Jesper Brodin, global CEO of Ingka, says India is a top investment priority for IKEA and the speed of development is exciting.

India is a “top one, two, three market” for furniture retailer Ikea, said Jesper Brodin, global CEO of Inka Group, the company’s franchisee holding company.

Admitting that India is a “challenging market”, Brodin said in an interview with the Economic Times that it will be difficult to “keep up with the rapid development of the country’s digital and physical infrastructure”.

“It’s interesting to see the speed of development over the last five to 10 years. India has gone from being a catcher to being a leader in many aspects of digital and even economic development,” Brodin said. said.

Ingka is IKEA’s largest global franchisee, accounting for nearly 90% of total sales. The brand is owned by Inter Ikea, a separate organization responsible for manufacturing all IKEA products.

Indian furniture market potential

Brodin, who previously worked as an assistant to IKEA founder Ingvar Kamprad, said he sees India as a key focus for the company’s expansion.

He emphasized the importance of India’s scale, saying IKEA’s global vision is in line with the characteristics of the Indian market and aims to serve a large number of people with sufficient needs at an affordable price. He added that there is.

“When it comes to investment priorities, India ranks first, second and third. We made a conscious decision that too many places cannot afford to go into the startup stage. India is a top priority for us right now. India is the ultimate market for us as we have people with thin wallets, many needs and large family situations. Therefore, if we succeed in India “I think that’s the most exciting expansion project we have,” he said.

In terms of pricing, IKEA has strategically reduced costs in response to softening raw material prices, resulting in approximately 20 per cent reduction in prices on various products both in India and globally. This reduction is expected to increase sales volumes.

IKEA was able to overtake local competitors such as Urban Ladder and Pepperfry in its first year of single-store operations, opening its first store in Hyderabad in 2018. Cutting back to the present, the company reported the following sales in 2023. INR176.8 billion yen, an increase of 61% from the previous year.

However, the net loss widened to more than 1 million yen. INRThe $113.4 billion comes from investments in new infrastructure, including land acquisition and the creation of distribution centers for future stores.

Expansion planning and market prioritization

Brodin said he was “deeply impressed” by India’s leadership in economic development and growth. “…compared to other large countries, the outlook (for India) is quite optimistic,” he added.

To date, IKEA has opened three large stores and two small stores in urban areas, with plans to open larger stores in Gurgaon and Noida in the national capital. In addition to physical expansion, the company has expanded its e-commerce services in Maharashtra, Karnataka, Telangana, Andhra Pradesh and Gujarat. Additionally, the Swedish retailer also aims to launch an online operation in Delhi later this year.

The company said its efforts to establish a stronger presence in the Indian market continue, emphasizing the need for at least 8-10 stores to achieve economies of scale.

“The sooner we get to that, the better. Chapter 1 was about sourcing and infrastructure and getting the first doors up and running. And the objective was to expand the company into top metropolitan areas.” We are measuring and planning how we can make that happen for 1.4 billion people. And if I am certain of anything, it is that India’s economic outlook is It’s in good shape,” Brodin said.

According to a report by IDBI Capital, the domestic furniture market is valued at $32 billion and is expected to grow to $38 billion by 2026. According to the report, it is primarily driven by the growth of the middle class.