Ikea in talks with Ireland and other countries on returning Covid-19 subsidies

Swedish retailer says returning the money is the ‘right thing to do’ given the pent-up demand it has experienced since reopening its stores

Ikea’s store in Ballymun, north Dublin. The retailer has decided to return Covid-19-related financial support that it received from nine European countries, including Ireland. Photograph: Dara Mac Donaill / The Irish Times

Ikea’s store in Ballymun, north Dublin. The retailer has decided to return Covid-19-related financial support that it received from nine European countries, including Ireland. Photograph: Dara Mac Donaill / The Irish Times

 

Ikea is in talks over returning money to all nine countries that gave the world’s largest furniture retailer government support through furlough schemes as it has 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 Belgium, Croatia, the Czech Republic, Ireland, Portugal, Romania, Serbia, Spain and the US.

Mr Oncu added that Ikea had thought business could fall by 70 to 80 per cent at the start of the crisis. However, now all but 23 of its stores had reopened, it is experiencing a large amount of “pent-up demand” for home improvements.

Ikea reopened in Dublin on June 8th, with large queues forming at its outlet in Ballymun.

“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.

Mr Oncu said the flat-pack retailer also did not know how much money it would cost or exactly how many workers were involved across the nine countries.

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.

Protect employees

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 said 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 €26m 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. - Copyright The Financial Times Limited 2020