Mega-retailers H&M and IKEA are unloading their stocks in Russia as they wind down their business in the country.
Russians are snapping up Western fashion and furniture this week as H&M and IKEA sell off the last of their inventory in Russia, moving forward with their exit from the country after it sent troops into Ukraine.
Sweden-based H&M and Netherlands-based IKEA had paused sales in Russia after the military operation began and are now looking to unload their stocks of clothing and furnishings as they wind down operations there, saying the future is unpredictable. IKEA’s sales are online only, while the H&M store at the Moscow shopping mall Aviapark saw a steady stream of young shoppers Tuesday.
The racks and shelves were well stocked in the clothing retailer. Nearby shops were closed, including Zara, Oysho, Bershka, Pull&Bear and Uniqlo, while New Yorker, Finn Flare, Marks & Spencer and Mango were open.
“I will start looking at Russian brands,” one H&M shopper, who gave only her first name Anya, said after emerging from the store. Another shopper, who only gave his name as Leonid, said he was “very hurt” that H&M is closing down: “A good store is leaving.”
Both companies are laying off staffers as they scale down business in Russia. H&M said Tuesday that 6,000 workers will be affected and that it was working on details of offering continued support in the coming months.
IKEA said in June that many workers will lose their jobs and it has guaranteed six months of pay for them, as well as core benefits. It said this week that it has 15,000 workers in Russia and Belarus, but it did not immediately confirm how many would be laid off.
“We are deeply saddened about the impact this will have on our colleagues and very grateful for all their hard work and dedication,” H&M Group CEO Helena Helmersson said last month.
Many Western companies promised to leave Russia after it sent troops into Ukraine, taking months to wind down operations and often selling holdings to Russian firms. McDonald’s sold its 850 restaurants to a Russian franchisee owner, who is moving to reopen them under the name Vkusno-i Tochka. British energy giants Shell and BP are taking trillions of dollars in charges to exit investments and holdings in Russia.
Meanwhile, some Western companies have remained in Russia or are partially operating. French-owned home improvement retailer Leroy Merlin has kept open its 112 stores in Russia, for example, while PepsiCo, Nestle and drugmaker Johnson & Johnson are supplying essentials like medications and baby formula while halting nonessential sales.
H&M said it expects costs from leaving Russia to reach about two billion Swedish kronor ($197m), which will be included as one-time costs in its third-quarter earnings this year.
IKEA said in June that it will start looking for new owners for its four factories in Russia and will close its 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 substitute goods and services to make up for the loss of Western imports, which has taken on new urgency as companies like H&M and IKEA wind down operations.
It can be difficult to tell when stores in Russia are closed. At the famous GUM department store lined with shops in Red Square, most of the closed storefronts still have the lights on and a clerk or guard inside.