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9 Oct, 2023 07:02

Foreign brands turn to Russian market

The newcomers are mainly from Türkiye, but there are also manufacturers from Australia, South Korea, and Estonia
Foreign brands turn to Russian market

The number of foreign brands that have registered in Russia this year has soared, defying sanctions aimed at discouraging business engagement in the country, according to an RBK report on Thursday that cites data from the consulting firm NF Group.

Between January and September, 16 new foreign retailers commenced operations in Russia, reaching a four-year peak. In contrast, in 2019, Russia saw the entry of 26 new foreign retail players, but this figure has steadily decreased each year since: 13 in 2020, 15 in 2021, and 11 in 2022. The highest influx of newcomers over the past decade occurred in 2014, with 68 firms.

Most of these newly established companies are in the clothing, footwear, and home goods sectors. While most originate from Türkiye, there are also brands from Belarus, Kyrgyzstan, Australia, South Korea, and Estonia.

Analysts have observed a notable shift in the origin of newcomers since 2022, when numerous Western brands chose to exit Russia due to sanctions related to Ukraine. Before that, most new registrations came from firms based in the EU and the US.

Market experts believe that the departures of Western companies present a lucrative opportunity for second and third-tier brands to expand internationally through Russia. While these brands may not be as globally renowned as industry giants, they often offer products of comparable quality.

Furthermore, Russia’s domestic businesses are capitalizing on this situation by stepping in to fill the gaps left by departing foreign firms. According to NF Group, between March 2022 and the end of the first quarter of this year, 23 foreign companies announced their exit from the Russian market, while 34 rebranded and transferred their Russian operations to other market players.

Consequently, substantial space in Russian shopping centers has become available. Russian clothing brands like Lime, Henderson, Gloria Jeans, Ostin, Love Republic, and Sela have actively taken advantage of these opportunities, expanding their presence across the country over the past year.

For more stories on economy & finance visit RT's business section

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