Owner Auchan will close the French chain of clothing stores Kiabi in Russia – RBK

French clothing store chain Kiabi, which also owns retailers Auchan, Decathlon and Leroy Merlin, plans to close its stores in Russia. Kiabi’s Russian business has been unprofitable in recent years

The French brand of clothing, footwear and accessories Kiabi plans to leave the Russian market, three sources in companies in the retail real estate market told RBC. In December, representatives of the retailer began negotiations on the conditions for the preliminary termination of lease agreements with the owners of shopping centers in which Kiabi stores are located, one of the sources told RBC. The process of closing stores could take at least three to six months, he predicts.

A representative of the Russian office of Kiabi confirmed to RBC that the company is leaving the Russian market. “We have already notified all partners and employees of the company and will gradually close all stores in Russia,” added the Russian press service of the chain. It is planned to complete the work of all retail outlets, including the online store in the first half of 2021.

RBC sent a request to the head office of the French Kiabi.

The French company has previously notified the Vesna shopping and entertainment center in Altufevo, where one of the Kiabi stores is located, about the closure of all its stores in Russia until July 1, 2022, a representative of the management company Parus Asset Management told RBC (Vesna is one of its assets). An official letter on termination of the contract in the Vesna shopping and entertainment center has not yet been received, added a representative of Parus Asset Management. The management company of another shopping center received an official letter of termination of the contract in the spring of 2022, two more received preliminary notifications.

Leaving Russia is due to the fact that the company “could not find its unique business model” in this market, explained a representative of the Russian office of Kiabi.

Kiabi opened its first store in Russia in 2008. Now in Moscow, St. Petersburg, Krasnodar, Ufa, Kazan, Samara and Voronezh there are 17 brand stores, it follows from the information on its website. At the end of 2020, Kiabi had 22 stores in Russia, it follows from the statements of the Russian legal entity of the company Keruska LLC. Also, Kiabi in Russia has its own online store with delivery throughout the country.

Kiabi’s decision to close stores in Russia may be due to low operating performance, says one of RBC’s interlocutors, who is familiar with the retailer’s plans. The company was looking for different development options: in the summer of 2021, Vedomosti reportedthat Kiabi stores may appear in the form of small corners in Auchan hypermarkets, and a Kommersant source said that the chain plans develop in Russia on a franchise basis. Such a plan was indeed developed, it was assumed that both partner stores and stores directly owned by the brand would develop. “But by the end of the year, the head office decided that it was necessary to curtail work in Russia,” explains the interlocutor of RBC.

The Russian legal entity Kiabi has shown losses for at least the last five years, it follows from the data of the SPARK system. In 2020, the revenue of Keruska LLC fell by almost 31% – to 3.2 billion rubles, and the loss increased by 25% – to almost 667 million rubles. Kerusca’s statements indicate that in February 2021, the parent company provided it with confirmation that it was “ready to provide the necessary financial support for at least the next twelve months” so that the Russian company could settle all external obligations on time and continue to function without interrupting your activities.

Mikhail Burmistrov, general director of InfoLine-Analytica, believes that Kiabi could have made a decision to leave the Russian market because the retailer was unable to make a profit and achieve the necessary scale for effective competition. In the fashion segment, according to the interlocutor of RBC, the share of the world’s largest players with a strong own online sales channel and the share of those actively working with marketplaces is growing. For example, in November, the largest Russian online retailer Wildberries had Melon Fashion Group (brands ZARINA, befree, Love Republic and sela), Kari, Tvoe in the top sellers. “In such a situation, the players have a question: can they provide the required level of competitiveness, especially in the perspective of the widespread introduction of QR codes, which will negatively affect sales in shopping centers,” the expert explains.

In 2021, nine international brands from the clothing and footwear segment entered the Russian market, according to CBRE. Among them – Arket clothing store (part of the H&M group), Shikkosa lingerie store, Accessorize accessories brand returned.

Competition in the mass-market clothing segment has intensified, both due to the expansion of Russian brands and the emergence of new international ones, says Daria Savenkova, deputy director of the Colliers retail real estate department. Kiabi’s brand awareness has never been high, Savenkova notes.

Anna Lebsak-Kleimans, General Director of Fashion Consulting Group, notes that against the background of a decrease in traffic in traditional stores, traffic in virtual stores is growing. Online shopping, according to Lebsak-Kleimans, is much more rational and less impulsive than shopping in physical stores. In such a situation, mass brands win with a properly built reputation, focused not only on price, but also on “fashion authority”, Lebsak-Kleimans is sure. She calls H&M an example of such a brand, which collaborates with the world’s leading designers. According to the results of three quarters in Russia, H&M, according to Lebsak-Kleimans, increased sales by 25% in annual terms, and in terms of recovery and growth rates, the Russian business of the group took third place in the world after the United States and Great Britain.

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