Amid the ongoing geopolitical tensions and sanctions on Russia, electronic goods manufacturers LG, Sony, and Bosch have initiated the closure of their single-brand stores in the country, as reported by the daily Kommersant. The brands, facing challenges in the supply chain due to sanctions related to the Ukraine conflict, had previously announced their intentions to either exit the Russian market or suspend deliveries.
Impact on Retailers: All three brands, LG, Sony, and Bosch, have faced disruptions in supply deliveries, leading to the decision to close their stores in Russia. Technical support from LG confirmed the plans to shut down all Russian stores, emphasizing the halt in supply deliveries as the primary reason. Similarly, Sony’s support operator cited the lack of supplies, with three single-brand stores in Moscow to remain open until the summer to sell off existing inventory. Bosch has closed all stores except one, planning to keep it open until the stock is sold.
Challenges in Early Closure: Despite the divestment plans, the closure of stores in Russia could not happen earlier due to long-term lease agreements with shopping malls. According to a source from a large retailer, tenants typically need to provide a six-month notice of lease termination, making it more practical for retail partners to fulfill their contractual obligations, even when official deliveries have ceased.
Background on Manufacturers’ Actions: LG Electronics from South Korea suspended all deliveries to Russia and ceased operations at its Moscow-area plant in Ruza in March 2022, coinciding with the onset of Russia’s military operation in Ukraine. Sony, based in Japan, halted deliveries of software and hardware to Russia, including sales of PlayStation consoles. Germany’s Bosch, responding to the geopolitical situation, halted production at its seven Russian factories and is currently in the process of selling them.
As these electronic giants adjust their operations in response to geopolitical events, the closures have significant implications for the retail landscape in Russia.
