IN SURVIVAL MODE: WHY ARE RUSSIAN FASHION BRANDS CLOSING DOWN?

The Russian fashion industry is going through difficult times. We are hearing more and more news about the suspension of sales or complete withdrawal from the market of once popular local brands. Behind the bright collections and beautiful pictures on social media lies the harsh reality of the struggle for survival.

Many people think that the problems have only just begun, but the roots go deeper. Businesses are facing a whole host of difficulties: from a sharp rise in the cost of materials and logistics to complications with payments abroad. It turns out that being an independent designer or a small brand in today's environment is incredibly difficult.

This story is not only about fashion, but about business in general. Buyers have become more cautious, and the shelves of both physical and online stores have become more competitive. In such an environment, even favorite brands may not withstand the pressure and fade into obscurity. Let's take a look at what's really behind this sad news.

Total decline

In the first half of 2025, Russian fashion retail showed a clear downward trend. Many domestic brands suspended their activities, closed their offline stores, or shut down their businesses completely.

According to a study by Kontur. Focus, in the first six months of 2025, more than 300 legal entities registered under OKVED 47.71 (retail sale of clothing), 47.72 (retail sale of footwear), and 47.78 (retail sale of accessories), which is approximately 3.8% of the total number of sellers in these categories.

The crisis has affected players at all levels, from large holdings to niche brands. Modny Kontinent, which developed the Incity and Deseo brands, has declared bankruptcy. Gloria Jeans has closed its Ready! Steady! Go! teen clothing stores.

Trade Management wound up the Just Clothes brand, which had claimed to replace the departed Uniqlo. The OBUV chain and the children's clothing brands Orby and Loloclo ceased operations. Niche brands Bat Norton, I Am Studio, Prav.da, Inspire Girls, and Mellow left the physical retail market.

Just Clothes

According to the consulting company CORE.XP, 29 clothing stores closed in Moscow shopping centers in April-June 2025 (+53% year-on-year). The share of fashion in the total number of closed outlets reached 38%. In St. Petersburg, according to NF Group, in the first half of 2025, the total area of clothing and accessories stores that closed amounted to about 25,000 square meters.

Overall in Russia, according to Shopper's, from April 2024 to March 2025, the number of Russian clothing retailers' stores decreased by 232 to 17,414.

According to Focus Technologies, foot traffic in Moscow shopping centers fell by 9% in the first half of 2025, and by 6% nationwide. In June, the decline intensified to 15% in the capital's shopping centers and 8% across Russia. The number of visitors to offline clothing and footwear stores between January 1 and June 15, 2025, decreased by 6% year-on-year. This reduction in traffic directly affects business profitability, especially in the mid-price segment, where margins are low and rental rates continue to rise.

Costs are killing it

The decline in consumer demand and rising costs are forcing many Russian clothing, footwear, and accessory brands to rethink their strategies or close down. Among the main reasons are high operating costs and new market realities, which make offline retail management extremely expensive.

According to Kontur Focus, the total revenue of fashion companies in Russia in the first half of 2025 decreased by 18% year-on-year, with some segments seeing a drop in revenue of 25–30%. At the same time, according to the analytical company RentNow, in the first quarter of 2025, the average annual rental rate in leading shopping centers in Moscow was 78,500 rubles per square meter (for comparison, in the first quarter of 2024, it was 40,000-50,000 rubles), and in the premium segment, it was 198,000 rubles.

The cost of renting warehouse space has also risen. According to information from the consulting company NF Group, in April–June 2025, the average annual rental rate for Class A properties in Moscow and the Moscow region was 12,400 rubles per square meter, which is 13% more than a year earlier. This is particularly critical given that many brands have accumulated large inventories due to abnormal seasonal shifts (a warm winter and late spring/summer).

The warm winter of 2025 had a significant impact on demand for seasonal goods, primarily down jackets, sales of which in Russia in January were down 21% in units compared to the previous year, while the total value of purchases fell by a quarter, according to First OFD (part of the VTB Group). Sales of winter collections at the Slava Concept chain of Russian designer department stores fell by 10%, according to Shopper's.

In order to free up warehouse space and obtain working capital, companies have to offer significant discounts. For example, the president of Finn Flare Ksenia Ryasova said “Kommersant”: "We have seen a very large drop in sales of down products compared to last year, literally 30%. … We have accumulated surplus stock and are forced to start a very large sale. And considering that we are now buying down for next year at a 30% higher price, this, of course, seems absurd. We are selling goods at purchase price 2026».

