Luxury brands suspend sales in Russia, citing concerns over ‘current situation’

A rapidly growing list of luxury brands puts an end to sales in Russia. On Wednesday, Bulgari CEO Jean-Christophe Babin said it was unclear how long a spike in spending on luxury goods in Russia would last as consumers sought to exchange their rubles for luxury goods. in order to accumulate value from the fall of the Russian currency. But it appears that on Friday the end was in sight, as in the wake of a range of companies – from Nike and adidas to BP and Shell – announcing plans to temporarily shut down operations in Russia following the invasion of Ukraine led by Vladimir Putin, luxury giants are beginning to take similar action.

A number of entities at the top of the luxury totem joined a growing list over the weekend, with Burberry, Hermès, Chanel, owner of Cartier Richemont, LVMH Moët Hennessy Louis Vuitton and Kering revealing they were temporarily closing stores and halted online sales. , with many making almost identical – and perfectly diplomatic – statements about “the current situation” and promising to support their home teams, potentially without going into detail in order to avoid cutting ties with Russian spendthrifts.

Among the most notable and recent additions to the list of luxury groups distancing themselves from Russia, an LVMH spokesperson said on Friday afternoon that “given the current circumstances in the region”, it would cease “temporarily” its activities in the stores of its stable of luxury goods brands in Russia, noting that it “stands by its 3,500 employees in Russia and their families”, and confirming that it will continue to pay employees with their “salary and benefits during this period”. Its French conglomerate Kering, owner of Gucci, Balenciaga, Saint Laurent and Bottega Veneta, among other luxury brands, also claimed in A declaration Friday that “due to growing concerns about the current situation in Europe”, it “temporarily closes its stores in Russia for its Maisons that the Group operates directly in the country”.

A statement from Chanel (left) & a statement from Hermès (right)

The current closures come amid major logistics/supply disruptions and other effects of Russian sanctions, which do not directly block the import of luxury goods but nonetheless complicate the operation of brands. Shipping giants such as UPS and FedEx announced they would halt services to and from Russia and Ukraine, while DHL revealed that its “inbound services to Russia and Belarus have been suspended, which is why [it is] also not accepting shipments to these countries until further notice.

At the same time, the plummeting value of the rouble, which fell around 30% against the dollar at the start of this week, valuing it less than 1 US cent, does little to compel brands to keep their doors open. open, especially as consumers were “freaking out into buying luxury goods that may have high resale value” in anticipation of the inevitable fall in the Russian currency.

In a nod to looming supply issues, Babin said this week that the implementation of SWIFT measures “could make it difficult, if not impossible, [for brands] to export to Russia. The United States and the European Union, along with several allies, have confirmed that they will block certain Russian institutions from accessing the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) international payments system. On Wednesday, European Union officials revealed that the 27-member bloc would exclude seven Russian banks from the SWIFT messaging system, a move that is expected to have an effect on Western businesses and banks in addition to proving capable of isolate Russia when it comes to international trade.

The messages coming from the luxury segment are notably – although potentially unsurprisingly – different from the sentiments that have been expelled from Apple, for example, which underlined its “deep concern over the Russian invasion of Ukraine” in relation with its decision to stop sales. A spokesperson for the tech titan said this week that in addition to suspending sales and halting exports, Apple is “supporting humanitarian efforts, providing aid for the ongoing refugee crisis and doing whatever we can to support our teams in the region”.

Responses to ads from luxury brands have been mixed so far. While some celebrated the decision to close stores, including praising the luxury titans for taking “business-like” action, much of the sentiment came in the form of denial in relation to what consumers view as largely vague statements from brands.

“Luxury brands should be much clearer in their statements: this is war, invasion, aggression,” one individual wrote in response to Kering’s statement on LinkedIn. “With Russia’s ban on independent media, it’s even more important to say it loud and clear,” the individual continued. Hermès sees similar skepticism on LinkedIn, as users voiced their disapproval of the language in its statement, with one saying, “It’s not a ‘situation.’ It’s a war. You don’t even mention Ukraine in your message. And yet others have questioned the motives behind such moves, with one individual, for example, stating that it is “nice to see [such statements] but let’s not argue that companies deserve goodwill credits here. A good majority do it because [the] credit card and financial systems are closed, and [the brands] cannot be paid. At the same time, the volatility of the ruble makes it impossible to accept cash and manage currencies. So, it’s not like they have much choice but to “take a break”.

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