Swedish brand IKEA announced on March 3 that it is suspending its sales in local stores, online stores, and studios in Russia. Deliveries and sales to the Russian branches of the company were temporarily suspended. For how long and whether the brand will come back are unknown.
What's in it for us?
Suspension of the Swedish brand’s operation in Russia also affected Kazakh manufacturers who collaborated with the Russian branches of IKEA. Among them are Gauhar Nasyrova and her production company AGF-Group.
Since 2016, she has been supplying IKEA stores in Russia with bedding produced at her Shymkent factory. Gauhar signed a permanent contract with the Swedish brand back in 2015, and until March 3, 2022, she had been a regular supplier.
“About 95-97% of our production went to the Russian market, 1-2% to the US market, Canada, Finland, and another 1-2% to the Kazakh market under the Arua brand. We produced 10,000 products per day, including sheets, pillowcases, duvet covers. Since 2019, we are trying to enter the EU market, but our price is not competitive there due to high customs tax and logistics.”
Now, due to the Russian IKEA closing down, the production capacity of AGF-Group is only 5% loaded, and the losses are already estimated at millions of tenge. Such a large-scale reduction in production cannot help but have an impact on the company's employees.
“The layoffs have already begun. Some had to be fired, some took a leave of absence, while some had to be sent on vacation without pay. Out of 240 employees, only 37 are still employed” says Gauhar Nasyrova with regret.
A ray of hope
Gauhar Nasyrova said that anti-crisis measures are underway and the negotiations with the IKEA head office are being conducted.
“There were offers from our side, but so far there is no exact answer. We had our first meeting where we reported our problems and losses. As for a further partnership with IKEA, of course, if their work in Russia resumes, we plan to continue our cooperation. At this stage, we are actively searching for new markets and new partners, and we are thinking about new goods for production."
The retailers who used to bring goods from the Russian IKEA stores, mostly from Omsk and Novosibirsk, to Kazakhstan, also found themselves in a suspended state. In recent years, business was moving at a steady course. But now the official store websites announced that orders are no longer accepted. The Kazakh stores that still sell IKEA products are clearing their existing stocks. According to the retailers, no new deliveries are expected in the near future.
