IKEA Store Feasibility Calculator
Calculate IKEA Store Feasibility
Compare costs for opening an IKEA store in different Indian cities based on land costs, logistics, and operational expenses.
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Key Insights
Why Hyderabad? Land costs are 90% lower than Mumbai/Delhi. Plus, government approvals and logistics access make it ideal.
India's Challenge: 80% of households prefer custom furniture from local carpenters. IKEA's flat-pack model faces cultural mismatch.
Key Factor: A single store costs ₹800 crore to build and operate. Expansion requires careful cost-benefit analysis.
Many people assume IKEA has dozens of stores across India. But if you’ve ever tried to find one outside Hyderabad, you’ve probably come up empty. There’s only one IKEA store in the entire country-and it’s in Hyderabad. Why? It’s not because IKEA doesn’t want to grow. It’s because India’s market doesn’t work like Europe’s or the U.S.’s. And IKEA had to adapt-or fail.
Hyderabad Was the Only Place That Made Sense
When IKEA entered India in 2018, it didn’t pick Mumbai, Delhi, or Bangalore. It picked Hyderabad. Why? Because Hyderabad offered something no other city could: a perfect mix of land availability, logistics access, and local policy support.
IKEA needs huge spaces-its stores are 300,000 to 500,000 square feet. In Mumbai or Delhi, land costs over ₹10,000 per square foot. In Hyderabad, near the Outer Ring Road, it was under ₹1,500. That’s a 90% savings. Plus, the Telangana government fast-tracked approvals. Other states had layers of red tape. Hyderabad cut through them.
The city also has one of India’s best logistics hubs. The Rajiv Gandhi International Airport is just 20 minutes away. The nearby industrial zones like Patancheru and Shamshabad host warehouses for Amazon, Flipkart, and DHL. IKEA could ship flat-pack furniture from Sweden, assemble it locally, and get it to customers fast-all without paying extra for cross-country freight.
India’s Furniture Market Is Nothing Like Europe’s
IKEA’s model works because it sells standardized, self-assemble furniture. But in India, people don’t want flat packs. They want custom-made, solid wood, hand-carved pieces. Over 80% of Indian households buy furniture from local carpenters or small workshops. These shops offer free delivery, installation, and lifetime repairs. IKEA’s DIY model? It’s a hard sell.
Even when people do buy IKEA, they often hire local workers to assemble it. A 2023 survey by the Indian Furniture Manufacturers Association found that 62% of IKEA customers in Hyderabad hired a carpenter to put their furniture together. That’s not how IKEA designed its business. It’s supposed to be simple, cheap, and hassle-free. But in India, hassle-free means someone else does the work.
Also, Indian homes are smaller. A 12x12-foot living room doesn’t need a 7-piece sofa set. IKEA’s large, minimalist designs don’t always fit. Many customers end up buying just one or two items-a bookshelf, a bed frame-and never return. That’s not enough to build loyalty.
Foreign Ownership Rules Made Expansion Hard
IKEA can’t own its stores outright in India. Foreign retailers must partner with local companies. IKEA chose to work with Godrej, one of India’s oldest and most trusted industrial families. But even that partnership came with strings.
India’s FDI rules require foreign retailers to source 30% of their products locally. That’s not easy when your entire brand is built on Swedish design and mass production. IKEA had to retool its supply chain. It now sources wood from Tamil Nadu, metal from Gujarat, and fabrics from Punjab. But that means its products aren’t truly ‘Swedish’ anymore. And that confused customers.
Other global brands like Zara and H&M opened multiple stores because they sell fashion-lightweight, high-turnover goods. Furniture is bulky, expensive, and slow-moving. One store in Hyderabad costs IKEA ₹800 crore to build and run. Opening another would mean another ₹800 crore-and no guarantee of double the sales.
Customer Behavior Doesn’t Match the Model
Think about how you shop. You go to IKEA because you want to spend a whole day there. You eat meatballs, browse showrooms, and leave with a cart full of stuff. But Indian shoppers don’t do that.
A 2024 study by the Indian Retail Forum showed that 78% of visitors to the Hyderabad IKEA store stayed less than 90 minutes. Most came to check out a single item-like a $50 lamp or a $120 bookshelf. They didn’t plan a full room overhaul. They didn’t want the experience. They wanted a price comparison.
And when they compared prices, they found local alternatives cheaper. A similar bed frame from a local carpenter costs ₹18,000. IKEA’s costs ₹22,000. But the carpenter’s version lasts 20 years. IKEA’s? Maybe 7. In a country where families pass down furniture, durability matters more than design.
Why No Other Cities Yet? It’s Not About Demand
There’s plenty of demand in Delhi, Bengaluru, and Pune. But IKEA isn’t holding back because of low interest. It’s holding back because the math doesn’t add up.
Opening a second store would mean:
- Another ₹800 crore investment
- Another 200+ local hires
- Another logistics network to build
- More pressure to meet the 30% local sourcing rule
- And no guarantee customers will spend more than they did in Hyderabad
Instead of expanding, IKEA India is doubling down on online sales. Its website now offers 1,200 products. Delivery is free for orders over ₹2,500. It’s testing small pickup points in 12 cities. That’s cheaper than building more giant stores.
They’re also launching more affordable lines-like the ‘FÖRNUFTIG’ series-priced 30% lower than their European versions. These are made entirely in India. But even then, sales are slow. Why? Because Indian consumers still trust local makers more than a Swedish brand.
What’s Next for IKEA in India?
IKEA isn’t leaving. But it’s not rushing either. The company says it’s still in the ‘learning phase.’
They’re testing new ideas:
- Smaller urban stores-maybe 50,000 sq ft instead of 400,000
- Partnerships with real estate developers to include furniture in new apartments
- Collaborations with local designers to blend Swedish minimalism with Indian patterns
They’ve even started renting out furniture. For young professionals who move often, renting a sofa for ₹1,500/month is easier than buying one. That’s a new model-borrowing, not owning.
But until Indian buyers start seeing IKEA as more than a one-time purchase, expansion will stay on hold. The Hyderabad store isn’t a mistake. It’s a prototype. And IKEA is waiting to see if India will change to fit its model-or if its model will change to fit India.
Frequently Asked Questions
Why is IKEA only in Hyderabad and not in Delhi or Mumbai?
Hyderabad offered the best combination of low land costs, fast government approvals, and strong logistics. Other cities like Delhi and Mumbai have much higher real estate prices and more complex regulations. IKEA chose to test the market in one location before expanding.
Does IKEA plan to open more stores in India?
Yes, but not as big physical stores. IKEA India is focusing on smaller urban outlets, online sales, and pickup points. They’re also testing furniture rental and partnerships with housing projects. A second full-sized store is unlikely before 2027.
Why don’t Indians buy more IKEA furniture?
Most Indian households prefer custom-made, solid wood furniture from local carpenters. These pieces last longer, can be repaired, and are often cheaper. IKEA’s flat-pack, disposable-style furniture doesn’t match this cultural preference for durability and personalization.
Is IKEA’s furniture made in India?
Yes. Since 2019, IKEA India sources over 80% of its materials locally-wood from Tamil Nadu, metal from Gujarat, fabrics from Punjab. Most of the furniture sold in India is assembled in its Hyderabad warehouse. Only the design and brand come from Sweden.
Can I order IKEA products online in India?
Yes. IKEA India’s website offers over 1,200 products, with free delivery on orders above ₹2,500. You can also pick up items at small collection points in 12 cities, including Bengaluru, Pune, and Chennai.