IKEA Shutters Operations In Russia

IKEA, the world’s largest furniture retailer, is calling it quits in Russia, following the country’s invasion of Ukraine.

“The devastating war in Ukraine is a human tragedy, and our deepest empathy and concerns are with the millions of people impacted,” brand owner Inter IKEA and Ingka Group said.

The retailer’s parent company, Ingka Group, noted that the move will result in an average price increase of 12% this year, up from previous estimates of 9% as it is going to result in an increase in cost of raw materials and cause other supply chain disruptions.

“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,” the two groups said.

IKEA is one of the first global businesses to not only pull the plug in Russia but also Belarus, which has played an instrumental role in facilitating Russia’s attack on Ukraine, Reuters reported.

The company operates 17 locations in Russia, along with one distribution center. As of August last year, Russia was the 10th largest market for the retailer, accounting for 4% of total retail sales worth $1.8 billion. Belarus, meanwhile, is just a sourcing market and has no IKEA stores in the country.

As IKEA exits out of the market, it is reportedly planning to pay its 15,000 employees in the country for at least the next three months.

“The company groups will secure employment and income stability and provide support to them and their families in the region,” IKEA said.

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Originally published at https://retailbum.com on March 3, 2022.