Public RelationsOne-third of Russia's garment retailers go bust
A third of Russia’s 42,000 clothing retailers will close by the end of this year after the economic crisis hurt local spending, according to the head of the European Fashion and Textile Export Council.
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“Many important German fashion suppliers have deleted between 20 per cent and 30 per cent of Russia’s fashion retailers from their customer records, because they don’t meet the basic conditions of doing business any more,” Doepfer said in an interview at last week’s CPD fashion fair in Dusseldorf.
German clothing companies ranging from luxury brand Hugo Boss AG to menswear maker Ahlers AG targeted Russia for growth as the nation’s economic growth outpaced that of Germany earlier this decade. Boss, known for its men’s suits, reported a wider loss last week, citing a 35 per cent plunge in revenue from eastern Europe, excluding the effect of foreign-exchange moves. Russia is the label’s largest market in the region.
Germany is Europe’s second-largest fashion-exporting nation, trailing only Italy. Germany’s first-quarter fashion sales to Russia declined 6 per cent to ¤162 million ($231 million), according to Doepfer.
The decline will accelerate during the year, as autumn- winter orders have fallen about 30 per cent, he added.
Some Russian analysts said Doepfer’s estimate was too pessimistic, though they acknowledged the weak local demand.
“About 10 per cent to 20 per cent of retailers may go bankrupt this year, but not a third,” said Anna Lebsak- Kleimans, president of Moscow-based researcher Fashion Consulting Group. Some of the halted German shipments will be replaced by cheaper imports from China and Turkey, she said.
“Retail chains may be reducing the number of outlets, but they are not shutting down completely,” she said.
The gross domestic product in Russia, the world’s biggest energy exporter, shrank 9.8 per cent in the first quarter, the worst contraction in 15 years. The average monthly wage dropped 5.2 per cent in June.
Germany exported clothes worth ¤750 million last year to Russia, 6 per cent more then in the previous year, according to Doepfer. Italy exported fashions to Russia worth ¤1.25 billion, and will also post a decline, he said.