Harrods is reportedly following in the footsteps of Chanel and limiting sales of luxury goods to Russian consumers in an attempt to comply with sanctions levied by the government of the United Kingdom. The Telegraph reported over the weekend that “the Qatar-owned store has been combing its customer database, singling out those with a Russian phone number or who have said they live in the country,” and alerting them that if they “might currently or ordinarily be [a] resident [of] Russia,” it cannot supply them with “luxury goods” worth more than £300. This means that “items ranging from jewelry and designer clothing to furniture and gym equipment are now off limits.”
“Our priority is to comply with regulations, informing potentially impacted customers on how it may limit their ability to shop at Harrods, and ensuring wider customers are not unduly affected. We are happy that we have been able to take this action and support customers in making them aware of recent government regulations,” a spokesman for the London-based department store stated. And while the move to block individuals who are “either currently or ordinarily in Russia” from snapping up designer wares may enable Harrods to fall in line with escalating sanctions in the United Kingdom, it does, however, stand to land the company on the receiving end of consumer furor, including “accusations of discrimination from Russians affected.”
Chanel faced pushback – and claims of “Russophobia” – last month when it revealed that it had “rolled out a process” in its stores outside of Russia “to ask clients for whom we do not know the main residency to confirm that the items they are purchasing will not be used in Russia.” This meant that some Russian consumers were blocked from purchasing coveted Chanel products in the wake of Russia’s invasion of Ukraine, in furtherance of an move by Chanel to abide by European Union sanctions that prohibit the export of luxury goods to Russia.
“The latest sanctions from the European Union and Switzerland prohibit ‘the sale, directly or indirectly, of luxury items to any natural, legal person or entity in the Russian Federation or for use in the Russian Federation,’” Chanel said in a statement in early April, noting at the time that it was “working to improve the procedure.” Chanel – which maintains the title of the second largest luxury brand in the world, following only behind Louis Vuitton – also apologized in the statement “for any related misunderstandings and inconveniences” that have stemmed from its efforts to implement the newest EU sanctions that prohibit companies in the 27-member bloc from exporting luxury goods worth more than 300 euros ($330) to Russia.
The response from Russia consumers, including models and heavily-followed influencers, who went so far as to post videos of themselves destroying Chanel bags on social media in protest, demonstrates the risk of tarnishment that comes from brands taking stands over issues, including geopolitics. On the heels of Western brands making statements about human rights abuses in their supply chains in connection with alleged forced labor in the Xinjian region in northwest China, which is known for its cotton production, massive boycotts came by way of the Chinese market. In addition to consumers swearing off companies – ranging from Nike and H&M to Burberry and Calvin Klein – for expressing their “concern,” leading Chinese e-commerce platforms “kicked major international labels off their sites, and a slew of celebrities have denounced their former foreign employers,” the New York Times reported at the time.
The Times’ Vanessa Friedman and Elizabeth Paton called the situation, which saw adidas’ Q2 2021 sales fall by more than 16 percent in China “because of geopolitical tensions,” CEO Kasper Rorsted revealed, “a perfect case study of what happens when market imperatives come up against global morality.” H&M similarly reported a drop in sales – 23 percent in Q2 2021 – in China as a result of consumer boycotts, with CEO Helena Helmersson calling the situation “complex.” Meanwhile, seeming looking to save face, Nike’s CEO John Donahoe asserted at the time that Nike, which also faced pushback over comments about the alleged use of Uyghur forced labor in cotton production, is “a brand that is of China and for China.”
At the same time, while the likes of H&M, adidas, and co. experienced what the Washington Post has characterized as “nationalistic backlash that led Chinese consumers to call for boycotts and hit brand loyalty and market share to a degree that these companies may never come back from,” Japanese apparel giant Uniqlo opted for a neutral stance, and has been rewarded as a result. “I want to be neutral between the U.S. and China,” Tadashi Yanai, the owner of Uniqlo parent Fast Retailing, told Nikkei Asia in December 2021. While its “more outspoken peers saw their revenues in the greater China region slump sharply,” Bloomberg has since reported that “Uniqlo’s went in the opposite direction, with takings rising 17 percent in the year ended August 2021.”
The publication notes that it is not merely its apparel offerings that set Uniqlo apart from its rivals in the “lucrative–but tricky–Chinese apparel market,” stating that “there is also the Japanese brand’s approach to contentious political issues. In particular, the predominantly Muslim Xinjiang region in China’s northwest.”
Back in terms of the robust luxury-centric sanctions that have been levied upon Russia by the U.S., UK, and EU, among others, if other brands and retailers are following in the lead of Chanel and Harrods, it is being kept quiet, presumably for fear that bottom-line-impacting backlash is sure to follow.
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