Westwing, a German online store of furniture and designer home accessories, is leaving Russia after six years of operations in the market. The company is also selling its affiliates in Kazakhstan and Brazil, reports DW.
“Westwing has made a strategic decision to focus on its main business in Europe,” the company representative told DW, while declining to disclose the details of the ongoing sales negotiations.
Even though Westwing’s decision is coming as the company is preparing for its IPO, the company’s spokesperson assured DW that there was no connection between the events.
The list of German companies which have fully or partially stopped their operations in Russia in 2018 is increasing. This past spring, Otto Group, the German e-commerce giant, announced the shutdown of its Russian online stores Otto.ru and Quelle.ru, which mostly sold apparel.
Meanwhile, Adidas significantly reduced the number of its trademark shops in Russia and neighboring countries.
This past summer Ceconomy, which owns Europe’s major household appliances megastores network, sold all of its Russian Media Markt stores. Simultaneously, ECE Projektmanagement, the European leader in shopping mall management companies, left Russia. The company had offices in the Moscow region, including the city itself (Lubianka), Yaroslavl and Surgut.
German retailers came to Russia amidst consumer boom hoping for its continuation. However, since 2014 the purchasing power of the Russian population has decreased significantly due to the ruble’s sharp depreciation and the economic crisis. In this situation, many of the imported goods – in particular, those made in Europe – have become too expensive for the majority of Russians.
At the same time, foreign businesses saw their revenues go down after converting profit in rubles into euros. Thus, in most cases, operations in Russia began generating losses.
The macroeconomic issues were followed by strategic and management errors of the companies themselves, as well as growing competition on the Russian market.
Not all German retailers are following the trend. Metro Cash & Carry, which has invested billions of euros in its Russian hypermarkets, shows no intention of leaving Russia.
Source: DW