However, climate anomalies are fading into the background amid competition from marketplaces, which are attracting the traditional audience of physical retailers. "Of all the problems retailers face, I would put the weather in second or even third place. Looking at the situation as a whole, I have spoken with representatives of small businesses that sell winter clothing, and they all talk about increased competition from marketplaces, — commented to Kommersant the director of the Institute for Entrepreneurship and Economic Development Artur Gafarov. — Due to the fact that online platforms cheaper products, mainly Chinese, pose very serious competition either to higher-quality down jackets from foreign brands or to Russian goods. Due to this trade is declining so sharply that many SMEs are closing down, even though they have been in this business for many years.

Chronicle of closures

"In general, we can say that the decline in consumer activity has affected all segments fashion market. This has also affected the mass market segment, including marketplace brands, where prices are rising. Commissions have increased by 5% on both Wildberries and Ozon. Advertising costs have risen significantly, — comments Galina Kravchenko-Manyukova, founder and CEO of the consulting agency K&P AGENCY. — Thus, it is necessary to take into account that 50-70% of payments from the price of goods on marketplaces are used to cover costs (transport, logistics, advertising, etc.). At the same time, the net profit in the mid-range clothing segment and average-minus after taxes is only 7–9%."

Oksana Khalina, cEO of Retail Expert Group, clarifies: "In my opinion, niche and small brands have suffered the most — especially those that were operating on the edge, without a stable business models and access to financing. Small brands with creative but expensive products, a narrow audience, poorly organized production chains, and no management system simply could not survive. Those without a margin of safety are the first to close.

I Am Studio

"The segment of small non-chain boutiques has been particularly vulnerable: the decline in traffic in shopping centers and the drop in clothing and footwear purchases have put significant pressure on revenue., — agrees Maria Gerasimenko, founder of Fashion Advisers and the Fashion Advisers School online school. — Many niche brands and small conceptual brands, influenced by economic instability, rising costs, and the transformation of the distribution model, are suspending or ceasing operations.

Thus, in July, the St. Petersburg streetwear brand Bat Norton, facing a serious crisis — in the first seven months of 2024, traffic fell by 63% and revenue fell by almost 40% — announced the closure of two flagship stores. "The last few months have been a serious test for Bat Norton… We continue to pay rent and meet our obligations, but many stores have simply stopped operating at a profit. We are already closing some of our outlets so as not to lose everything., — the company reported on its Telegram channel. — … this whole situation led to Bat Norton finding himself at a point where the very existence of the brand was threatened. We sorely lack the resources to meet critical obligations and continue moving forward."

The Moscow-based women's casual wear brand I Am Studio temporarily ceased operations in May. “In the current environment — with a changed market, new realities of promotion, and high operational load — we cannot develop the brand as we would like. And now, with respect for the path we have traveled, I have decided to stop.”, — wrote the brand's founder Dasha Samkovich on social media.

A similar situation arose with the Moscow-based women's clothing brand Prav.da, which suspended operations in July. Co-founder Maria Maltseva the brand's Telegram channel reported: "To keep the brand going, we gave up expensive rent, downsized the office, moved part of the team to remote work, suspended custom tailoring, and terminated unprofitable partnerships… This gave the brand a reprieve, but not salvation.".

The economic crisis and decline in consumer traffic have affected the revenues of players in all segments.

"Mass-market online retailers also faced problems: the number of closed retail outlets of domestic operators grew faster than that of foreign ones., — notes Maria Gerasimenko. — At the same time, purchase conversion decreased by 16%.

«Due to with the drop in traffic at shopping malls, mass market brands are seeing a decline in revenue., — continues Galina Kravchenko-Manyukova. The expert cites data from the Check Index and OFD Platform studies, according to which the number of purchases in January-June 2025 decreased by 16% year-on-year.

Faced with a critical decline in commercial activity, Modny Kontinent, which owns the Incity and Deseo chains, entered bankruptcy proceedings in the spring of this year and ceased operations entirely in June.

