Parallel strategies of luxury brands in Russia

L'Oréal CEO Nicolas Hieronimus announced this weekend that the company is continuing its operations in Russia, specifically the factory located in Kaluga, south of Moscow, which produces, among other things, Yves Saint Laurent perfumes and employs around 2000 workers. The cosmetics giant justifies this decision as a preventive measure to avoid a takeover by Russian authorities, a procedure already experienced by other major international companies such as Danone. On March 8, 2022, the French company announced the temporary closure of its stores in the country. The Kaluga factory remains the group's only active operation in the country.

L'Oréal is not the only international brand maintaining a presence in Russia despite sanctions. While it is true that luxury brands like Dior, Chanel, Fendi, and Louis Vuitton have officially closed their stores in the capital, citing "technical reasons," an investigation by Radio France revealed that major retailers had stockpiled large quantities of luxury products (especially fashion and leather goods items) immediately after the invasion of Ukraine, which now feed an online parallel market. On the web, Russia is experiencing a situation reminiscent of the "black market" years when major European brands were not authorized for sale in stores.

These stocks do not fully explain the significant presence of luxury products in Russia despite trade sanctions. Since the start of the conflict, there have been reports of "parallel imports." Official distributors have been replaced by intermediaries operating in countries that continue to have trade relations with Russia, such as Armenia, Turkey, or the United Arab Emirates. The Moscow department store TSUM can thus offer its customers fashion items from the latest collections of French or Italian luxury brands. The same applies to several Russian websites specializing in online luxury product sales.