Tue, 03 Oct 2023

MOSCOW, Russia: After a turbulent 15 months of store closures and declining demand, Russian designers and brands are assisting the gradual recovery of the retail sector, with new labels filling the gap left by the exodus of Western rivals.

In response to Russia's invasion of Ukraine in February 2022, many foreign retailers left the country, leaving some of Moscow's most prestigious streets with boarded up stores and the industry suffering losses of $2.5 billion.

Spain's Inditex, whose flagship Zara store in central Moscow reopened last month under new management and a new brand, MAAG, sold some of its more than 500 Russian stores to a UAE-based buyer.

In an interview with Reuters, Oleg Klimov, president of Russia's Council of Shopping Centers, said retail sales, a key gauge of consumer demand, slumped in 2022, hit by soaring inflation and falling wages, while the Western exodus contributed to heavy industry losses.

"People in general just did not understand what was going on. They did not want to spend money. The losses were about 200 billion roubles ($2.47 billion). But it is recovering now. Money always eventually changes hands," he added, as quoted by Reuters.

Russians are increasingly losing access to Western products, such as McDonald's burgers and Levi's jeans.

Gloria Jeans, which once sold Levi's jeans, has taken over Swedish retailer H&M's central Moscow store.

Trading routes have also been restricted by the Western sanctions and export bans.

"The biggest problem is international transactions. Our industry is extremely dependent on imports," said Ksenia Zhdanova, who runs her own KSEW clothing brand and is commercial director for online Russian designer wear marketplace Richmill, according to Reuters.

Citing a lack of seamstresses and professionals in textiles that she believed only government-led initiatives could resolve, Zhdanova said staff shortages are also an issue.

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