Tensions between Russia and Ukraine could lead to tightening of international sanctions, especially if Ukrainian territory is invaded. While the impact of sanctions on the fashion industry may not be immediate, it will undoubtedly be felt.
High dependence on imports
First of all, the Russian fashion sector is highly dependent on imported goods. Although local clothing companies try to meet domestic demand, most clothing and accessories are sourced from imported brands.
Ursula von der Leyen, President of the European Commission, said on Monday that Western sanctions would cut Russia’s access to financial markets and restrict access to high-tech goods. When the US and EU countries first imposed sanctions in 2014 after Russia’s invasion of Crimea, the supply of fashion items to Russia was only slightly affected.
Little own production
The situation of the Russian fashion industry is not as rosy as it seems either. A 2019 report by the Flanders Investment & Trade Group highlights that in Russia the connection between fashion designers, textile manufacturers and weavers is poor and investment activity is low is. There is also a shortage of local raw materials, such as flax, cotton and wool, as well as skills in sewing, textiles, leather and shoemaking.
Unlike its immediate neighbor Poland and other EU countries, Russia does not produce high-quality fabrics, shoe soles and shoe accessories. Many fabrics and shoe soles are imported from Italy, Turkey and China. The country also does not grow cotton, but imports it from Uzbekistan, Tajikistan and Turkmenistan. Wool, fur and leather are produced in Russia, but the supply of these materials is insufficient, the report said.
Russia wants to strengthen its own fashion industry
While much of its mid- and low-end goods come from China, Russia has adopted an import-substitution policy to reduce its dependency and boost its own textile and fashion industries.
As in the rest of the world, spending on luxury goods in Russia did not pick up again since the pandemic began until the fourth quarter of 2021 – when other sectors also reported stronger than before results.
Despite Russia’s shift to the domestic market, the allure of Western fashion and luxury companies will not wane – and that will not change even with the imposition of sanctions.
With the gradual opening of borders, Russian citizens will be able to travel more again, and wealthy consumers will be welcomed in the fashion capitals of the UK, Japan, Italy and France.
While a diplomatic solution is the best-case scenario for both Russian retailers and Western brands, there is no denying that the sanctions could impact Russian consumer spending. This in turn will affect those companies that export to the Russian market.
Article source: Flanders Investment & Trade report: Fashion market in Russia and Saint Petersburg
This translated post previously appeared on FashionUnited.uk. Translation and editing: Karenita Haalck