IKEA reinvents India growth plan to reach tier-II cities

In a strategic departure from its traditional large-format retail model, Swedish home furnishings major IKEA is doubling down on localized and flexible formats to accelerate its growth in India and become more accessible to urban and emerging markets alike, PTI reported.

The company is entering the next phase of its India expansion by rolling out smaller-format stores, as compact as 10,000 square feet, that can be housed in neighbourhood malls and high-street locations, according to Pooja Grover, IKEA India’s Country Expansion Manager.

This multi-format approach marks a significant shift for IKEA, which has so far been known for sprawling megastores spanning over 40,000 square meters. Grover said the move will allow IKEA to scale faster, adapt to local catchment areas and reach more consumers in a cost-efficient manner.

“These formats give us agility and make us more accessible, especially in cities where space is at a premium,” Grover said. “This is a huge shift for us in terms of size and strategy.”

While IKEA’s current physical footprint is concentrated in metros like Hyderabad, Bengaluru and Mumbai, with upcoming stores in Gurugram and Noida, Grover confirmed that plans are underway to enter tier II cities with these flexible formats, potentially supported by Centralised Marketing Platforms (CMPs) and real estate partnerships.

In addition to physical stores, IKEA is also enhancing its digital and omnichannel capabilities. The compact stores will showcase a limited range of products but offer access to IKEA’s full digital catalogue of over 7,000 items, alongside various fulfilment options including home delivery, collection points and third-party pickups.

The strategy also includes a Plan & Order Point (PaOP) format, recently launched in Bengaluru, acting as a hub for customized planning, consultations and design services, blending IKEA’s retail experience with personalised service. Grover said the expansion blueprint for the next four to five years has been approved by the board, and discussions are ongoing with developers to identify suitable locations across cities.

Earlier this year, IKEA began online sales in Delhi-NCR and nine other markets, ahead of its upcoming stores in Gurugram and Noida. Physical stores in Chennai and Pune are expected to follow. Meanwhile, Ingka Centres, part of the Ingka Group that operates IKEA retail, is investing €1 billion to set up two massive retail and leisure destinations under the Lykli brand in Gurgaon and Noida, further signaling IKEA’s commitment to India.

CEO Susanne Pulverer has also indicated that the company is now focusing on profitable growth, and is in talks with the Indian government for approvals on the next round of foreign direct investment (FDI). IKEA’s original FDI proposal of Rs 10,500 crore, approved in 2013, aimed to establish 10 large stores over a decade.