IKEA On Path To Profitability But Timeline Unclear Amid Demand Woes, Says CEO

IKEA, which entered India seven years ago, is yet to make a profit, as sales growth have not matched the pace of its expansion and investments. With consumers continuing to cut discretionary spending, the Swedish furniture retailer remains cautious about providing a timeline for achieving profitability.

"Given how much we are impacted by the world around us...the pandemic, then the aftermath of it, which had a big impact on supply chains, and now inflation, I'm a little bit cautious to share an exact timeline [for achieving profitability]," Chief Executive Officer Susanne Pulverer told NDTV Profit in New Delhi. "However, we have our internal timelines, and we are following that plan."

IKEA's losses swelled to nearly Rs 1,300 crore in fiscal 2024, as per a filing with the Registrar of Companies. The company saw a 4.5% increase in revenue to Rs 1,810 crore during the same year, marking the slowest pace of growth since it opened its first store in 2018. It incurred a cumulative loss of Rs 5,550 crore in India, as it spent heavily to set up distribution centres, city outlets and large stores ranging from 4-5 lakh square feet.

Pulverer said that the Ingka Group, of which IKEA is a part, is mulling the next phase of investments in India after exhausting most of the Rs 10,500-crore for which it had got the government’s approval in 2013. To be sure, two IKEA stores — in Gurugram and Noida — are being constructed with a total cost of Rs 9,000 crore. While the Gurugram store is expected to be operational next year, the one in Noida is likely to be opened in 2028.

Despite losses, IKEA is continuing to expand as it aims to have a profitable growth after attaining a size. IKEA entered North India where it plans to expand through a mix of online and pop-up outlets before opening larger stores. The e-commerce-first strategy marks a shift in the company's strategy, which has historically prioritised opening physical stores.

The new stores, too, will be 2-2.5 lakh square feet, much smaller than its traditional large stores of 4-5 lakh square feet in other cities, such as Hyderabad, Navi Mumbai and Bengaluru, as the company adjusts to high real estate costs. It also plans to enter Chennai and open physical stores in Pune to complement its e-commerce operations in a couple of years.

"In India, we are here for the long-term," Pulverer said. "Whenever we enter a new market, we do it carefully and in a planned way. Any market we entered globally, the first years when we invest a lot are also the years when we are not profitable. But gradually we move there."

India's $24-billion furniture market is highly fragmented, with unorganised players dominating a chunk of business. The largest segment within this market is the home furnishing segment. Both the segments combined, however, have grown a mere 1-3% between October and January period, according to data shared by Retailers' Association of India.

But Pulverer is confident that consumption will improve "at a stable pace" from here on. "We know that [furniture and furnishing] is not the first category to invest with the money left after doing away with necessities...there are many other things people want to spend on but gradually with an interest to improve one's home, we see steady demand. The overall economic outlook is also positive, which will drive consumption."

Market research firm Statista expects the country's furniture market to grow at a compound annual growth rate of 6.04% from 2025 to 2029. Other than IKEA, the key players in the country include Godrej Interio, Pepperfry, Reliance-owned Urban Ladder and Nilkamal Ltd.