Zara parent Inditex has closed all of its 502 stores in Russia, as more retailers, brands and designers call for an end to Russia’s war on Ukraine.
The high street giant follows H&M, Mango and Ikea, all of whom have temporarily shuttered their doors. While many businesses stop short of publicly condemning Russia for its Ukraine invasion, the crash of the ruble and logistical issues are also forcing retailers to pause their operations. Fulfilling orders is already a challenge with current sanctions and embargoes.
Hermès on Friday said in a LinkedIn post: “Deeply concerned by the situation in Europe at this time, it’s with regret that we have taken the decision to temporarily close our stores in Russia and pause all our commercial activities from March the 4th evening. We will continue to stand by our local teams.”
LVMH, Kering, Richemont and Chanel have also closed their stores. On Wednesday LVMH said the group is “closely monitoring the tragic situation in Ukraine and stands alongside all those severely affected by this war. The Group’s first concern is the safety of its 150 employees in Ukraine and is providing them with essential financial and operational assistance.” LVMH operates 120 stores in Russia and employs about 3,500 people.
Kering, in a tweet on Friday, said “due to growing concerns regarding the current situation in Europe, Kering is temporarily closing its stores in Russia for its Houses that the Group operates directly in the country.”
With most luxury brands suspending operations in Russia, the impact on the bottom line may not be as disastrous as previously implied. A seminar hosted by Luxury Daily on Friday saw a panel discuss how luxury brands have survived centuries of upheaval, war and revolution, to which the current situation is no different.
Reputational risk may be the greatest
Reputational risk may in fact do more damage than the financial risk, for those continuing to operate in Russia. Luxury groups are much less dependent on the Russian market in comparison to the U.S. and China. Swiss bank UBS underscored that Russia is not a very large part of the global economy, with many brands seeing less than 1 percent of sales generated from Russia, even from its citizens shopping abroad.
Companies including Apple, Microsoft, Ikea and Nike were quick to respond to Russia’s invasion and halt their operations, yet by stark contrast most luxury and fashion brands waited well until the ninth day of the war to suspend their Russian businesses.
Prompted by social media, brands can no longer afford to stay silent.
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