Western brands disappearing from Russian malls – analysts

The presence of foreign brands in Moscow’s largest shopping centers has dropped significantly over the past year amid an exit of Western companies from the Russian market, according to data shared by consultancy firm Nikoliers.

According to the company’s calculations, at the end of the first quarter of 2023 the share of foreign brands in Moscow’s 12 largest shopping malls was 35.9%. That figure is almost half than in the fourth quarter of 2021, prior to the start of Russia’s military operation in Ukraine and the Western sanctions that followed.

Analysts noted that spaces previously owned by foreign brands have been actively occupied by Russian retailers, both long established and those that bought out the businesses of departing companies.

Meanwhile, new foreign brands from Turkey and other ‘friendly’ nations have also boosted their presence in Russia. According to Nikoliers’ estimates, since the beginning of 2022, 56 such companies have announced their intention to launch businesses in the country. Ten of them have already opened stores in Russia and five are in the final stages of launching. Analysts noted that 64% of these brands are Turkish.

Anna Nikandrova, a partner at Nikoliers, stated that “Russia remains an interesting market for foreign brands opening their first stores both in Moscow and other regions.”

“We are already witnessing a good pace of new projects opening in quality shopping centers and we expect that by the end of the year this dynamic will continue… At the same time, it is worth noting the high activity on the part of Russian brands, which last year embraced the additional opportunities which opened for them. A number of retailers with ambitious strategies received the opportunity to implement them in the current situation, and a number of other companies, in turn, adjusted their development plans towards a more rapid expansion,” she added.

According to data from the Kiev School of Economics’ (KSE) Leave Russia project, out of 3,157 foreign firms that operated in Russia prior to the start of the conflict in Ukraine, only 215 have so far exited the market, which is less than 7%. Russian authorities, meanwhile, have been actively reorienting both imports and exports from Western countries and companies to new markets, and introducing other trade mechanisms to help keep the domestic market well-stocked.

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