MOSCOW (Reuters) – As Western brands have left Russia since the invasion of Ukraine, trucks carrying Coca-Cola cross the Russian border, tourists return from abroad loaded with the latest Zara creations and the Local online stores are snapping up IKEA furniture inventory.
While sourcing routes have changed, products remain available both online and in-store, and shoppers just need to know where to look.
The vast majority of the goods concerned are not subject to sanctions and cross-border flows are legal. Moscow does nothing to curb them, on the contrary.
In fact, the impact of the withdrawal of major international brands from Russia is minimal for consumers, apart from longer delivery times and sometimes more expensive products.
Inditex, owner of ready-to-wear brand Zara, closed its 502 stores in Russia and then sold them to the United Arab Emirates-based Daher Group.
Today, it’s small-scale imports and online sellers that keep them alive, according to Reuters research of six major online marketplaces and conversations with a dozen buyers and sellers.
Albina, 32, took an empty suitcase to Minsk last summer and returned 24 hours later with 33,000 rubles (413.61 euros) of Zara, Bershka and Massimo Dutti clothes from the Inditex brand for herself and her friends.
Unlike most Western brands, Inditex is still present in Belarus. The company did not respond when asked about this.
Albina told Reuters she also bought clothes in Paris and Dubai and used a network of online sellers.
NEW SUPPLY CHAINS
Faced with collapsing supply chains, Russia has legalized so-called parallel imports, which allow retailers to import products from abroad without the permission of the brand owner.
Market leader Wildberries sells old stock of Inditex brands and has nearly 17,000 items in its Zara catalog. According to a source close to Inditex, these are liquidation stocks that were in Russia when the company suspended operations there.
Wildberries did not respond to a request for comment.
Coca-Cola is one of the most demanded Western products on the sales platforms of Wildberries and its peers Ozon and Yandex Market.
As Coca-Cola Co stopped producing and selling drinks in Russia last year, labels on cans and bottles say they come from Europe, Kazakhstan, Uzbekistan and China.
One of the peculiarities of this system is that the prices vary. In a Moscow supermarket, three cans of Coca-Cola were on sale at three different prices, imported respectively from Denmark, Poland and Great Britain.
According to an employee of a major retailer, companies have adapted to the withdrawal of major brands by quickly signing new contracts.
“Contacts were quickly established and new contracts were signed with new partners; new money flows and logistics supply chains with Turkish, Polish and Kazakh companies were initiated,” he said. reported on condition of anonymity.
“EVERYTHING IS ACCESSIBLE”
As new business relationships are forged, additional logistics costs decrease, which should make these partnerships sustainable, said Ram Ben Tzion, CEO of digital control platform Publican.
“Parallel import mechanisms have been consolidated and extended, which means that almost everything is accessible and will be in the future”, he says, pointing to the queues of trucks at the borders and the new entities that arise in neighboring states.
“Coca Cola can easily notice the jump in demand from neighboring countries of Russia, where most of the parallel imports come from,” said Ram Ben Tzion. “It’s not in their interest to do anything about it.”
Coca-Cola declined to comment.
Informal supply routes, which are difficult for the authorities to control, could however lead to more poor quality goods entering Russia, warns Ram Ben Tzion.
RISK OF COPIES
The big brands, on the other hand, face a risk of copying, a phenomenon against which they can fight for years.
When it left Russia, Swedish furniture giant IKEA sold its shares to Yandex Market, the e-commerce division of tech giant Yandex.
Yandex Market says it puts customers in direct contact with vendors who previously sold goods through IKEA stores.
But old suppliers are also ready to sell slightly modified IKEA items under different names. One of them is already advertising a bedding set that he calls “ARUA (analog of IKEA BERGPALM)”.
IKEA said it reviews products shown online as similar to its own.
(Report Alexander Marrow; with the contribution of Olga Popova in Moscow and Corina Pons in Madrid; French version Augustin Turpin, edited by Blandine Hénault)
Copyright © 2023 Thomson Reuters