IKEA, Inditex want to resume work in Russia when logistics problems solved - Industry and Trade Ministry

MOSCOW. April 21 (Interfax) - IKEA and Inditex, which have suspended the work of their stores in Russia, want to return to the Russian market, Russian Deputy Industry and Trade Minister Viktor Yevtukhov said.

Foreign companies suspending their work, including retail, is mainly connected to problems with logistics and the supply of goods, Yevtukhov said.

"Accordingly, they plan to resume supplies of goods in the foreseeable future. They don't want [to leave], because the market is big. That same IKEA [...] Everything was fine with IKEA's sales, they have a very good Russian market, we frequently got in touch with the management in Russia. We know what IKEA is, they constantly bring in products from other countries, although they have a part of their factories for the production of furniture localized here. They have such an operational format, IKEA is difficult to reduplicate, they have very interesting business processes. But at the same time, they've left Megas [Mega shopping malls that also belong to Sweden's Ingka, the owner of IKEA] working, they're finishing up the construction of two Megas, that is to say, they haven't suspended investments in construction. They say, things are difficult for us at the moment, it's important to them for their product mix to be full, right now it's difficult to do that, everything will settle down a little presently, we'll figure out how to bring in products, and we'll open up. Moreover, IKEA has invested itself, has built its centers itself, therefore, of course, to abandon them, leave them to someone, for them that's clearly not an effective move," Yevtukhov said during a live broadcast on the People's Front on Thursday.

Swedish furniture producer and seller IKEA announced a suspension of sales, production, imports, and exports in Russia at the beginning of March. IKEA has 14 stores in Russia, all located in Mega shopping malls. It also has several IKEA City stores and design studios. According to its website, IKEA has four factories in Russia, in Yesipovo in the Moscow region, Tikhvin in the Leningrad region, and Veliky Novgorod and Krasnaya Polyana in the Kirov region.

Spain's Industria de Diseno Textil SA (Inditex), one of the largest clothing retailers in the world, also wants to resume work in Russia, Yevtukhov said. Inditex, which operates clothing stores such as Zara, Pull&Bear, Massimo Dutti, Bershka, and others, said on March 5 that it was temporarily suspending work in Russia. This affected 502 Russian stores, including 86 Zara stores, and online sales. The company based its decision on the inability to guarantee uninterrupted operations in the country.

"The same thing concerns the company Inditex, that's the brands Zara, Massimo Dutti, Bershka. The same thing - they also have a fairly complicated business process, Zara is also quite difficult to reduplicate. They update their collection very frequently, not once a season, but several times a season. They have original design manufacturing, they order everything at various factories, including, by the way, in the Russian Federation, several of our factories put the final stitches on the Zara brand, individual items not only for the domestic, but for foreign markets, as well. And the same thing - we can't bring in the product on time, and it's not right for us to sell one and the same stock. They're also saying now that the Russian market is very important for them. I can say that in Moscow, one of these stores [...] had the largest sales revenue for Zara products in Europe. Of course they want to return to our market. But if they don't return, then, in fact, it's possible that there's an upside to that, as well. It's not possible, it's for sure, because huge opportunities open up for our producers, we have a lot of good companies in the consumer goods industry," Yevtukhov said.

"So far, those companies, according to our ministry, it's a large number of industrial sectors that our ministry oversees, a large number of various producers, so far even those that have temporarily suspended their activities [...] they all, to start with, have said that they will return to Russia," he said.