“Business as usual” is something that is getting harder to prove to the Russian population. Lego, which had halted all new shipments of bricks to Russia at the beginning of March is now cease cooperation with its Russian retail partner the Inventive Retail Group (IRG) and effectively shut off its business interests.
While sales of remaining stock had continued at partner stores, the group has now cut off its internal distribution operation and is to release its remaining staff.
Lego’s move follows that of other Western companies such as Starbucks and McDonalds. Polish retailers such as CCC and the LPP Group’s stores Reserved and Mohito were among the first to shut down stock.
The final Lego departure comes after several store closures in June, as unreplenished stocks began to run out, according to the Gizmondo website.
The move may not spell the end for all sales of the company’s bricks, as Reuters reports that the Russian government added Lego to a list of companies whose products could be sold in the country without recourse to the trademark holder in May. Other companies on that list include Apple and Samsung.
The Lego departure is further evidence of the timebomb effect of sanctions on the Russian economy. While some companies were able to cut ties loose straight away, others had decided to wait out notice periods on commercial agreements with trusted trading partners, keeping staff employed in the meantime. The remaining employees of Lego will be given severance packages, according to reports, but they too will run out affecting the employment situation.
In McDonald’s case the sites were re-opened as “Vkusno i tochka” – Tasty, full stop and while the colourful livery looked convincing, the distribution system could not provide enough potatoes to keep all the french fries fryers going.
Distribution has been hit. Back in May, Russian business daily Kommersant reported that demand for logistics centres is at a 10-year low in the Moscow area.
Lada Niva Legend Classic 22 is to go back into production, but without the parts which make it a 21st-century car. Out go the electric windows, the computer, the steel frame, according to Kommersant. A back-to-the-eighties feel is guaranteed for the car which was banned from the European market long ago, not making the grade. Its production according to old norms may be the way to go. Will soft plastic bricks which don’t stick together properly be the way to go for Lego fans? That’s the direction of travel.
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