Luxury brands close their doors in Russia, what impact on the fashion world?
It is a true urban exodus that brands are undertaking in Russia. From luxury to fast fashion, stores are closing one by one in order to show support for the Ukrainian population and publicly express their disagreement with the violence that is taking place in the region. This violence has already forced over 2 million people living in the country to flee.
This ongoing conflict is shaking the Western world, and economic sanctions will also have a strong impact on the lives of Russian citizens.
How does the fashion world react to this war on the borders of the European space and what will be its impact on these brands?
Which brands are closing their doors in Russia?
Symbolically distancing themselves, economically sanctioning Russia, and as a sign of protest against the war, luxury brands are closing their curtains. A few days after the start of the fighting, Chanel, Louis Vuitton, Gucci, Hermès, Prada, Burberry, and Richemont, which owns Cartier, Chloé, and Montblanc, have decided to halt all their commercial activities in Russia.
The brands also specify that these closures are temporary, hoping of course that the situation improves. They continue to pay the salaries of employees in Russia and Ukraine who are suffering from the conflict and affirm their concern for their teams during these difficult times. “The safety of our employees is our priority, and we remain closely connected to our local teams whom we will continue to support” – Chanel.
In addition to closing stores, some brands are not hesitating to make a donation to support the Ukrainian people in this ordeal.
The e-commerce market is also at a standstill.
It’s not just luxury brands that are deserting Russia. Fast fashion companies are also closing their doors.
H&M has stopped all its business in Russia, as the country represents a very important market share. The Swedish group has also temporarily closed its stores in Ukraine, fearing for the safety of its employees. All Uniqlo, Mango, and Asos stores have also left the territory, leaving thousands of Russians without access to their favorite brands.
What are the consequences for brands and the fashion market?
These closures isolate Russia for invading Ukraine. They also deprive brands of an important market share and economic benefits. One of the reasons for these hasty departures is financial. With the current sanctions imposed by the European Union, exports-imports to Russia are disrupted, as well as money transactions. According to economist Estelle Brack, “With these sanctions, European exporting companies to Russia take the risk of not being paid, since money cannot be taken out of Russia”.
If the economic consequences for companies are significant, they are also significant for the inhabitants. Since the beginning of this conflict, a new Russian story is being written. Companies are closing one after another in the country, depriving themselves of a significant percentage of sales, and above all, employees find themselves without work overnight. In the world of fashion, an entire dynamic is collapsing, and the recovery will be long and gradual.
Can the closure of major brands influence Russia to cease the war to avoid the country’s bankruptcy?
Yes… and no. For political protectionist reasons, Putin had already considered the option of producing more in Russia and distancing himself from foreign imports at the same time. Goods from European countries will be less accessible on the market, as the Russian leader has decided to add European countries to the list of countries hostile to the Russian Federation.
However, the population remains heavily impacted by these closures and sees its way of life greatly disrupted. In a short amount of time, Russians will have to learn to consume differently. What is terrible for those accustomed to department stores may be an opportunity for others. Indeed, some citizens are in favor of regaining a certain sovereignty.
Closing remarks
The brands first made an ethical choice. The choice not to do business in a country that is starting a war. This choice also ensures the company’s image and good reputation.
On social media, brands that had not ceased their activities in Russia were forced to speak out on this issue, and boycott hashtags were created.
As Olivier Rousteing so aptly said when presenting his collection, “There are more important things happening in the world today”. The fashion world may seem superficial when a war breaks out, however, the closures of stores, the demonstrations of support for the Ukrainian people that took place during fashion week, as well as the initiatives taken by designers, raise their voices for peace and remind us that fashion has a great influence in the world and will always support peace and beauty in the face of barbarism.
