‘I see my business falling apart’: can retailers survive inside Putin’s Russia? | retail industry

Western brands have moved quickly to shut down operations in Russia since the invasion of Ukraine, wiping familiar products off the shelves. But how do those trying to run businesses in the country feel?

The Russian partner of a Western brand shares his story.

“To say that I have concerns about the future is a huge understatement. Waking up every day with the knowledge that you are an unwitting part of this nightmare is devastating.

“I have been building my business for decades and now I am watching it fall apart. I have people who depend on me, not only my family, but also my employees, who will lose their source of income, their health insurance, their livelihood. One of my biggest concerns is your well-being. But of course, compared to the tragedy unfolding in Ukraine, all trade concerns seem insignificant.

“As of right now, retail businesses are still running, but the biggest question we all have is what will happen in a few weeks or months, when supplies run out.

“The big brands operating in Russia, like Ikea and Inditex [the owner of fashion chain Zara], they have a little more freedom: they can afford to temporarily suspend operations while continuing to pay their employees.

“Companies that work under a license agreement face much more difficult challenges. I am afraid we will all have to make a difficult strategic decision: close our businesses permanently and sell our remaining stock, or try to keep the business afloat in the hope that the situation improves and supplies can resume.

“The first scenario involves selling the shares quickly in an attempt to salvage some of our investments, and maybe trying to start a new business with that. The second scenario is more hopeful, but would still imply the closure of some [sites] and fire employees.

“The biggest risk of all, of course, is that this second scenario involves the return of our Western partners. If that doesn’t happen, we run the risk of losing everything and being left with nothing.

“Right now, I am working with the second scenario and I hope that things will return to normal. But I also know many people who have already closed their businesses.

“The only thing that could be considered positive is that our sales increased, because people realize that the stock will run out. But it inevitably speeds up the timeline for my chosen scenario, meaning our supplies could run out before normal trade resumes.

“Obviously there are a lot of issues facing companies with Western partners right now, like logistics and payments. [in the light of sanctions on banks and payment of Russian companies]. But the decision to suspend operations in Russia was for many brands as much political as it was operational. Personally, I am constantly in contact with my partners in Europeand they have been a great support.

“We can still pay staff in Russia, but we will need to close select stores at some point soon, as stocks run low, and pay severance pay for affected employees.

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“I know quite a few people who were forced to close their businesses, sell their remaining shares, and have already left Russia or plan to leave soon.

“Of course [our customers and staff] they are disappointed to some extent, because with many brands suspending their operations, tens of thousands of people are at risk of losing their jobs, their source of income, their access to health care.

“They just don’t know what’s going to happen, whether they’ll be able to pay their rent, pay off their credit card debt, provide for their families. I don’t think people are afraid of the fact that the products they’re used to won’t be available per se, I think they’re afraid of not having more options.”

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