Background
Canada was hit with a nationwide affordability crisis in 2023. Housing affordability specifically, reached its worst level in history. This created heightened economic anxiety for millions of people who were struggling to meet the rising costs of living. As a result, the second-hand economy became a widespread choice for those seeking value. There was only one problem: a federal tax policy that was punishing Canadians for making sustainable choices.
In Canada, a 13% federal tax called HST (Harmonized Sales Tax) is applied to every sales transaction. It’s a tax that’s been around since 1997, so it’s something no one thinks twice about. Until IKEA discovered that buying second-hand means paying tax twice. Even though these items lose their original look, packaging, price, and value, they never lose the tax. Every new owner must pay the HST that was already paid the first time. This unfair double taxation on second-hand items generates a whopping $720 million for the federal government. Money that should rightfully be in Canadians’ pockets.
For a country that is known as a global leader in sustainability, this was shocking. An outdated, unfair tax policy was making it harder for Canadians to choose affordable and sustainable options, especially in one of the country’s most financially challenging times. As a brand that’s committed to creating a better everyday life for the many people, we needed to capitalize on this moment and double down on IKEA’s commitment to affordability and sustainability. Within our As-is (second-hand) marketplace, we re-sell everything from gently used products to furniture. So, as a leading retailer of second-hand items ourselves, we had just one thing to say: SHT.
Creative idea
SHT (Second-Hand Tax) is a counter tax that effectively eliminates the unfair double tax on second-hand items. HST is 13% and SHT is -13%. Meaning, customers pay 0% tax on our As-is (second-hand) items.
At its core, the idea was designed with an inherent risk associated with it in order to earn attention from those affected by it (consumers) and those who hold the power to change it (government and business stakeholders). It was timely and urgent, loaded with tension and of course, surprising. But more than just a clever play on letters, SHT is a bold articulation of the sentiment all Canadians felt about this issue. It harmonized economic affordability with environmental sustainability. It offered a blueprint for how policies can evolve to support sustainable consumer choices. Most of all, it kickstarted the beginning of the end to the double tax on second-hand items, for good.
Describe the strategy
According to a 2023 IKEA report, 45% of Canadians were concerned with their finances. Many had turned to the second-hand economy to make the most of every dollar – with 31% having purchased second-hand items more than once a month. This shift in mindset challenged us to eliminate barriers to circular shopping. That’s when we uncovered the issue of double taxation on second-hand items, which led to the insight: Even though these items lose their original look, packaging, price, and value, they never lose the tax.
IKEA believes in caring for people and the planet. SHT does both.
Because tax laws vary by province, we chose Ontario, Canada’s largest province with the highest intensity index in participation in the second-hand economy (92 compared to the national average of 85) to start our stance against the unfair tax. Then, we targeted the rest of Canada by starting within our organization and taking a leadership position on affecting the federal tax policy with government. To broaden awareness and ignite conversation and change, we conducted targeted media outreach across Canada to policy, sustainability, and general news publications, urging them to join us.
Describe the execution
One day prior to launch, IKEA distributed digital letters to top federal and provincial stakeholders and existing partners, teasing out that SHT was happening this Earth Month.
Then, we revealed this unfair double tax nationwide, introduced our solution, and called on everyone to join us in putting an end to it. On April 2nd, we put out open letters in Canada’s biggest newspapers across top tier outlets read by Canadian business leaders: The Globe and Mail, Financial Post, Toronto Star and Ottawa Citizen. IKEA distributed a press release across the Canadian Newswire and conducted targeted pitching to gain awareness of the initiative, drive traffic to IKEA’s As-is (second-hand) marketplace, and spur action and petition signatures. We developed a radio chatter sheet with bite-sized messages for broadcast hosts to share that garnered significant traction within just two weeks of launch.
While journalists were covering the initiative across digital, print, online and broadcast, we promoted it across IKEA stores, letting customers know that we would give them SHT back on all our As-is (second-hand) items. Then, we announced SHT on Instagram and TikTok, where Brand fans and influencers made SHT even bigger, without even being paid. Our CEO was even talking SHT on LinkedIn.
Throughout the remainder of Earth Month, we continued conducting outreach and landed top tier coverage as SHT gained momentum. Outlets encouraged their readers and listeners to sign the petition, demonstrating support for sustainability and affordability. Over 35,000 Canadians flocked to sign our petition on change.org. We conducted outreach to government and business stakeholders directly to get them on board. Most importantly, we convened over 100 leaders from business, government and civil society to discuss change.
Results
IKEA was the 1st consumer brand in Canada to propose changes to tax laws. We ignited the biggest bipartisan tax law debate in recent years, making SHT the most covered campaign in IKEA Canada’s history, starting as a single-market effort and sparking national reform.
We gained +35,000 petition signatures, earned 300+ piece of coverage and +80M impressions. Purchase intent was 81% and IKEA sustainability perceptions increased by 11%. The campaign also led to significant business impact, with a 192% increase in IKEA As-is (second-hand) sales and a 16% increase in foot traffic.
Canada’s most important tax and retail organizations, representing +235,000 members and +142,000 stores respectively, shared their interest in working with IKEA almost immediately. Most importantly, because of the campaign, provincial and federal decisionmakers engaged with IKEA to discuss a change in policy that would end the double taxation on second-hand items Canada-wide.
The Canadian Taxpayers Federation, Retail Council of Canada, and Canadian Federation of Independent Business all shared notes of written support with IKEA. The Ontario Minister of the Environment met with IKEA to discuss actionable next steps. The Ontario Minister of Finance also set a meeting with IKEA. There have also been ongoing discussions with the Canadian federal government to this date. Most impressively, on May 7, 2024, IKEA met with the Prime Minister of Canada to talk about ending the double tax for good.