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Ikea deals with coronavirus demand downturn after tackling tariffs

China 2562 Cons. Discr. - Durables 318 Cons. Discr. - Retailing 296 Coronavirus 400 European Union 643 U.S. 4540

Furniture retailer Ikea has stated that store reopenings in China and Germany have been followed by a rapid recovery in footfall, Reuters reports. The firm owns both its own stores as well as a range of shopping centers. The upturn in other markets could still be a long way off with many markets, particularly the U.S., still debating the route to ending population lockdowns.

As detailed in Panjiva’s research of April 24 there’s already been a 6.2% slide in retail sales in the U.S. in March, which has been followed by an 8.7% slide in total U.S. seaborne imports in the first two weeks of April. Panjiva’s data shows shipments of furniture fell by 7.1% over the same period. 

That followed a 9.4% decline in Q1 including a 21.0% drop in imports from China in April. The latter in part reflects earlier industrial disruptions as well as the application of tariffs to some furniture products as part of the U.S.-China trade war. Compensating shipments from Asia ex-China surged 22.4% higher in the first half of April. Meanwhile, shipments from Europe turned downward by 4.5%, perhaps reflecting the spread of industrial lockdowns there.

FURNITURE SLOWDOWN MODERATED IN APRIL

Chart segments change in U.S. seaborne imports of furniture by origin. Data for April covers first 15 days of the month. Source: Panjiva

Panjiva data shows imports in the first 15 days of April associated with Ikea fell by 9.2% compared to the same period a year earlier. That followed a 3.6% slowdown in Q1. Before the firm ran into COVID-19 troubles it had also had to deal with disruptions to its supply chain caused by the U.S.-China trade war. Tariffs of 15% were applied to certain furniture products from May 2019 and were cut to 7.5% from February 2020. 

As a consequence imports from China had already fallen by 17.1% year over year in Q4 to reach 28.2% of the total compared to 33.7% in Q4 2017. Shipments from China were replaced by a 10.0% surge in shipments from Europe and a 15.7% increase in imports from the rest of the world including Vietnam and India.

IKEA’S IMPORT SLOWDOWN ACCELERATING IN APRIL

Chart segments change in U.S. seaborne imports associated with Ikea by origin. Data for April covers first 15 days of the month. Source: Panjiva

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