Russian Retail Slides, And Global Brands Flee

As Russia’s roughly $33 billion (that’s 2.3 trillion rubles) fashion market shrinks by as much as 20 percent this year, some fashion heavyweights may end up leaving the country, The Business of Fashion reported Wednesday (Sept. 9).

Research firm Fashion Consulting Group said in a report that the depreciation of the ruble against any number of foreign currencies has slammed consumer incomes and, specifically, disposable income. The report by Fashion Consulting said that many Russians spend a significant amount of their budget — roughly half — on food. That, of course, leaves little left over to devote to discretionary items, such as clothing.

As the consumer feels pinched, retailers have been fleeing the scene, noted The Business of Fashion, with sartorial refugees including the U.K.’s New Look and River Island in just the past year. In a less drastic trimming of exposure to the country, Marks & Spencer Group (also of the U.K.) and Spain’s Mango, among others, have reduced their store counts. In still another tack against too much ruble exposure, Supergroup PLC’s Superdry has delayed opening in the nation.

In an interview with The Business of Fashion, Nick Hill, who heads the Russian operations of the U.K.’s Debenhams, said that “you probably won’t see many international brands launching now. Russian investors at this end aren’t thinking about adding more franchises right now.” Debenhams, for its part, recently opened a flagship operation in Moscow at that city’s largest mall.

One silver lining, perhaps, comes from the fact that the retail slide has hit rents, which are down as much as a third in Moscow, noted Reinhard Doepfer, chairman of the European Fashion and Textile Export Council, in an email presentation cited by The Business of Fashion.

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