Lebanese clothing brand MAAG, which took over the retail spaces previously occupied by Zara in Russia, is reportedly facing financial challenges and is considering closing down several stores in the country. The owner of MAAG, Fashion And More Management DMCC, opened stores in Russia in May, replacing well-known brands like Zara, Pull & Bear, Stradivarius, and Bershka. However, after three months of operations, the brand has allegedly struggled to generate significant revenue, leading to discussions about potentially leaving the Russian market.
According to the Telegram channel MASH, MAAG’s daily earnings were significantly lower compared to Zara. While Zara reportedly earned 2-3 million rubles a day and up to 4 million rubles on weekends, MAAG’s daily earnings were only around 300-400 thousand rubles. This drastic difference in performance has raised concerns about the brand’s viability in the Russian market.
However, Pavel Lyulin, vice president of the Russian Union of Shopping Centers, believes it is premature to discuss the closure of MAAG stores. He acknowledged that the brand’s sales have not been as successful as Zara’s, as the assortment of products offered differs significantly. Nevertheless, Lyulin emphasized that it is too early to consider closing the stores just three months after their opening.
The closure of Western retail brands in Russia has been a recurring trend due to economic sanctions imposed on the country. Yale University analysts have reported over 1,000 Western firms leaving the Russian market under the pressure of these sanctions, with Russia subsequently seeking non-Western partners to fill the gaps. As a result, brands from countries like Turkey, China, India, and other friendlier nations have gained a stronger presence in the Russian market.
Spanish clothing conglomerate Inditex, which includes brands like Zara, Bershka, and Massimo Dutti, also closed its stores in Russia last year before deciding to exit the market altogether. Subsequently, the conglomerate sold some of its more than 500 Russian stores to a buyer based in the United Arab Emirates.
The challenges faced by MAAG in the Russian market reflect the complexities and uncertainties businesses encounter when entering a new market. It remains to be seen whether MAAG will be able to address the issues and turn its operations around, or if it will ultimately exit the market like its predecessor, Zara. As the Russian market continues to evolve and adapt to changing dynamics, it will be interesting to observe how international brands navigate these challenges and seize opportunities for growth.
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