The $3 billion Russian fashion industry is in a deep crisis as the Ukraine-Russia war is compelling brands including Mango, Nikaand H&M to shut stores in the country Global fast fashion website Asoshas halted online sales and deliveries in Russia while US conglomerate, TJX Cos is divesting 25 per cent stake in Russian low-cost apparel retailer Familia.Some of the world’s biggest luxury corporations, Richemont and LVMH are also closing stores in Russia.
Luxury fashion market in Russia declines
Besides other global names, Russia operates several reputed Australian brands like the upmarket fashion brand Zimmermann and Blundstone. A wholly owned Australian company based in Tasmania, Blundstone has a Russian Instagram account and a local website. On the other hand, Zimmermann sells clothes on Russian websites.According to Patty Huntington, Australian Fashion Journalist, Harper's Bazaar and National Correspondent, Women's Wear Daily, few companies like H&M have a significant financial interest in Russia. However, the market is not too big, forcing brands to ponder over their business in Russia.
Some of the world’sbiggest luxury brands are closing stores in Russia, reports Morgan Stanley and the market for luxury brands in the country is declining and accounts for only 1 per cent of LVMH and Kering’ssales. The Russian market accounts for around $9 billion in annual luxury sales, estimates investment bank Jefferies.
E-commerce players such as Farfetch, MyTheresa and Net-A-Porter and DHL and FedEx are also halting shipments to Russia, adds Huntington.
Delivery delays hit Bangladesh manufacturers
Meanwhile, brands’ decision to continue operating in Russia depends on the economic conditions in the country. A massive decline in rouble’s value and inability to access SWIFT may prompt some brands to discontinue operations in Russia, says Adam Blake, CEO, Blundstone.
The ongoing Russia-Ukraine war is also making shipments to Russia difficult with international container linessuspending deliveries. This is a concern for Bangladesh apparel manufacturers who fear facing order cancellations or difficulties in receiving payments.
Sonnet Textile, which handed over half of the ordered T-shirts to the freight forwarder nominated by Russian buyer, has not yet receiveddelivery confirmation, says Gazi Mohammad ShahidUllah, Director. This is making the company reluctant to book a ship to deliver the remaining three lakh pieces, he adds.
Around 166 Russia-bound containers are currently stuck in differently privately run depots in Bangladesh, affirms Ruhul Amin Shikder, Secretary General, Bangladesh Inland Container Depots Association.Bangladesh exports nearly 2 per cent of its goods to Russia with apparels constituting a major portion of these exports, says RakibulAlam Chowdhury, Vice President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA). In fiscal year 2021, Bangladesh exported goods worth $687 million to Russia..
War to disrupt global supply chain
Garment manufacturers in Bangladesh also fear suspension of operations by some of their largest buyers, including multinational clothing brands H&M and Inditex. The closure of banks from the global telecommunication network of financial transactions, Swift, is also hitting Bangladesh exporters.
ShahedSarwar, Director, Bangladesh Shipping Agents Association warns, continuation of the Russia-Ukraine war may lead to additional surcharges on shipping fares from large shipping companies. This might disrupt the entire global supply chain in the future, he adds.
Metakeys: Ukraine, Russia, Bangladesh, BGMEA, Bangladesh Shipping Agents Association, Bangladesh Inland Container Depots Association, Sonmet Textiles,
