11 March 2022
After Ukraine invasion, these consumer brands stopped selling in Russia
Here's a look at Western companies that brought a halt to business in Russia and called for peace.
Photo by Max Kukurudziak on Unsplash
Here's a look at Western companies that brought a halt to business in Russia and called for peace.
When Russia invaded Ukraine in February, consumer brands did not remain silent.
Russian troops marched across the border of neighboring Ukraine starting on Feb. 24. As Ukranian forces dug in, days of fighting extended to weeks, resulting in thousands deaths and the displacement of 2.5 million Ukranian citizens. Across the globe, government and private sector leaders condemned the aggression by Russia.
Alongside calls for peace came action to close stores and suspend operations in Russia. They joined companies from across categories and the globe that sought to deal an economic blow to Vladimir Putin from the private sector, alongside the sanctions brought by the US and European governments. Companies also paused operations in Ukraine, but for the purposes of safety rather than protest. Many also made donations to help those impacted.
Here’s a look at the brands that paused operations, and their statements on the conflict:
The denim-focused apparel company halted business in Russia.
“Given the enormous disruption occurring in the region, which makes normal business untenable, LS&Co. is temporarily suspending commercial operations in Russia, including any new investments,” the company said in a news release. “The company is committed to supporting its employees, partners and their families affected by this decision in the months ahead.”
Levi’s said 4% of its revenue came from Eastern Europe in 2021, and about half of that was from Russia.
“But any business considerations are clearly secondary to the human suffering experienced by so many,” the company wrote. “The LS&Co. community continues to be saddened by the devastating conflict in Ukraine and our thoughts are with all of those who have been affected, including our employees, partners and their loved ones.”
As NPR pointed out, the move evoked Cold War memories. Jeans were banned in the Soviet Union due to their strong association with capitalism, and hundreds of Soviets were dressed in jeans as they crossed the Iron Curtain after the fall of the Berlin Wall.
In this conflict, Levi’s said it would donate $300,000 to nonprofit organizations helping displaced Ukrainians, including the International Rescue Committee and CARE. It is also offering a 2-to-1 match, up to $200,000, for employees who donate to "organizations committed to ensuring that the most vulnerable communities get the support they need, including several that are ensuring discrimination doesn't occur at border crossings."
The ecommerce giant suspended shipments to customers in Russia and Belarus. Here’s the company’s statement from March 8:
Given the ongoing situation in Russia and Ukraine, we’ve taken additional actions in the region. We’ve suspended shipment of retail products to customers based in Russia and Belarus, and we will no longer be accepting new Russia and Belarus-based AWS customers and Amazon third-party sellers. We are also suspending access to Prime Video for customers based in Russia, and we will no longer be taking orders for New World, which is the only video game we sell directly in Russia.
Office products company 3M said it would halt all of its operations in Russia.
"After reassessing our business in Russia, we have decided to suspend all business operations there,” the company told the Minneapolis Star-Tribune. “Our focus continues to be on the safety of our colleagues and their families."
The footwear company said it is pausing its direct-to-consumer business, including ecommerce and retail operations, in Russia. It is continuing to pay corporate and retail staff in the country during this time. Colorado also made a donation to UNICEF. CEO said Crocs Andrew Rees said the following in a statement.
"Comfort is needed now more than ever and we're pleased to make a donation to UNICEF to support those directly impacted by the war. Additionally, as a People Purposed organization, taking care of our employees remains a top priority. While our decision to pause all business operations in Russia was decisive, our commitment to doing the right thing is unwavering. Our hearts are with all those enduring this crisis and we hope for a swift and peaceful resolution to the war in Ukraine."
The German apparel company closed Russian stores and paused online sales. The company has thousands of employees in Russia, which it is continuing to pay.
“We will deal with the situation as the world moves on, but right now we’re trying to deal with that situation immediately and in the right way,” CEO Kasper Rorsted told CNBC on Wednesday.
British fashion retailer Asos suspended sales in both Russia and Ukraine. While it said it couldn’t continue sales in Ukraine due to the war, the decision to continue in Russia was more of a moral decision.
