Uniqlo bows to public pressure to close stores in Russia

Fashion company Uniqlo has suspended commercial operations in Russia and condemned its invasion of Ukraine, changing course after its CEO initially pledged to continue selling clothes to the Russian public.

The previous position of the Japanese retailer contrasted with that of other large corporations that quickly closed stores and stopped operations in protest of Russia’s unprovoked attack on Ukraine. But on Thursday, amid growing pressure on corporations to sever ties with Russia, Uniqlo Fast Retailing’s parent company said in a statement that it would “temporarily suspend” its operations there.

“As we continue our Uniqlo business in Russia, it has become clear to us that we can no longer continue due to a number of difficulties,” the company said in a statement.

• These are the companies that have withdrawn from Russia since the invasion of Ukraine
• These companies continue to do business in Russia

The general manager of the Japanese retail holding company Fast Retailing, owner of Uniqlo, initially promised to keep Uniqlo’s 50 retail stores open in Russia, arguing that its citizens should be entitled to clothing and other essentials despite the actions. of Putin, reported the world news organization Nikkei Asia.

“Clothing is a necessity of life,” CEO Tadashi Yanai told Nikkei last week. “The people of Russia have the same right to live as we do.”

But that position proved unsustainable, and the company said Thursday that “it has recently faced a number of difficulties, such as operational challenges and the worsening of the conflict situation.”

Going reluctantly

Uniqlo was an atypical value among large corporations with footprints in Russia that stopped business operations in an effort to undermine Russia’s attack on Ukraine. Large companies, from Apple to Disney and Ikea, abruptly left the Russian market after Putin sent his troops to Ukraine on February 23.

Uniqlo’s competitor and Swedish fast-fashion chain H&M also said it would “temporarily stop all sales in Russia” in part because of concerns about the safety of its employees.

“H&M Group is deeply concerned about the tragic developments in Ukraine and is on the side of all those who suffer,” the company said in a statement.

Fast Retailing’s insistence on staying in Russia had sparked a backlash from some Uniqlo customers, clothing fans but opposed to the company’s geopolitical position.

They even used social media to call for a boycott of Uniqlo when the company said it would continue doing business in Russia as millions fled people war-torn Ukraine. Uniqlo, described on its website as the “fourth largest retailer in the world”, operates around 1,500 stores worldwide.

“And it’s time to boycott Uniqlo. It’s very sad to read its announcement of staying in Russia,” Titter user Tiia R said on March 7.

Others on social media attacked the retailer and accused Uniqlo of supporting Russian aggression.

“From now on, you will not buy any Uniqlo material until you change course in the face of invasive Russia,” said a Twitter user based in Taiwan.

“Never buy @UNIQLO_JP again. They have refused to stop operations in Russia. Big red flag. Terrible values,” @alejandro_m_g said.

Uniqlo has taken steps to show that it supports the people of Ukraine, who are still under relentless attack by Russia.

On March 4, Fast Retailing said it would give $ 10 million to the UN High Commissioner for Refugees, which is providing financial assistance to displaced Ukrainians. The funds will help cover the costs of accommodation, psychosocial support and other services for those who were forced to flee, according to a Fast Retailing statement.

Fast Retailing also said it would donate 100,000 pieces of Uniqlo clothing, including warm blankets, base coats and face masks to refugees.

Large corporations in virtually every industry are stop operations in Russia in an effort to financially affect Russia. Those companies that continue to work in Russia risk of damaging your reputation.

Steven Fox, founder and CEO of Veracity Worldwide, a strategic intelligence company that advises companies around the world on geopolitical and regulatory risks, anticipated that Uniqlo would eventually leave Russia. “It would not be right to go on business as usual in Russia,” he told CBS MoneyWatch.

Ultimately, it is up to companies to weigh the potential damage to reputation that could be caused by staying in Russia in the face of the immediate financial impact of the withdrawal, Fox said.

“There are a multitude of risks involved, largely driven by what reputational risk is, what do our shareholders think, what do our own employees think, what do our customers think?” He said