Inditex has announced this Saturday to have closed its 502 stores in Russia and stopped online sales in the country. The Spanish giant joins a list of companies reporting disruptions on their businesses driven by political stances and/or operational difficulties. It has become impossible for most to proceed with operations in Russia due to the devaluation of the rouble and to logistical issues caused by the sanctions imposed on the country, even if there are no direct sanctions on their product categories. Meanwhile, pressure has been mounting in the social media for decisive stands of the Fashion industry regarding the ongoing conflict. 

Deliveries

A growing number of fashion brands and retailers cannot continue processing online orders to customers in Russia, as major delivery companies have decided to halt shipments in and out of the country. Among them are the German logistics giant DHL, which has ceased operations to both Russia and Belarus, the American transport firm FedEx and the Netherlands-based TNT. Other companies have opted altogether to stop selling in Russia for the moment.  

The online luxury retailers Mytheresa, Matchesfashion, Farfetch and Yoox Net-a-Porter have stopped shipping to Russia. Burberry has declared to Vogue Business to have paused shipping, claiming “operational challenges”. The Italian brand Golden Goose has also confirmed that it has stopped delivering to Russia due to trade restrictions. Nike, Under Armour, H&M, Puma, JD Group, Asos, John Lewis, Kurt Geiger and Mango have opted to temporarily cease deliveries.

Luxury Brands

Brands and retailers that have existing stock in the country can continue business should they choose. However, the reputational risk may pose more damage than the financial risk for those continuing to operate in Russia, as consumers become increasingly more vocal on the urgency of supporting the Ukrainian cause. Nuance is a keyword to examining the luxury brands’ reaction, often deemed slow.

At the moment, Chanel, LVMH, Kering, Hermès and Richemont are among the luxury companies that have halted commercial trading with Russia, deciding also to temporarily close their stores. Some brands were cautious not to include the word “war” in their statements, with many employing staff locally. Kering, which owns Gucci, Balenciaga and Saint Laurent, for example, has expressed that it will close temporarily its stores due to “growing concerns regarding the situation in Europe” and Hermès declared to be “deeply concerned by the situation in Europe at this time.

LVMH, more clearly, said that 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”. In Russia, LVMH operates 120 stores and employs about 3 500 people.

On one hand, luxury companies fear disengaging Russian customers, which, according to the firm Bernstein, comprise around 5% of the global luxury market, underlining that anti-war sentiments concern the Russian Government, not the people itself. The British Fashion Council, in a statement issued last Thursday, highlighted this very point: “We encourage all those in our network to show their support, however they can, for the global campaign condemning Russia’s invasion of Ukraine. This campaign is aimed at the Russian Government, not the teams of our Designer Members and Patrons in Russia, or indeed Russian colleagues and friends here, who may be fearful of facing discrimination for actions over which they have no influence at all”.

On the other hand, according to Vogue Business, the priority for luxury brands in crises, such as this one, is always and foremost their employees, so, “speaking to their people, and figuring out what to do meaningfully, then speaking to global teams for a collective response, is the norm”.

Humanitarian Support

Fashion brands are also choosing to make charitable donations to support the victims of this war. The LVMH Group has made an emergency contribution of 5 million euros to support the International Committee of the Red Cross (ICRC) to help the direct and indirect victims of the conflict in Ukraine. Kering has announced that it will make a “significant donation” to the United Nations Refugees Agency (UNHCR). The footwear retailer Kurt Geiger, John Lewis Partnership and Burberry have decided to donate to the British Red Cross.