LG, Bosch, and Sony, known for their home appliances and electronics, are shutting their doors across Russia, a move initiated by the halt of product supplies since the onset of the Ukraine conflict. These closures, as reported by Russian news outlet Kommersant, are a result of expiring lease agreements.
These companies are also clearing out their remaining stock in Russia.
As these South Korean, German, and Japanese brands exit, their retail spaces are expected to be taken over by new suppliers from Turkey and China.
Reasons Behind the Closures
The decision to stop supplying products to Russia was a direct response to the conflict in Ukraine.
The process of closing stores has been gradual, attributed to the complexities of long-term lease agreements and the financial penalties associated with early termination.
An industry source explained to Kommersant, "The lessee must give notice of the termination of the lease six months in advance, so it was easier for the retail partners of the vendors who left to 'sit out' until the end of the contract, although the official deliveries have started."
Unprofitable Ventures and Strategic Withdrawals
This shift has made the operation of household appliance stores unprofitable in Russia, leading manufacturers to cease their promotional activities in the country.
In March 2022, LG Electronics declared it would halt all shipments to Russia.
Similarly, Robert Bosch GmbH announced its decision to scale back its Russian operations in March 2022 after it was revealed that Bosch parts were being used in Russian military equipment. Bosch is also in the process of selling its facilities near St. Petersburg to Turkish investment fund Can Holding for $20 million.
Sony has stopped all hardware and software shipments to Russia, including PlayStation consoles, and pledged $2 million to support the war victims in Ukraine
