Ikea bets big on India, ramping up investment and production efforts
The Swedish retailer is more than doubling its investment in the country to over $2.2 billion in the next five years, after another period of slumping sales.
The world’s go-to for DIY furniture is developing a new manufacturing hub of its own. On Monday, Ikea announced plans to more than double its investment in India to over 200 billion rupees (~$2.2 billion) across the next five years.
Having only opened its first store there in 2018, online orders currently account for over 30% of the retailer’s total India sales. But with plans to quintuple its store count in the country from 6 to 30, Ikea will be hoping that India can kickstart growth after a gloomy couple of years globally.
Back in November, the Swedish furniture giant reported that its global retail sales declined to €44.6 billion (~$52 billion) in fiscal year 2025 — marking the second consecutive year that its global revenues have fallen, down 6% from the 2023 peak.
The only other occasion across two decades where Ikea’s revenues faltered was in 2020, when the pandemic prevented people from going to locations in person. Despite a growing e-commerce business, the company’s intentionally labyrinthine store layout has helped ensure that Ikea still sells the majority (some 69%) of its merchandise at its brick-and-mortar stores.
With worldwide store visits and customer numbers both growing, Ikea’s strategy of keeping prices low to attract cash-strapped consumers meant the retailer simply shifted more stuff for less last year. Indeed, even as sales volumes rose 2.6% in FY2025, a stronger euro against the dollar also impacted its headline result.
Smål world
So, why is the company going all in on India, where US tariff rates are currently among the world’s highest at 50%?
Besides a growing middle class within the country itself, Ikea joins a list of retail powerhouses, including Apple and other electronics giants, that are ramping up their manufacturing facilities in India, keen to take advantage of cheap labor and other low costs. Even with America’s tariffs, India’s exports still grew a very healthy ~20% year over year in November — driven mainly by exports to the US and China.
