The gray Zara market: how ‘parallel imports’ give consolation to Russian customers

Aleksandr Gorbunov, a property investor from the Siberian metropolis Krasnoyarsk, had a easy answer when Zara, the Spanish clothes big, closed its shops in Russia over the invasion of Ukraine: import it himself.

“The concept to begin promoting Zara got here from my spouse, who mentioned she actually wished the garments to return,” mentioned Gorbunov, who mentioned he was opening a retailer referred to as Panika (panic) on Friday that offers solely in Zara and Zara Residence merchandise.

Gorbunov mentioned he shortly discovered a vendor in Kazakhstan who dealt in Zara garments, then imported a batch of clothes for 1.5-2 million roubles (about £23,000). He claims his markup can be simply 200-300 roubles (about £3).

“It’s all official, parallel import,” he mentioned, as Russia now permits practically anybody to resell merchandise purchased overseas. “We don’t simply purchase the whole lot … We’ve got a designer who chooses what to purchase from the most recent collections – we don’t wish to merely fill our retailer with Zara garments.”

Western firms are leaving Russia in protest in opposition to the battle and to keep away from a possible backlash over making income in Russia. However the exit of western manufacturers additionally has an outsized political significance, reminding unusual Russians of their isolation extra viscerally than sanctions on Kremlin officers or central financial institution reserves.

So Russia has responded by publishing an extended record of products from international carmakers, expertise firms and shopper manufacturers that fall beneath the so-called parallel import mechanism, which permits Russian corporations to purchase items from any firm exterior Russia, with out approval from the trademark house owners, opening the floodgates to gray imports and different schemes to maintain retailer cabinets full.

The merchandise that now arrive in Russia are sometimes initially meant for export to international locations which might be a part of the Moscow-led Eurasian Financial Union (EEU) and with whom Moscow shares one customs union: Armenia, Belarus, Kazakhstan and Kyrgyzstan. The merchandise are then shipped to Russia and bought available on the market, with western manufacturers dropping all management of their distribution and sale.

Discussing the coverage in late Could, Vladimir Putin mentioned it could let Russians proceed to import “lyuksus class” items, an unintended portmanteau of the Russian for luxe and the car model Lexus.

“It should simply be a bit costlier,” he mentioned.

The re:retailer, which billed itself as the most important reseller of Apple merchandise in Russia, was in a bind when Apple formally introduced its exit in early March, chopping off provides of high-end iPhones and laptops.

However their retailer on Moscow’s Tverskaya Avenue is stocked with iPhone 13 Professional and Professional Max in alpine inexperienced, a color that was solely launched after Apple pulled out because of the invasion. Employees there mentioned they anticipated there could be a slight delay in getting shares of the iPhone 14 whether it is launched in September. “It should take a couple of month, so October,” mentioned a gross sales affiliate. “However we are going to get it.”

Whereas the corporate didn’t reply to questions on how they’re importing new Apple merchandise, the reply is evident: parallel import. “Directions in Russian for the phone could be downloaded on the positioning,” the shop says, indicating its telephones usually are not destined for the Russian market. And in an especially obscure assertion final month, the corporate introduced it could be “altering”, emphasising that it could proceed to promote “unique merchandise … made beneath the management of the producer”.

“We’re persevering with our work in an effort to be certain that there’s a place the place everyone seems to be welcome and ready for you,” it mentioned.

Grigory Yudin, a sociologist, mentioned that the Kremlin was eager to maintain a “sense of normality in [Russians’] every day lives” to encourage the escapism that many Russians have embraced because the starting of the battle.

“This sense of normality additionally implies that Russians nonetheless have entry to all of the merchandise that they’ve come accustomed to,” he mentioned. “Parallel import, due to this fact, performs its half in ensuring life isn’t disrupted by the battle. Putin doesn’t need Russians to vary their habits due to the battle however proceed residing as they lived. Western shopper merchandise which will look insignificant can have numerous worth to the common Russian.”

Vladislav Surkov, an aide to Vladimir Putin, as soon as crowed that he wasn’t affected by sanctions as a result of he may nonetheless entry the works of rapper Tupac Shakur and author Allen Ginsberg. Very rich Russians now may say the identical of their Mercedes and BMWs, all obtainable for these keen to pay the value.

Ararat Mardoyan, the proprietor of the Moscow-based “Auto Seller College” automobile brokerage agency, has imported a number of dozen luxurious vehicles to Russia because the battle started. They’re ordered from Dubai, India, China or South America, he mentioned, then shipped to Russia by means of international locations akin to Armenia or from the Iranian port of Anzali. It’s higher to keep away from “unfriendly” international locations such because the Baltics or Georgia, he added.

“The demand for western vehicles is there. It’s enormous,” he mentioned. And resellers are actually the one sport on the town. “I wouldn’t name it parallel import – actual import has completely stopped so that is the one one that’s left.”

Purchasers immediately organise the import of vehicles akin to Mercedes, BMWs and Vary Rovers he mentioned. “The demand for luxurious vehicles is particularly large, vehicles that value over $100,000,” he mentioned. “We promote the vehicles for about 20% costlier than prior to now.”

The brand new coverage is reworking the Russian market, presenting dangers for firms that haven’t even left the nation. Nikita, who beforehand labored for a big e-retailer, has begun importing Korean cosmetics akin to facial masks and lotions which might be nonetheless being bought at main shops.

“If it wasn’t for the state of affairs with parallel import, our sale of those merchandise wouldn’t be solely authorized,” he mentioned of their stock, which incorporates Dr.Jart+. “However we see a giant alternative as a result of these firms have an unbelievable markup.”

He had organised imports by means of Kyrgyzstan, which permits the merchandise to enter the Russian-led customs union, earlier than they’re shipped on by truck from Bishkek to Moscow, a visit that takes six days.

Nikita mentioned that Russian e-commerce platforms akin to Ozon and Wildberries had been additionally creating comparable provide traces on a a lot bigger scale and are easing restrictions on sellers as a way to attempt to meet demand in Russia for western items.

A cottage business has additionally emerged on messengers akin to Telegram, the place sellers supply to import luxurious merchandise and electronics and even deal with difficult monetary transactions, for instance transferring money between Russia and the USA for a 5% fee.

Nurbek from Kyrgyzstan has ferried lots of of Apple merchandise to Russia, a lot of that are later bought on Telegram.

“I’ve purchased roughly 300 iPhones and 100 MacBooks thus far,” he mentioned, saying they had been bought in Bishkek after which despatched on to Moscow by means of couriers or by submit. “I do know mates who do it in Kazakhstan, Uzbekistan and different post-Soviet international locations. I take a roughly 5% minimize from the sale, so I’m making actually good cash. It’s higher than working in development or as a taxi driver.”