Claire’s to withdraw from Russian market for second time
American budget accessories retailer Claire’s Inc.’s second attempt to establish itself in Russia via franchising has failed, with Russians preferring to invest in more expensive jewelry pieces.
Three commercial real estate sources have told Russian daily newspaper Kommersant that the accessories company’s Russian franchisee is set to close its three remaining locations in Moscow, in the city’s "Metropolis", "Oceania" and "Mega Belaya Dacha" malls. Only two months ago, there were twice as many Russian Claire’s stores in operation.
This is the company’s second entry into the Russian market, following a first failed attempt launched in 2006 by franchisee the Kuwaiti Alshaya Group, which ended with stores closing in 2013.
In 2016, the current franchise chain was set up by managers from the Valtera jewelry network, with up to one hundred locations being projected in Moscow, St Petersburg and other cities with over 1 million inhabitants, and revenues totaling 31.59 million rubles in the first year.
Rezeda Sadritdinova, deputy director of the rental department of JLL shopping centres in Russia, told Kommersant that the tribulations of Claire’s in the country are linked to shifts in consumer preference. “Today, consumer behavior has changed: the consumer is increasingly thinking about how to ‘invest’ money in quality products that will last more than one season and will be relevant in a few years,” she stated.
UK-based competitor Accessorize was also forced to pull out of the Russian market last summer, with Dina Postolenko, executive director of the department of commercial real estate of Colliers International, identifying similar problems with pricing and market positioning as the root of the company's troubles in the country.
Claire's is also facing serious problems on its home turf, with sources reporting that the Hoffman Estates, Illinois-based company is likely to file for Chapter 11 bankruptcy in the next few weeks as it struggles to meet deadlines for interest payments on its $2 billion debt.
Representatives of the company’s Russian franchise did not respond to requests for comment.
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