IKEA's India sales growth hits 6-year low amid rising losses
IKEA, the world's largest furniture retailer, has reported a 5% increase in its India sales for FY24. This is the slowest growth rate since the company entered the Indian market six years ago. The net loss for IKEA also expanded by 15% owing to massive investments to expand its footprint in India. Despite these challenges, IKEA remains committed to its expansion plans in the country.
IKEA's net loss widens amid large-scale investments
IKEA's net loss for FY24 widened by 15% to ₹1,303 crore, owing to heavy investments in distribution centers and new stores. The company has now lost a total of ₹5,550 crore in India since its arrival here in 2018. Despite the financial losses, a company spokesperson said their losses mainly reflect the investment they are making toward their omni-channel growth strategy.
IKEA lowers product prices, continues expansion plans
In the last fiscal year, IKEA cut costs after raw material prices fell, resulting in a reduction of several product prices by around 20% in India and globally. Despite a slower sales growth, the company is still committed to its expansion plans. The global CEO of Ingka Group that owns IKEA, Jesper Brodin said earlier this year that they are still working on establishing a strong presence in the Indian market.
IKEA's future plans and investments in India
IKEA started sourcing from India in the 1980s and now has over 60 suppliers here, mostly in textiles. The company's ₹10,500-crore investment proposal to open 25 stores by 2025 was cleared by the Foreign Investment Promotion Board (FIPB) over a decade ago. Till now, it has opened three large-format stores in Hyderabad, Mumbai, Bengaluru and one smaller city store in Mumbai. More stores are planned in Gurugram and Noida in the National Capital Region.
