Many high-end fashion brands withdraw from the Russian market

Since the Russia-Ukraine conflict, Hermès Russia has closed three stores in Moscow, while the new store planned to open in Saint Petersburg has been postponed indefinitely.

Many high-end fashion brands withdraw from the Russian market French brand Hermès has not renewed its lease for a store at the luxury GUM department store in central Moscow. (Source: interior.ru)

Italian luxury fashion brand Fendi will not sign a lease for its only remaining store in Russia, and French brand Hermès will not renew its lease at the luxury GUM department store in central Moscow.

GUM confirmed that the two brands are moving out of the stores they have been operating for nearly a decade. Fendi is now being replaced by Italian brand Pinko at Moscow’s most expensive shopping mall, while the “successor” to Hermès has not been revealed.

Finding tenants for high-end brands like Fendi and Hermès is not easy, because “starting up” in the most luxurious and expensive center of Moscow is not the first choice for new brands.

However, GUM manager Mikhail Kusnirovych said that the fashion house of the football club “Dinamo” and the Chinese womenswear brand Ellassay have successfully replaced Louis Vuitton and Prada at GUM.

The reason for the “withdrawal” from this long-standing business location is easy to understand through the numbers. In 2023, Hermès Russia reported a net loss of 1.8 billion rubles (more than 19.5 million USD).

Since the Russia-Ukraine conflict, Hermès Russia has closed three stores in Moscow, while the new store planned to open in Saint Petersburg has been postponed indefinitely.

Meanwhile, Fendi's revenue in Russia fell nearly 22-fold in 2023, from more than 800 million rubles ($8.63 million) in 2022 to 36.7 million rubles (nearly $400,000), and this revenue did not come from sales, but from returning goods to suppliers.

According to experts' calculations, over the past two years, about a third of luxury brands have ceased operations in Russia.

Ekaterina Nogai, head of research and analysis at IBC Real Estate, said that 73% of luxury brands present on the Russian market continue to operate in Russia, but most of them do not have new supply. 25% of luxury brands have suspended operations in Russia, including Chanel, Gucci, Cartier.

Experts also noted changes in market penetration strategies. While in the past brands opened central stores and had grand development plans, now they open one to three stores to test the market.

And if in the first quarter of 2023 new foreign brands came to the Russian market from Türkiye, then in the first quarter of 2024 up to 40% of new brands will be Chinese brands./.

According to VNA

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