Top brands pull out of Russia, but their goods remain easy to find
Business
Coca Cola is available from even more countries now.
MOSCOW (Reuters) - Trucks carrying Coca Cola roll across the border into Russia, tourists return from abroad laden with Zara's latest designs, and local online marketplaces snap up IKEA's furniture stocks. Western brands may have left the country, but their goods haven't.
Despite European, North American and Japanese companies exiting Russia over its actions in Ukraine, the impact on Russian consumers is minimal, although delivery times can be longer and some goods more expensive.
The main change has been to supply routes, but the products remain available both online and in stores. Buyers just need to know where to look.
Crucially, the vast majority of goods concerned are not subject to sanctions and these cross-border flows are legal. And Moscow is happy to let them in, whatever route they take.
Brands' continued availability shows the challenge companies face in controlling supply chains when exiting a market.
ZARA IN MINSK
Zara-owner Inditex (ITX.MC) shuttered its 502 Russian stores after Moscow sent troops into Ukraine, and then sold them to UAE-based Daher Group.
Now, small-scale imports and online sellers are keeping them alive, a Reuters review of six major online marketplaces and conversations with a dozen buyers and sellers showed.
Albina, 32, took an empty suitcase to Minsk last summer and returned 24 hours later with 33,000 roubles ($442) worth of Inditex-brand Zara, Bershka and Massimo Dutti clothes for herself and friends.
While most Western brands that have halted Russian operations have also pulled out of Belarus - a staunch Moscow ally - Inditex has not. The company did not respond when asked about this.
Albina told Reuters she has also bought clothes in Paris and Dubai and used a network of online sellers.
"There are pages on Instagram, on Telegram, there are girls I know who moved to live in Europe or Istanbul or Dubai," she said. "They collect orders, let's say in Istanbul, they take 15%-30% (as commission), then get them delivered here and you pay for the delivery."
Last year's strong rouble and weak Turkish lira played into Russian consumers' hands.
Currency dynamics were partly responsible for a seven-fold increase in deliveries from Turkey on CDEK Forward, a delivery service from foreign e-commerce sites, its marketing director Dinara Ismailova told Reuters.
"As soon as brands said they were leaving, some kind of panic started, and the number of volumes and orders rose sharply," Ismailova said.
Dealing with small, private deliveries, CDEK Forward's turnover doubled in money terms last year, with 80% of that coming from clothes, while its goods turnover tripled.
"It's comparable to if you personally went to a Zara store in New York, bought something there and sent it on to your friends in Moscow," Ismailova said.
ONLINE MARKETPLACES
As supply chains broke down, Russia legalised so-called parallel imports, allowing retailers to bring in products from abroad without the trademark owner's permission.
E-commerce sites sell a wide range of imported goods, and sellers often advertise that they bring products from abroad.
Market leader Wildberries sells old stock from Inditex brands and has almost 17,000 goods in its Zara catalogue. A source close to Inditex said these were clearance stocks that were in Russia when it suspended activities there.
Wildberries did not respond to a request for comment.
One ubiquitous Western product Wildberries and its peers Ozon (OZON.O) and Yandex Market sell is Coca-Cola, often advertised as imported so buyers know it is the real thing.
While Coca-Cola Co (K.N) stopped producing and selling drinks in Russia last year, others have been importing them, with labels on cans and bottles showing they have arrived from Europe, Kazakhstan, Uzbekistan and China.
One quirk of this arrangement is that prices vary. In one Moscow supermarket, three cans of Coca-Cola were on sale for three different prices, imported from Denmark, Poland and Britain respectively.
A senior employee at a major retailer explained how companies have adapted.
"Contacts were quickly established and new contracts with new partners signed, new money flows and logistical supply chains with Turkish, Polish and Kazakh companies were launched," he said on condition of anonymity.
Coca Cola is available from even more countries now.
