The departure of Western clothing brands allowed local brands to increase turnover and the number of customers in 2023

The departure of Western clothing brands from the Russian market had a positive impact on half of local brands, which led to an increase in their turnover and number of buyers in 2023, Fashion Consulting Group and Fashion Factory School found out. However, market participants are pessimistic about the future and do not really believe that the dynamics will be maintained in 2024. It will also be difficult to maintain business profitability due to rising inflation, personnel costs and ongoing logistics problems.

Kommersant obtained the results of a survey conducted by the Fashion Consulting Group (FCG) and the Fashion Factory School, a school of business education in the field of fashion, among participants in the clothing market. Thus, more than half of the surveyed owners of small Russian clothing brands, as well as founders and top managers of large players in this market segment, noted positive dynamics in key business parameters at the end of 2023, despite the ongoing military conflict between the Russian Federation and Ukraine.

For example, 62% of respondents reported an overall increase in turnover, 61% – an increase in customers. Thus, 47% of owners and top managers of fashion companies expect an increase in revenue by the end of 2023 by a third, 10% – from 30% to 50%, another 10% expect an increase in financial indicators even higher.

In 2023, the largest growth was shown by large Russian companies in the mass segment with great investment opportunities, which managed to bring new brands to the market, states fashion market analyst Olga Steinberg. At the same time, small local brands began to confidently go offline and increase their marketing activity, adds Inna Gureeva, operating director of Fashion Factory School.

After the start of Russian military operations in Ukraine, more than 50 large international brands, including Inditex, H&M, Uniqlo, left the Russian market. In 2022, retail sales of clothing and footwear decreased by 10.3%, to 2.6 trillion rubles, and in 2023, they increased by 11.5%, to 2.9 trillion rubles, according to Infoline-Analytics. . According to a survey by FCG and Fashion Factory School, 43% of Russian companies did not notice a significant impact on their business from the departure of international players, another 45% said there was a positive impact on small local brands.

The departure of Western competitors allowed local players to occupy the most profitable trading floors and attract new segments of the target audience, Gloria Jeans says. Baon President Ilya Yaroshenko notes that in 2023, Russian fashion retailers showed customers that local brands are no worse than Western ones. According to him, Baon’s revenue grew by 20% year-on-year.

According to the chairman of the board of directors of Gloria Jeans, Vladimir Melnikov, in 2024, the fashion business as a whole will still face uncertainty. According to him, the retailer plans to optimize its real estate portfolio, reconstruct 200 stores in the chain, and open 50-100 stores under the new Ready! brand. Steady! Go! Gloria Jeans’ investment program for opening stores in 2024 will be similar to last year and amount to 10 billion rubles, Mr. Melnikov added.

Ilya Yaroshenko notes that the Russian fashion market will continue to strengthen this year, in particular, Baon projects sales growth across all channels by 20–40% for 2024. At the same time, according to him, it will be more difficult to grow and maintain profitability at the 2023 level, in particular, due to rising exchange rates, inflation, and high loan refinancing rates.

Olga Steinberg also talks about the growing level of competition between games in the fashion market, as well as high inflation, which is noticeable for the end buyer. According to the expert, growth may continue in the segment of inexpensive products. Previously, Yakov and Partners experts predicted the dominance of chains and brands in the lower and middle price segments in the Russian market (see Kommersant, December 22, 2023).

According to Ms. Steinberg, the potential for development in the niches of sportswear, men’s, children’s and teenage clothing, as well as “specific and narrow niches where competition is much lower,” remains quite high.

Alina Savitskaya