The owner of Vans will close stores in Russia and will be engaged in wholesale deliveries

Foreign companies are looking for compromise options to reduce business in Russia. In particular, the American VF Corporation, which owns the Vans brand, decided to close local retail and reorient its Russian division to wholesale sales. Such a strategy will reduce geopolitical risks and store costs, but it will also need to ensure the continuity of distribution.

The American clothing and footwear manufacturer VF Corporation (brands Vans, The North Face, etc.) decided to close its stores in Russia, and transfer the local division to wholesale deliveries. This is stated in the statements of the Russian structure of VF Corporation VF CIA LLC. The last Vans outlets in Russia were closed in the spring of 2023, the document says. VF CIA did not respond to Kommersant’s request.

VF Corporation decided to develop a retail network of stores under the Vans brand in Russia in 2020 by purchasing the stores operating under this brand from its franchisee A3 Retail Group. As of the end of 2022, there were 12 Vans stores in Moscow and St. Petersburg, according to the company. Following the start of military operations by the Russian Federation in Ukraine in March 2022, VF Corporation suspended the work of retail stores, wholesale deliveries and online sales. At the end of 2022, VF CIA’s revenue decreased by 50.8% year-on-year to RUB 1.36 billion. The net loss was 306.97 million rubles. against a profit of 420 million rubles. in 2021.

In April of this year, VF CIA received the first declaration of conformity this year for women’s and men’s clothing under the trademarks The North Face, Vans, Napapijri, Dickies, Disney and Timberland, follows from the data of Rosaccreditation. The supplier is the Swiss VF International SAGL, and the production sites are enterprises in Japan, China, Bangladesh, Malaysia, Vietnam, and EU countries. These brands are not subject to EU sanctions prohibiting the supply of clothing in Russia for more than €300 per item.

Fashion Consulting Group (FCG) CEO Anna Lebsak-Kleymans considers the reorientation of VF Corporation’s business in Russia exclusively to wholesale sales as a compromise option. According to her, continuing to work on the market as a distribution partner enables the company to maintain the popularity of its own brands, at least through representation in multi-brand networks and maintain business momentum. Due to the deteriorating geopolitical situation, having your own retail network or online store threatens to boycott the brand in other markets, and wholesale deliveries allow you to “mix with other brands,” says Dania Tkacheva, business consultant for sales management and strategic development.

Evgenia Prilutskaya, director of infrastructure retail and representation of CORE.XP tenants, says that the main benefit of this model is risk sharing: the manufacturer is responsible for the product, its quality and quantity, and the wholesale buyer is responsible for sales. A company store, Ms. Prilutskaya says, is needed to represent the brand, while in the case of VF Corporation, we are talking about already well-known brands with their consumers. According to her, the progressive growth of rental costs in a situation where “consumer demand is in a fever” also negatively affects the content of its retail. The distributor’s risks are only in the shortage of goods and depend primarily on logistics, the expert adds.

According to Nikolliers, at the end of 2022, international retail holdings with 23 brands have finally left Russia, and 25 international chains with 27 brands remain on pause, leaving their stores closed. Another 22 companies that managed 31 brands sold the Russian business, which in some cases was accompanied by the renaming of stores. So, Reebok sold the local network to Turkish FLO Retailing, which renamed the outlets to Sneaker Box, Levi’s facilities resume work under the JNS brand, and Crocs stores are renamed Saboo. According to FCG, in 2022, the turnover of the fashion market in Russia decreased by 8.1% in money terms. This is the worst result since 2020, when due to the pandemic, clothing and footwear sales in Russia decreased by 11% year-on-year.

Alina Savitskaya