According to him, India was not a competitive destination for IKEA to set up large-scale, technology-driven furniture factories. Currently, 30% of sourcing is from India, with plans to increase this to 50%.
However, Antoni pointed out that IKEA was not chasing profitability as they wanted to focus on expanding stores aggressively. Attract customers first, and then profits will come, he said. “So we will continue to invest more in India,” he said. The company viewed India as a long-term prospect, a story for the next 50 years with a growing population, young people, economic growth, and migration into cities. So all these macro things really point to the fact that IKEA has a fantastic opportunity,” Antoni said. IKEA has committed to invest another Rs 20,000 crore in India over the next five years.
Small is Big
Antoni was in Pune to announce the opening of the IKEA store at the Phoenix Market City mall. The 32,000 sq. ft store is a mid-size store located within the city to make it more accessible and convenient. The strategy is to have smaller stores closer to people, and everyday interaction with the brand. Globally, too, they are moving towards smaller stores because of the disruption caused by e-commerce.
IKEA entered India in 2018 and has been investing in store expansion and supply chain. The initial investment of Rs 10,500 crore committed in the country has been completed. The company has invested in setting up three large format stores in Hyderabad, Navi Mumbai and Bengaluru, City stores in Delhi, Mumbai and Pune, a large central eight lakh sq. ft distribution centre in Pune and a 1.2 lakh sq. ft distribution centre in Delhi. Two large-format stores will open in Gurgaon in the next one and a half years and in Noida in three years. Around 70% of IKEA’s sales come from stores anad 30% from online