IKEA: Second Wave Of COVID-19 Lockdowns Won’t Hit As Hard

IKEA said it’s ready to forge ahead, despite new COVID-19 restrictions in Europe that threaten economic recovery.

Martin van Dam, chief financial officer of Inter Ikea, the main company of the Ikea brand, told the Financial Times on Tuesday (Nov. 3) that a second wave of  lockdowns will have “incomparably” less of an impact than the first.

Although about one in 10 of IKEA’s stores are closed — in France, Israel, Ireland, Czech Republic, Slovakia, Belgium and the U.K. — van Dam said the effect of that has been blunted by allowing customers to collect online orders from some shops.

In addition, he told the FT, IKEA will be able to continue manufacturing its famous ready-to-assemble furniture. “The big thing is we don’t stop production,” he said. “There are slower sales, but there is not the inefficiency of the first lockdown.”

The Netherlands-based IKEA’s supply chains were hammered as lockdowns in Europe and parts of China heavily disrupted its production. At the peak of the COVID-19 crisis in April, about three-quarters of the retailer’s 450 stores were closed — on average for seven weeks each. The company had to fork over financial aid to bail out some of its hundreds of external suppliers and allow them to pay their workers.

The latest shutdowns, van Dam said, have not strained its supply system to that degree. In fact, IKEA has since asked suppliers to work extra shifts, as many consumers working from home focus more of their time and energy on home improvements.

Van Dam said IKEA had given its suppliers loans and prepayments for goods. “We had to go back to our suppliers and say — what can we do together to make sure that stopping your production doesn’t bring you into financial problems. We had to make sure they don’t go bankrupt,” he said.

Nonetheless, the spike in COVID-19 cases is a threat to economic recovery in the U.S. and the European Union. Ireland and the Czech Republic are the first two European nations to return to full lockdown mode. Other countries are putting restrictions in place in hope of heading off full shutdowns.