"Against the backdrop of the continuing war, ASOS has decided that it is neither practical nor right to continue to trade in Russia,"
The British fast fashion retailer suspended sales in Russia, according to Reuters. It does not serve Ukraine.
The fast fashion retailer said it was pausing sales in Russia. Here's its statement:
H&M Group is deeply concerned about the tragic developments in Ukraine and stand with all the people who are suffering. H&M Group has decided to temporarily pause all sales in Russia. The stores in Ukraine have already been temporarily closed due to the safety of customers and colleagues.
The sportswear company said it stopped shipments to Russia. The company said the following in part:
We believe in the power of democracy, the ultimate team sport. We are partnering with humanitarian groups to provide what is needed for those displaced and have also stopped all shipments into our sales channels in Russia. We are proud to stand with Ukraine against Russia’s attack on their democracy and will do what we can as a global company where standing for equality matters.
The sportswear company made purchases on its website unavailable, and temporarily closed stores in Russia, according to Reuters.
In support of relief efforts, the company’s foundation donated $1 million to the United Nations Children's Fund and the International Rescue Committee.
The Swedish furniture company paused business operations in Russia, including export and import, production and retail operations. However, it is keeping shopping center called Mega open to “ensure that the many people in Russia have access to their daily needs and essentials such as food, groceries and pharmacies.”
The decision impacted 15,000 employees.
“The devastating war in Ukraine is a human tragedy, and our deepest empathy and concerns are with the millions of people impacted,” the company wrote. “The immediate actions of Inter IKEA Group and Ingka Group have been to support the personal safety and security of IKEA co-workers and their families, and we will continue to do so.”
The chain said it would sell a 25% stake in Russian low-cost apparel retailer Familia. Additionally, two of the company’s executives resigned from board positions with the company.
The luxury group, which owns brands like Christian Dior, Givenchy and Bulgari, closed its estimated 120 stores in Russia, according to the New York Times. The company is continuing to pay salary and benefits to its 3,500 employees in Russia.
The luxury brand temporarily closed stores and paused commercial activity.
“Deeply concerned by the situation in Europe at this time, it’s with regret that we have taken the decision to temporarily close our stores in Russia and pause all our commercial activities,” the company wrote in a LinkedIn post.
The luxury brand halted business in Russia.
"Given our increasing concerns about the current situation, the growing uncertainty and the complexity to operate, Chanel decided to temporarily pause its business in Russia." it wrote in a LinkedIn post.
The French luxury group temporarily closed Russian stores.
“Due to growing concerns regarding the current situation in Europe, Kering is temporarily closing its stores in Russia for its Houses that the Group operates directly in the country,” the company wrote on Twitter.
The sportswear company stopped deliveries to Russia, and closed its 100 stores in the country, according to Reuters.
The fast fashion house, which owns Zara, temporarily stopped trading in Russia. This included closing 502 shops and stopping online sales, The Guardian reported.
The luxury brand announced it would temporarily shut down its three stores in Russia, the Guardian reported.
The beauty brand said in a statement that it halted all commercial activity, and donated $1 million to Ukranian relief efforts.
Further, after having already suspended The Estée Lauder Companies' business investments and initiatives in Russia last week, we have also decided to suspend all commercial activity in Russia, including closing every store we own and operate, as well as our brand sites and shipments to any of our retailers in Russia. Our top priority remains the safety of all our employees and we have decided to continue to provide compensation and support to our employees in Russia at this time.
The beauty giant halted sales from standalone counters and stores in Russia, as well as its ecommerce operations in the country.
“We are assessing additional measures, whilst still taking care of our 2,200 Russian employees,” the company wrote in a statement on LinkedIn. “Our crisis committee, which has been permanently mobilised since the beginning of the war, is in daily contact with our team on the ground and will continue to adapt our response according to the evolving situation.”
CEO Jon Moeller wrote in a letter to employees that the beauty and personal care company is operating at “reduced scale.” More from his statement:
“We have discontinued all new capital investments in Russia and are suspending all media, advertising, and promotional activity. We are significantly reducing our product portfolio to focus on basic health, hygiene and personal care items needed by the many Russian families who depend on them in their daily lives. As we proceed with the reduced scale of our Russian operations, we will continue to adjust as necessary.”
