Ukraine-Russia war’s impact on Europe’s apparel market

Prior to the Ukraine-Russia war, the two countries made up 11% of the European retail sector with Russia having a tenth of the region's total spend and Ukraine taking the remaining 1%.

Stephens highlights the brands and retailers who have exited Russia and Ukraine have absorbed the losses of doing so themselves. This means some have been more impacted than others, depending on the extent of their previous operations in the two countries.

However, she adds: "Many are passing on the subsequent price increases that have occurred as a result of the surge in fuel and raw material costs, causing many shoppers to either buy less or trade down to more affordable options."

Aside from the increased costs of transporting products to and from suppliers and customers, and the resulting surge in inflation causing brands to increase their prices, Stephens points out the rising price of crude oil could have a significant impact on material prices, especially polyester and nylon which derive from petroleum.

"This will disproportionately affect value and mass market brands who are more reliant on these materials."

Stephens also adds retailers and brands that previously had a large presence in either Russia or Ukraine have suffered the most from the conflict since it started six months ago. As a result, she believes it will have made other players more cautious about becoming too dependent on one specific country going forward.

"Also, it will have made retailers realise the need for them to become more flexible in their supply chains and intake of stock, as not only have delays impacted the timing of range launches, but lack of demand may eventually result in surplus stock."

She notes that despite retailers initially vowing not to pass price increases onto consumers following the invasion in order to retain shopper loyalty, many have since been forced to increase product prices to protect their margins.

The Ukraine/Russia war set amongst the backdrop of the pandemic and the ongoing supply chain issues that went alongside it, have resulted in inflation being the main short-term theme impacting apparel consumers’ purchases. Stephens says it is causing consumers to cut back spend on non-essential sectors like apparel, while brands are also having to implement price hikes to retain profitability.

Aside from the war and rising inflation, concerns about sustainability are also increasingly driving many shoppers to either buy fewer products, purchase items made from more sustainable materials or shop secondhand instead, states Stephens. She believes that despite this being very beneficial for the environment, the shift towards resale will cause more traditional brands to suffer unless they invest in a secondhand proposition.

On the plus side, Stephens highlights the European apparel market is set to return to 2019 levels this year, after suffering severe declines during the pandemic. She points out, however, this will primarily be boosted by retailers and brands increasing their prices amid the surges in inflation caused by the Ukraine/Russia war.

GlobalData's analysis suggests the relative return to normality post pandemic has given consumers a renewed desire to buy new fashion items, particularly holidaywear and occasionwear, after not needing to purchase these products over the past two years.