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U. S. Retailers Spent the Past Year Rushing Into Russia. Now What?

In: Business and Management

Submitted By bfairchild1
Words 550
Pages 3
Brenda Fairchild
March 30, 2014
MGMT 338

U.S. Retailers Spent the Past Year Rushing Into Russia. Now What?

For years, consumers have pride themselves on wearing the best brand of diamonds ever to exist which is carried by the renowned Tiffany jewelry company. Tiffany & Co has jewelry retail stores and boutiques located all over the Americas as well as Asia-Pacific, Japan, Europe and the United Arab Emirates. They invaded Moscow approximately 10 months ago and purchased a 4,500 square-foot store. In their quest to do busy with Moscow, they made promises to millions of potential customers to deliver the best of the diamond world. Now because of the many issues with U.S. sanctions, Tiffany & Co is caught up in an economic war zone as sanctions continue to put financial pressure on Russian pipelines.

"It’s just a really, really big country, and because of that it’s been pretty underserved," says Charles Whiteman, senior vice president of client services of Motion Point. This is how several major corporations like Apple, Nike and Mattel feel about conducting business in Russia. Many of Standard & Poor’s top stock businesses have talked about the enormous nation and the financial implications of doing commerce there. Nike has gushed about Russia for months, noting that business there has been sprinting along at a double-digit clip. “
"We are still the sports brand of choice in Russia and in Eastern Europe," Trevor Edwards, president of the Nike brand, said in December. According to some enterprises mentioned in the article, "Russia is a top five market behind Canada, Australia and the United Kingdom."
Yet despite the monetary opportunities available to the conglomerates, the U.S. sanctions have made it difficult to pay for the products offered by the businesses. Certain sanctions imposed by the U.S. have caused large processing corporations like Visa and MasterCard to cease processing transactions. The economic downturn of the ruble, the primary unit of currency for Russia, has not helped things either. The value of the ruble has dropped a whopping 25% since December. The commentary goes on to point out that a" simple pair of shorts from the University of Connecticut, that cost 2,640 rubles in December would now cost him 2,848 rubles."
For now, despite the economic turmoil, the consumers in Russia are in stand-by mode. They are waiting to see how the whole situation will play out. Many executives like Elena Bychkovskikh, Motion Point's Russian specialist and native of the country feel the buyers will "just continue to monitor the situation," she says. "But if they really need something, they’ll buy it." She is hoping purchasers will remain loyal throughout the economic sanctions. Nike officials also hope for the same. Nike CEO Mike Parker is hoping that a resolution comes about peacefully. Until then the major sports apparel company will continue to focus on what’s important to them: "connecting with their customers."
In Conclusion, the Russian trade is at a point where it appears that politics has greatly hampered it's international trading in a lot of areas in regards to the free trade market in international business.

Work Cited
Stock, Kyle. "U. S. Retailers Spent the Past Year Rushing Into Russia. Now What?". 26 March 2014. Web http://www.businessweek.com…...

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