As it suspended operations, a memo from CEO Ramon Laguarta evoked the soft drink company’s longtime presence in Russia. The message began with the following:
“As many of you know, we have been operating in Russia for more than 60 years, and we have a place in many Russian homes. Pepsi-Cola entered the market at the height of the Cold War and helped create common ground between the United States and the Soviet Union. However, given the horrific events occurring in Ukraine we are announcing the suspension of the sale of Pepsi-Cola, and our global beverage brands in Russia, including 7Up and Mirinda. We will also be suspending capital investments and all advertising and promotional activities in Russia.”
PepsiCo has 60,000 employees in Russia, including 40,000 agricultural workers and 20,000 associates.
The soft drink company is suspending business of its products in Russia.
“Our hearts are with the people who are enduring unconscionable effects from these tragic events in Ukraine,” the company said in a statement. “We will continue to monitor and assess the situation as circumstances evolve.
The beauty and personal care company said it stopped business operations in Ukraine, and donated products to humanitarian relief. In Russia, the company suspended exports and imports, media spend and new investments.
“We will continue to supply our everyday essential food and hygiene products made in Russia to people in the country. We will keep this under close review,” wrote Unilever CEO Alan Jope. "We join calls for an end to this war and hope that peace, human rights, and the international rule of law will prevail. We join calls for an end to this war and hope that peace, human rights, and the international rule of law will prevail.”
The food company issued the following statement to announce it was suspending business in Russia. The company said the following:
While we continue to closely assess the humanitarian crisis in Ukraine, Kraft Heinz has suspended all new investments in Russia, and has also suspended all exports of Kraft Heinz products to Russia as well as imports of products from Russia. Additionally, we have donated $1 million USD to the Red Cross to address the humanitarian crisis, and we’ve implemented a $2 to $1 company match for employees who wish to personally donate to the Red Cross. We have also made several in-kind donations, including our Pudliszki brand in Poland donating food products to the local Red Cross, helping feed refugees arriving from Ukraine.
The company suspended export of nonessential food items, such as Nespresso coffee or S.Pellegrino, according to Reuters. It also halted investment in Russia.
The marketplace company canceled balances owed by Ukranain sellers, including listing fees, transaction fees, advertising fees, and more. This represented a $4 million contribution.
“The events unfolding in Ukraine weigh heavily on us all. Being part of a community means that when one part is suffering, the rest of us must step up and offer our support,” CEO Josh Silverman wrote.
The tools maker said it is shutting down business in Russia, per a tweet.
The video game company stopped shipping products, including the Switch, to Russia. It also stopped selling games in the country through its ecommerce shop, Engadget reported.
The spicemaker suspended operations in Russia, including putting a halt to advertising and promotional activity. It also paused operations in Ukraine.
“McCormick hopes for an immediate end to the conflict in Ukraine and the suffering of innocent people,” the company wrote.
The electronics company said it suspended all exports to Russia, and paused manufacturing. However, it is making an exception for electrical power equipment. Russian operations account for .5% of the company’s revenues for the most recent fiscal year.
The apparel company was initially among the few prominent retailers to remain open, with its CEO saying clothing is a “necessity of life.”
However, the company reversed course on March 10, saying the company would close its 50 stores.
"While continuing our Uniqlo business in Russia, it has become clear to us that we can no longer proceed due to a number of difficulties,"
The electronics company said it was suspending shipments to the country, citing “geopolitical developments.”
The company stopped sales of its PlayStation video game system in Russia, and paused shipments of the new game Gran Turismo 7. In support of Ukranians affected by the war, it also donated $2 million to the to UNHCR, the UN Refugee Agency, and the international NGO and Save the Children.
The iconic tech company said it was halting sales of all of its products to Russia. According to NBC News, the company does not have any in-person stores in the country, and conducts all sales through ecommerce sales.
The fintech company, which works with many merchants to offer payments software, said it was halting operations in Russia, citing “the current circumstances.”
The retailer's marketplace is expanding quickly.
