‘I am watching my business fall apart’ – Can retailers survive inside Putin’s Russia? | Retail industry

Western brands have swiftly moved to shut down operations in Russia since the invasion of Ukraine, wiping well-known goods from the shelves. But what does it feel like for those trying to run businesses in the country?

The Russian partner of one western brand shares their story.

“To say I have concerns about the future is a huge understatement. Waking up every day with the knowledge that you are an unwilling 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 depending on me – not just my family, but my employees, who will lose their source of income, their health insurance, their livelihood. One of my biggest concerns is their welfare. But of course, compared with the tragedy that’s happening in Ukraine, all business concerns seem insignificant.

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

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

“The businesses that work under a license agreement are facing much tougher challenges. I fear we will all have to make a difficult, strategic choice – whether to close our businesses permanently and sell off our remaining stocks, or try to keep the business afloat in the hope that the situation improves and supplies can be resumed.

“The first scenario presumes selling off the stock quickly in an attempt to salvage some of our investments, and maybe try to start a new business with that. The second scenario is more hopeful, but it would still involve shutting down some [sites] and letting go of employees.

“The biggest risk of all, of course, is that this second scenario presumes the return of our western partners. If that does not happen, then we risk losing everything and being left with nothing.

“At this point in time, I am working with the second scenario and hoping that things will get back to normal. But I also know a lot of people who have already shut down their businesses.

“The only thing that might be considered an upside is that our sales went up, because people realize that stocks will run out. But it inevitably speeds up the timeline for my chosen scenario, which means our supplies might run out before normal trade relations resume.

Obviously, there are a lot of issues that businesses with western partners face right now – such as 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 a political one as much as an operational one. Personally, I am constantly in touch with my partners in Europe, and they have been very supportive.

“We are still able to pay staff in Russia, but we are going to have to close selected shops at some point soon, as stocks dwindle, and pay the affected employees severance pay.

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“I know quite a few people who were forced to shut down their businesses, sell off their remaining stock and have either left Russia already or are planning to leave soon.

Of course [our customers and staff] feel let down to an 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 medical care.

“They simply do not know what’s going to happen, whether they’ll be able to pay rent, pay off their credit card debt, provide for their families. I do not think people are scared of the fact that the products they are used to will not be available per se, I think they’re scared of not having a choice any more. ”

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