The number of foreign brands entering the Russian market has seen a significant increase this year, despite the sanctions imposed on the country. According to a report by RBK, based on data from consulting firm NF Group, 16 new foreign retailers have commenced operations in Russia between January and September, reaching a four-year peak. This is a significant increase compared to the 26 new foreign retail players that entered the market in 2019. However, the number has been steadily decreasing since then, with only 13 companies entering in 2020, 15 in 2021, and 11 in 2022. The highest influx of newcomers in the past decade occurred in 2014, with 68 firms making their entry.
The majority of these newly established companies belong to the clothing, footwear, and home goods sectors. While a significant number of them originate from Türkiye, there are also brands from Belarus, Kyrgyzstan, Australia, South Korea, and Estonia. It is worth noting that since 2022, there has been a notable shift in the origin of newcomers. Many Western brands have chosen to exit the Russian market due to sanctions related to Ukraine. Before that, most new registrations came from firms based in the EU and the US.
Analysts view the departure of Western companies as an opportunity for second and third-tier brands to expand internationally through Russia. Although these brands may not have the same global recognition as industry giants, they often offer products of comparable quality. This presents a lucrative opportunity for them to tap into the Russian market and establish a presence.
Moreover, 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. As a result, substantial space in Russian shopping centers has become available, and domestic clothing brands such as Lime, Henderson, Gloria Jeans, Ostin, Love Republic, and Sela have actively taken advantage of these opportunities to expand their presence across the country over the past year.
Overall, the increase in the number of foreign brands entering the Russian market shows that despite sanctions, businesses are still finding opportunities and success in this market. The exit of Western companies has opened up space for other brands to establish themselves and expand their international presence through Russia. With domestic businesses also stepping up, the Russian market continues to be dynamic and attractive for both local and foreign players.
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