After Booming During COVID-19 Epidemic, IKEA Is Now Handing Jobkeeper Payments Back To Governments
Ikea whose stores are back open, now the Swedish Company is looking at returning money handed out by Governments due to COVID-19.
The world’s largest furniture retailer got government support, now it’s admitted that the Swedish furniture group suffered less than expected from the Covid-19 crisis.
Tolga Oncu, retail operations manager at Ingka Group, the main Ikea retailer, said the company had decided to start a dialogue with several Countries.
Mr Oncu added that Ikea had thought business could fall by 70-80 per cent at the start of the crisis. But, now all but 23 of its stores had reopened, it was experiencing a large amount of “pent-up demand” for home improvements.
“Now we know more than what we did in February and March, it’s just the right thing to go back and say, ‘hey guys thanks very much you helped us through this difficult period and so now can we see about paying this back or forward’,” he told the Financial Times.
Ikea is in early discussions with the relevant national authorities. Because of differences in how the furlough or short-time working schemes are set up, the company does not yet know how it will pay the governments back.
The Countries that could get an Ikea refund immediately are Belgium, Croatia, the Czech Republic, Ireland, Portugal, Romania, Serbia, Spain, and the US.
Mr Oncu said the flat-pack retailer did not know how much money it would cost or exactly how many workers were involved across Countries who handed out incentives.
Ikea’s decision to return the money lays bare a dilemma for many companies as economies start to recover after the immediate shock following lockdowns from coronavirus across much of the world.
Some other companies have returned furlough money in individual countries, often under pressure from external scrutiny, but few large multinational companies have committed to returning all support.
Mr Oncu told the Financial Times that Ikea’s priority at the beginning of the crisis in February and March had been to protect employees and their livelihoods as it closed down most of its 374 stores worldwide.
“When the thick fog started to fade away we saw that our ability to adapt to the new circumstances. . made us realise that the depth of the crisis was not as deep as we had feared and would not last as long as we first thought.”
Mr Oncu said the move to repay the money had nothing to do with how Ikea is perceived but was simply “the right thing to do”.
He added: “It’s important to keep good relations with societies and communities we are close to. Connected with the fact that we work in the long term and we talk in terms of generations, it gives us the responsibility and opportunity to work with these questions.”
Ikea has also set up a $50m fund for Ikea store leaders to distribute in their local communities. This is on top of looking at improving both remote solutions for its workers and customers as it boosts its digital offering.
Ikea, which was founded in Sweden but now has a family of companies, many of which are headquartered in the Netherlands, is facing scrutiny from European regulators about its tax affairs.