What does Russia’s war on Ukraine mean for U.S. retail?
Twelve days into Russia’s invasion of Ukraine, the most visible impact on U.S. retail appears to be brands suspending operations in Russia, local calls for boycotts of Russian vodka and a spike in gas prices.
Overseas, Apple, Microsoft and Nike have joined a swathe of western firms including IKEA and H&M that have halted Russian operations.
“We are deeply concerned about the Russian invasion of Ukraine and stand with all of the people who are suffering as a result of the violence,” Apple said in a statement.
Nike had indicated on its Russian website that it was suspending operations because it could not guarantee delivery. Three days after the war started, FedEx and UPS suspended shipments to Russia and Ukraine.
TJX Cos. said last Thursday it was divesting its minority investment in Familia, a Russian off-price retailer, and would instruct buyers to halt purchases from Russia and Belarus.
In a note Friday, Moody’s said that the “greatest risk facing global supply chains has shifted from the pandemic to the Russia-Ukraine military conflict and the geopolitical and economic uncertainties it has created.”
In the U.S., Publix, Kroger, and other U.S. chains have taken Russian vodka off the shelves although Russia accounted for only 1.3 percent of all vodka imports to the U.S. in 2021, according to the Distilled Spirits Council.
The most common Russian imports to the U.S. are mineral fuels, precious metals, iron and steel and fertilizer. The big production concern is whether economic sanctions will create imbalances in the worldwide supply of oil and gas. Russia represents around a third of all energy imports to Europe.
As of Sunday afternoon, the national average of a regular gallon of gas was $4.009, up 40 cents from the prior week, according to the American Automobile Association.
Skyrocketing gas prices add to the highest U.S. inflation rate in 40 years, but the duration of the conflict on U.S. shoppers’ psyche could be retail’s biggest worry amid threats of broader conflict.
“You have to think the longer it goes on, the more problematic” it gets, Chuck Grom, an analyst with Gordon Haskett told CNBC. “In other words, the consumer spends more time getting absorbed with the situation.”
- Apple pauses sales of its products in Russia. – The New York Times
- Google suspends all ad sales in Russia as censorship demands – Reuters
- Publix, Kroger, and other US chains have taken Russian vodka off the shelves after the country invaded Ukraine— see the full list – Business Insider
- Russia’s Vodka Is Getting Banned. If Only We Drank It. – Barron’s
- Retailers start to warn of business impact from Russia’s invasion of Ukraine – CNBC
- Russia-Ukraine’s Impact on Global Supply Chains – Moody’s
- Russia-Ukraine crisis replaces Covid as top risk to global supply chains, Moody’s says – CNN
DISCUSSION QUESTIONS: How should U.S. retail prepare for and respond to any fallout from Russia’s invasion of Ukraine? What’s your biggest concern as it relates to the impact of the war?