Inside India newsletter: Ikea has high hopes for the country as it stares at a global slowdown

Hello, this is Priyanka Salve, writing to you from Singapore.

Welcome to the latest edition of Inside India — your one-stop destination for stories and developments from the world's fastest growing large economy.

This week, I dive into the world's largest furniture retailer, Ikea, and its big plans in India even as it contends with sluggish sales in key markets as well as store closures in China.

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Ikea, the world's largest furniture retailer, has seen a slowdown in sales globally. And while it has closed several large stores in China, the Swedish company is doubling down on neighboring India.

Patrik Antoni, CEO of Ikea India, has been appearing in playful Instagram reels teasing store launches in India — "a priority market" for the company. Currently, there are six Ikea stores in India, and the company is aiming for around 30 within five years, which will be a mix of large and small stores and pick-up points for online deliveries.

Ikea views India not only as a potential major retail market but also as a possible export hub, supported by the India‑EU free trade agreement that was finalized on Jan. 26.

Further, 30% of the company's India sales currently come from locally sourced raw materials, a figure it aims to lift to 50% by 2030, according to Antoni. This growing local sourcing ecosystem, strengthened by rising domestic demand and export‑friendly policies, positions India as an increasingly strategic base for Ikea.

"India is a long-term market for us, and we are building with the next 100 years in mind," Antoni told CNBC in an email interview. He added that the India-EU trade pact signals "a strong economic alignment between two important markets," and this could boost India's role "as a production and export base within our global network."

India's furniture and home décor market, valued at over $25 billion in 2024, is projected to reach $40.8 billion by 2033, as per the Indian commerce ministry-backed organization IBEF. But Ikea forecasts even faster expansion, expecting the market to hit $48 billion by 2030 — momentum the company is keen to capture.

Globally, Ikea's retail sales have declined over the past two years, falling to 44.6 billion euros ($51.7 billion) in the financial year ended Aug. 31 2025 from 45.1 billion euros in the prior year. Europe accounts for more than 70% of its sales, followed by North America (17%) and Asia (around 9%).

Meanwhile, in China — another major market for the company— growth has slowed sharply. Ikea is closing seven large-format stores in the country to focus on smaller outlets as a weak housing market and intensifying competition from online retailers takes a toll.

"We will shift from scale-based expansion to precision-driven penetration," the Swedish retailer said.

India is dominated by smaller furniture and interiors players, with no domestic brand operating at Ikea's scale, as per the IBEF. Also, housing sales since the pandemic have seen strong growth, with a marginal slowdown in 2025, according to data from real estate consultancy Knight Frank.

"We are truly inspired by this potential," Antoni said, noting that evolving lifestyles and expanding real estate categories are creating fresh opportunities.

Ikea's India sales rose by around 6% in the financial year ended August 2025, with furniture being the leading category, the company said. The company's EBITDA, excluding fixed costs, also improved by over 10%, it said.

Although India's current contribution — 18.5 billion rupees ($196.7 million) — to Ikea's global revenue remains modest, the company expects retail operations in the country to turn profitable by its financial year ending Aug. 2028 and is doubling down on its expansion plan.

Ikea currently operates three large-format stores in Hyderabad, Navi Mumbai and Bengaluru, as well as city stores in Mumbai and West Delhi. Pune, its newest store, opened earlier this month.

A new store format, known as "Lykli," was due to open in the northern city of Gurugram in "late 2025," described by the company as "a key destination for entertainment, social connections and retail therapy," complete with office facilities and community spaces.

When asked about the timeline for that store, the company did not disclose details but said that Gurugram will be the first large-format store in North India and will be followed by another Lykli store in Noida in the state of Uttar Pradesh.

The in‑store "touch and feel" experience is vital for IKEA in India, where offline outlets generate 70% of sales compared with 30% from e‑commerce, Antoni said.

Ikea's expansion strategy will prioritize six key markets: Mumbai, Delhi National Capital Region, Bengaluru, Hyderabad, Pune and Chennai.

Last year, Ikea India recorded nearly 110 million "customer interactions," and the Swedish firm now hopes to get a bigger share of their wallets.

— CNBC's Anniek Bao contributed to this story.

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Coming up

March 30: External debt data for January to March.

March 30: Industrial output data for February.

March 31: RBI releases Balance of Payment data for January to March.