Out of Russia | IKEA’s Decision on Russia-Ukraine War
While Russia and Ukraine entered the tag-of-war, some retailers have felt the impact of the crisis as it reverberates down the supply chain. Despite existing economic pressures, many retailers are cutting their Russian operations in support of Ukraine.
In this blog, I’m going to talk about how IKEA responded and acted to offer its help to Ukraine as one of the world leaders of retailing. In the end, I will discuss IKEA’s discissions and choices from the perspective of an integrated marketing student and provide my vision on it.
What Actions has IKEA Taken?
IKEA Group has been announced to pause all export and import in and out of Russia and Belarus on March 3rd. This also means that all deliveries from all sub-suppliers to these units are paused.
As one of the biggest furniture retailers in the world, Ikea has 17 stores in Russia, which is the Swedish company’s 10th largest retail market. In the year up to August 2021, sales from Russia made up 4% of Ikea’s overall sales. While there are no Ikea stores in Belarus, it is used to source materials, so the IKEA group has also stopped sourcing materials from Belarus.
“The war has both a huge human impact and is resulting in serious disruptions to supply chain and trading conditions, which is why the company groups have decided to temporarily pause IKEA operations in Russia.” Said IKEA group in their official statement. Therefore, Ikea joins major retailers who have cut Russian operations that show their attitude and stated their position.
IKEA does its way to help Ukraine
In view of the impact and damage of this war on Ukraine, IKEA reached out a helping hand for the first time, regarding Several initiatives that have already started throughout IKEA, together with established humanitarian organizations, to support the affected people with emergency relief in the most needed regions.
IKEA Group has announced an immediate donation of €20 million for humanitarian assistance to those who have been forcibly displaced as a result of the conflict in Ukraine. This is in response to an emergency appeal from the UN Refugee Agency, to scale up its assistance and protection to people affected by the conflict in Ukraine.
Besides, Inter IKEA Group and Ingka Group are granting €10 million each to provide support in products and other assistance to UNHCR, Save the Children, and other organizations working in the local markets. The IKEA groups are dedicated to putting the best interest of people as the highest priority.
My Insights
Due to IKEA having pulled out of Russia and Belarus in protest of the war with Ukraine. The large crowds of panicked people thronged IKEA locations across Russia in recent days for what may be their last chance to buy the iconic furniture and home goods. In my opinion, this is an unavoidable result for the Russian consumers, that the westernized middle-class lifestyle and international brands including IKEA are not available anymore. It is a war without humanitarian, and the following political result from the international sanction becomes a burden for the consumers even though it seems rather unacceptable.
For IKEA Group, IKEA’s reasons for leaving are not solely from an ethical standpoint. Because of sanctions against Russia and the devaluation of the ruble, it is has become difficult for the company to maintain its supply chains and turn a profit. That’s why IKEA joins many other brands such as Apple and Coca-Cola that have also decided to pull out of Russia, among many others.
The Russia-Ukraine war is a humanitarian crisis with an economic and cultural impact. Although most manufacturing brands with plants in Ukraine have halted their operations and implemented contingency and risk management plans. It’s time for organizations doing business in Ukraine and Russia should rethink their plans and flex their strategies based on evolving business conditions.
In the short term, the actions IKEA was taken were correct because the way brands respond to crises varies depending on the whole retail industry and their operation. IKEA‘s actions have been recognized by the public on social media platforms. In the long run, it’s high time for the IKEA group to start building their plans. During this crisis, marketers must flex their strategies by considering different hypothetical business scenarios likely to emerge if the war escalates.
Originally published at https://medium.com/@KathyXue on March 27, 2022.
