Mega-retailers H&M and IKEA are unloading their stocks in Russia as they close their operations in the country.
Russians are consuming Western fashion and furniture this week as H&M and IKEA sell the last of their inventory in Russia, moving out of the country after sending troops into Ukraine.
Sweden-based H&M and Netherlands-based IKEA paused sales in Russia after the military operation began and are now considering offloading their clothing and accessories as they close operations there, saying the future is unpredictable. IKEA’s sales are online only, while the H&M store in Moscow shopping mall Aviapark saw a steady stream of young shoppers on Tuesday.
The clothing retailer had well-stocked racks and shelves. Nearby stores including Zara, Oysho, Bershka, Pull & Bear and Uniqlo were closed, while New Yorker, Finn Flare, Marks & Spencer and Mango were open.
“I’ll start looking at Russian brands,” one H&M shopper, who gave only her first name Anya, said after leaving the store. Another shopper, who only gave his name as Leonid, said he was “very hurt” that H&M was closing: “A good store is leaving.”
Both companies are laying off staff as they cut back on business in Russia. H&M said on Tuesday that 6,000 workers would be affected and that it was working out the details of continued support in the coming months.
IKEA said in June that many workers would lose their jobs and guaranteed them six months’ pay as well as key benefits. It said this week it has 15,000 workers in Russia and Belarus, but did not immediately confirm how many would be laid off.
“We are deeply saddened by the impact this will have on our colleagues and are grateful for all their hard work and dedication,” H&M Group CEO Helena Helmerson said last month.
After Russia sent troops into Ukraine, many Western companies promised to leave Russia, taking months to wind down operations and often selling holdings to Russian companies. McDonald’s sold its 850 restaurants to a Russian franchise owner, who is proceeding to reopen them under the name Vkusno-i Tochka. British energy giants Shell and BP are charging billions of dollars to exit investments and holdings in Russia.
Meanwhile, some Western companies remain or partially operate in Russia. French-owned home improvement retailer Leroy Merlin has opened 112 stores in Russia, for example, supplying essentials such as medicines and baby formula while PepsiCo, Nestle and drugmaker Johnson & Johnson halt non-essential sales.
H&M said the cost of leaving Russia is expected to reach about two billion Swedish kroner ($197m), which will be included as a one-time expense in this year’s third-quarter earnings.
IKEA said in June it would begin looking for new owners for four factories in Russia and close purchasing and logistics offices in Moscow and Minsk, Belarus, a key Russian ally.
Russian President Vladimir Putin has pushed for years to develop and deploy Russian alternative goods and services to offset the loss of Western imports, which has taken on new urgency as companies such as H&M and IKEA shut down their operations.
It’s hard to tell when shops in Russia are closed. At the famous GUM department store in a row of shops in Red Square, most of the closed storefronts still have lights on and a clerk or guard inside.