Toleration, lack of inventory control or smuggling?

Just a few hours before the Spanish fashion group Inditex presented its results for the third quarter of the current 2025 financial year on Wednesday, a piece of news is causing a stir. It is neither positive for the image nor for the operational implications. It is about the sale of clothing brands Zara, Oysho, Pull&Bear, Bershka, Stradivarius and Massimo Dutti in Russia.

A quick review: After the outbreak of war in Ukraine and the invasion by the army of the Russian Federation on February 24, 2022, Inditex announced on March 5 of the same year that it would suspend all operations. All shops on Russian soil were closed. At the time, this was the second largest market for the Spanish fashion group. This was followed by an agreement to sell the entire Russian business to the Emirati group Daher in October 2022.

Therefore, Azadea is Inditex’s local partner for certain markets in North Africa and the Middle East. From that point on, Inditex ceased all activities and left Russia, but reserved certain rights for a possible return. This is different from other retailers like Mango. They continue their business in the Russian Federation via a franchise system.

After the cessation of activities in Russia and before the sale to the owners of the Lebanese group Azadea (Azadea Group), the first reports of a growing “grey market” emerged. This was promoted by the Russian authorities through the system of “parallel imports”. The Kremlin wanted to ensure that Russian consumers continued to have access to products from Western brands that had left the country.

Import controls have been “made more flexible” or relaxed to the maximum. Essentially, this scheme allows the importation of a wide range of Western branded products, ostensibly without control of the brands and their official distributors. It was already warned back then that this would encourage the sale of items from the Inditex brands Zara and Zara Home in Russia. Last May, the Russian parliament’s official media outlet spread reports about Inditex’s possible return. However, the company still does not operate in Russia. It maintains the statement that the conditions for a return “definitely” do not currently exist.

Tvoe, the “gateway” for Inditex collections to Russia

Against this background and without any change in Inditex’s position, we reach December 2025. Everything indicates that channels have been established that guarantee a constant flow of Inditex products to Russia. This no longer only affects Zara and Zara Home, but also the chains Oysho, Pull&Bear, Bershka, Stradivarius and Massimo Dutti. In the current case, the chain Tvoe (Tboe in Russian) is said to be responsible for distribution to the Russian population.

Tvoe operates more than 340 stores in four countries of the Commonwealth of Independent States (CIS). These include Russia, Belarus, Kazakhstan and Uzbekistan. On November 20, TVOE management informed its customers that the fashion collections of Inditex brands are “waiting for them” in their stores. The Russian chain says it sells this fashion offering in a total of 19 of its stores in Russia. These include two in St. Petersburg and eight in the greater Moscow area. FashionUnited has the communication in which the chain also assures that the “range” of Inditex brands is “constantly updated”. Customers should check back often so as not to miss the most exclusive items.

Imports without the involvement of Inditex

This information was published today by the British business newspaper Financial Times. Accordingly, the Russian chain began selling Inditex brand clothing last September. Initially this happened in around nine branches. The presence has now been expanded to the current 19 sales outlets. According to the business journal, Tvoe is currently selling products from previous seasons of the Inditex fashion chains there. These have the official labels of the brands and prices in euros.

However, the Russian company Disco Club LLC is said to be behind these operations. It is named as responsible for importing items from Zara, Oysho, Pull&Bear, Bershka, Stradivarius and Massimo Dutti. These then reach the Tvoe branches. The “parallel imports” system is said to have been used for these imports. In September, the Moscow-based company submitted as many as 18 “declarations of conformity” for the import of various Inditex-branded clothing and footwear items. It presented itself as a supplier.

Tvoe remains silent on this and refers to “confidentiality agreements”. The founder of Disco Club LLC, Burkhard Binder, denies any responsibility. The entrepreneur founded the Russian company through the United Arab Emirates-based Galaktik Limited. He told the Financial Times that he would no longer be involved in Disco Club’s operations. He also did not personally participate in any activities related to the distribution of Inditex brands. Disco Club stated that it only provided occasional technical services for the group.

Inditex denies having authorized a company called Disco Club or Mr. Burkhard Binder to act on its behalf. Inditex added: “Inditex does not comment on third parties outside our group who may distribute products of our brands in markets where we are not present, as in the case of Russia.” The group emphasizes that “Inditex no longer has any activities there since the sale of our business”.

Toleration, lack of inventory control or smuggling?

Given this information, there is no doubt that the war in Ukraine has consolidated a “gray market” for Western branded products in Russia. It is not just the appearance of these products that is problematic, but the existence of the channels that enable their arrival. This happens with a company like Inditex, which is known to maintain strict control over its inventory. The possibility of counterfeit products can be largely ruled out. Assuming that the items were originally destined for different countries in the European Union and China, only three possible causes remain: toleration, lack of inventory control or smuggling.

None of these three possible causes reflect well on the Spanish company or the supposed inventory control. The “toleration” hypothesis would mean that the company tolerates the sale of its clothing in Russia outside of official channels. The aim would be not to lose market share, also with a view to a possible peace agreement between Russia and Ukraine. It can be assumed that this hypothesis is the furthest from reality. The only alternatives are smuggling Inditex clothing or a loss of control. There could be a “blind spot” within the network and retail chain that leads to the marketing of the fashion items outside of the official channels.

This apparent vulnerability is as alarming as it is serious. Either some do business through smuggling with the stocks of the Spanish multinational’s most important brands. Or it reveals the company’s lack of oversight of its inventory, as the clothing is sold with original labels. This represents a break in distribution channels and exposes the products to the “grey market” that is flourishing in Russia.