When it comes to ecommerce growth, was the pandemic a blip or a new trendsetter?
As we move further from the height of COVID-related closures, it’s a question that will start to be answered through the lens of history.
So far, the narrative of ecommerce growth in the U.S. from 2019-2022 has gone like this: Ecommerce’s share of overall retail saw a huge spike at the height of the pandemic in 2020-21, when goods in general were in demand and online shopping was necessary to preserve health and safety. Experts looked out and saw a permanent exponential change in the penetration of ecommerce as a share of retail that would last beyond the pandemic. Then, in 2022, everyone went back to stores and the trendline came back to 2019 levels. Growth was no longer exponential. There was still growth, but it was not happening as fast as during the pandemic period.
With this in mind, it’s worth pointing out that 2023 is the first year that there likely won’t be a pandemic-influenced swing to influence ecommerce growth. It is also a year where demand has suffered challenges amid inflation and interest rate hikes.
So as we seek to determine the importance of ecommerce to overall retail, it’s worth it to continue taking a close look at what growth trends retailers are seeing now, whether ecommerce is remaining resilient amid consumer pullback and how retailers are preparing for the future.
The latest example arrived this week from Macy’s. It’s a fitting one for the times. Overall, Macy’s is seeing a slowdown as consumers pull back on discretionary purchases, with sales declining 7% in the first quarter versus the same quarter of 2022. Digital sales were down 8%.
Macy’s is particularly susceptible to the macroeconomic headwinds that many brands and retailers are facing, as spending among the middle-income consumers it counts as a primary customer base is particularly softening, said GlobalData Managing Director Neil Saunders.
But while ecommerce is slowing overall, the importance it gained to Macy’s business during the pandemic is remaining in place.
In 2019, ecommerce made up 25% of Macy’s revenue, CEO Jeff Gennette told analysts on the company’s earnings call. That jumped to a high of 44% in 2020. By 2022, digital reached 33% of sales after the pandemic boom. In the first quarter of 2023, it remained at 33%. So, while the trend line dipped after shoppers returned to stores, ecommerce share still settled in at a higher post-lockdown point than it was before the pandemic.
This came in a quarter in which traffic was “relatively good” across both online and in-store, Macy’s CEO Jeff Gennette said. It was “flattish” online, and slightly up in stores.
“We do expect that this is the reset year with the penetration between them,” Gennette said. “But we do expect more aggressive growth in digital in the future versus stores as we think about '24 and beyond. And that's going to be foisted by a lot of ideas and strategies.
Over the last year, the retailer has made investments in boosting ecommerce, even as shoppers returned to stores. In a bid to boost the assortment of goods available online, Macy’s launched a marketplace in September 2022 that welcomes goods from third-party sellers.
The marketplace had an “outstanding” first quarter, said Macy’s President Tony Spring, who is poised to succeed Gennette as CEO next year. Gross merchandise value increased over 50% when compared to the fourth quarter of 2022, while the average order value and units per order for marketplace customers was 50% above those not shopping at the marketplace.
Macy’s is continuing to build the marketplace even as it racks up sales. The retailer added 450 brands, ending the quarter with 950 brands.
This is helping to draw in new customers, as well as younger existing customers who are buying more items, resulting in increased basket size.
“We're very excited as to how marketplace is really attracting the Gen Z customer, particularly in categories where it was not economically feasible for us to carry in the past,” Gennette said.
In the end, Gennette said a strong digital and social presence is key to attracting younger consumers. That's a different type of shopper than other age groups.
“We know the younger customer starts first online,” Gennette said. That behavior will still be in place as the generation gets older, and gains more buying power in the process.
Going forward, Macy’s is seeking to expand the model to other retail banners in its portfolio. Bloomingdale’s will open a marketplace in the early fall.
The Macy’s ecommerce trajectory isn’t that different from the wider U.S. ecommerce narrative detailed above. With one quarter of 2023 data, there is evidence that ecommerce share settled out at a higher point after the pandemic than where it started before COVID arrived. There is flattening now, but the retailer is taking it not as a sign of a slowdown, or a signal to change course. Rather, it sees changing consumer behavior as a reason to build for the future.