Chanel reduces the number of stores in Russia

As Kommersant learned, Chanel, which did not officially leave the Russian market after the outbreak of the military conflict between the Russian Federation and Ukraine, began to refuse to rent space for its boutiques. Other luxury brands will follow this path, experts are sure. Luxury sellers do not have the slightest understanding whether the West will lift sanctions on the import of clothing and accessories over €300 into Russia.

Chanel has begun negotiations with landlords about terminating lease agreements for the premises where the chain’s boutiques are located, three sources in the real estate market told Kommersant. Chanel did not respond to Kommersant’s request.

The luxury retailer announced the suspension of activities in Russia after the start of a special Russian military operation in Ukraine in March 2022, but there was no talk of a complete exit from the market. The company continued to rent premises for its boutiques. The revenue of Chanel LLC in 2022 decreased by 75.6%, to 4.5 billion rubles, the net loss amounted to 1.8 billion rubles. against a profit of 1.7 billion rubles. a year earlier.

Two years ago, Chanel had 17 boutiques in Russia, mainly in Moscow – in TSUM, GUM, on Petrovka, Stoleshnikov Lane, etc.

However, now some of the boutiques are no longer listed on the Chanel website – for example, stores in the Afimall, Evropeisky, Metropolis, Mega Teply Stan shopping centers and in Posledniy Lane.

Afimall confirmed to Kommersant that Chanel terminated the lease agreement on terms that “constitute confidential information.” The vacated space was occupied by the Furla chain. Representatives of other objects did not respond to Kommersant’s request. A Kommersant source in the St. Petersburg real estate market also says that one of the brand’s points in the city is ending its contract, which is unlikely to be renewed.

According to two Kommersant interlocutors, the company is also discussing the issue of abandoning space in the Geneva House business center on Petrovka, 7: the brand’s flagship store is located there. General Director of ERA Holding (owner of the property) Medina Dietz, however, told Kommersant that there were no requests from Chanel to terminate the lease agreement for the premises. According to her, this contract is long-term and inextricable.

Luxury brands do not expect to be able to resume operations in Russia any time soon, says Marina Malakhatko, senior director at CORE.XP. Therefore, she continues, after the lease agreements expire, they close their outlets.

According to the vice-president of the Union of Shopping Centers, Pavel Lyulin, “brands are forced to make such economically unprofitable decisions by Western sanctions” that prohibit the import of clothing and accessories into Russia that cost more than €300.

Stores of other “heavy” luxury chains also do not operate in Russia, including LVMH (manages, in particular, the brands Christian Dior, Louis Vuitton, Celine, Kenzo, Givenchy), Kering (brands Balenciaga, Bottega Veneta, Gucci), Richemont (Chloe, Montblanc), Hermes, Burberry. “There is no doubt that the space, which is now legally vacated by luxury brands, including Chanel, will be leased out quite quickly,” says R4S commercial director Irina Burenko. She recalls that the Bork chain recently opened its boutiques on the site of the planned Bvlgari on Bolshaya Nikitskaya and the former Fendi on Stoleshnikov Lane. Monochrom, Alrosa Diamonds, Oskelly replaced Jaeger LeCoultre, Montblanc, Richard Mille, Dior in the same Stoleshnikov Lane, she adds. But it is unlikely that the owners will find retailers who are willing to pay rent at the high rates that luxury brands agreed to, notes Marina Malakhatko.

Despite the ban on the import of luxury goods into Russia, luxury brand goods can still be purchased in the Russian Federation, for example at TSUM. “Currently, deliveries of such products are carried out in parts,” says Ekaterina Nogai, head of the research and analytics department at IBC Real Estate. A branded jacket, for example, arrives at the boutique in several stages: first the main part of the product arrives, and then the collar and belt, provided that the cost of each part is no more than €300, she explains. According to her, another way to get around the ban is to reduce the cost of the product by the manufacturer itself, for example, by replacing the accessories with more affordable ones.

Daria Andrianova; Konstantin Kurkin, St. Petersburg