Bat Norton

In April, Gloria Jeans announced that it plans to close the stores of the Ready! Steady! Go! teen clothing brand, created in 2014, and include its collections in its flagship range. At the same time, Trade Management decided to liquidate the retail outlets of the Just Clothes brand, launched in 2023, integrating it into the Lady & Gentleman City chain, and to focus on developing single-brand boutiques for luxury and premium houses such as Armani Exchange, Karl Lagerfeld, Aeronautica Militare, Max & Co, and others.

«The premium segment — looks more stable for now., — explains Oksana Khalina. — It is saved by a solvent audience and loyalty to the habit of buying from “their” brand. But even here, if style, quality, or service are lacking, customers will leave. It is impossible to survive without a truly premium experience, from quality to service.

“The premium segment, which includes niche brands from local designers, has also come under pressure,” — objects Galina Kravchenko-Manyukova. — It was negatively affected by the same factors as the mass segment, as well as the high price of the clothing and accessories on offer.

What to prepare for

The experts surveyed by PROfashion agree that the Russian fashion market will see a continuation of the wave of closures in the second half of 2025. According to Maria Gerasimenko, this will primarily affect small offline players, especially those who have not been able to quickly move online or optimize their logistics; mass retailers with weak financial cushions that will not be able to withstand further losses in traffic and turnover; niche and newly emerged brands that are unable to ensure a stable flow of sales and adapt to the requirements of marketplaces.

Oksana Khalina identifies three groups of players that will be hit hard: the same small and niche brands that do not have a financial cushion, a stable sales channel, or an established community; large “old school” brands that are stuck in physical retail and have not undergone digital transformation; so-called “meaningless” brands that have not built a positioning that is understandable to consumers. “In a hyper-competitive environment, ‘just clothes’ doesn't work — you need a story, an idea, a community.”, the expert comments.

The main reasons for closures will be cost optimization and the reduction of less profitable locations, she believes. Galina Kravchenko-Manyukova, which draws attention to the following factors: in offline retail, insufficient margins will not cover key store maintenance costs, including rent and operating expenses; on marketplaces, rising tariffs will increase the financial burden, which will also lead to the closure of retail outlets. "Closures will primarily continue among brands with low margins, where the current business model cannot withstand the increasing pressure of costs in physical retail and marketplaces," — the expert clarifies.

Oksana Khalina notes: "The market continues to be cleansed of inefficient business models, and in the second half of the year, this trend is likely to intensify. And it's not even that someone something is doing badly — in the current conditions, it is not the talented who survive, but those who are flexible, fast, know how to count, and have a management system, or those who are moving in this direction. There is now talk of a possible easing: rates may fall, inflation may stabilize slightly. But, to be honest, once the train has left the station, it won't help. I'm not talking about external factors, but internal ones. Those who don't restructure now may not make it to the end of the year.

Strategies for working in a crisis

Oksana Khalina, CEO of Retail Expert Group:

1. Moving away from dependence on shopping centers. It is not necessary to completely close offline stores, but it is definitely necessary to reduce costs and abandon ineffective formats. Instead of large stores — showrooms, pop-up points, collaborations with creative platforms.
2. Focus on your community and DTC approach. Now is the time to build relationships with your existing audience: direct communication on Telegram, newsletters, branded content, private clubs, personalized offers.
3. A conscious approach to marketplaces — they cannot be ignored, but they cannot be turned into the only channel either. They should be used as a showcase and a traffic trap, and then the customer should be transferred to your own channels, where you can build relationships. It takes time, but the market is moving towards personalization.
4. Focus on meaning and USP. In a market with an abundance of offers, it is not enough to simply offer the cheapest turtleneck; you need to explain why it is needed in the first place. Honesty, history, and uniqueness work well.
5. Optimization of everything and cost cutting — from the product range (reducing the number of SKUs, focusing on bestsellers) to logistics, content, and funnels. The more compact the model, the higher the chances of surviving the crisis.
6. Service and customer focus — especially in the mid-range and premium segments. Personal attention, pre-orders, proper handling of returns, high-quality packaging, and simple communication.
7. Transition from chaos to system. Many brands still operate on a whim: without a collection calendar, without a clear sales funnel, without financial and production planning. This is no longer affordable. Planning, forecasting, normal processes, and metric control are needed.

Maria Gerasimenko, founder of Fashion Advisers and online schools Fashion Advisers School:

1. Focus on online channels and marketplaces: develop sales through Wildberries, Ozon, Lamoda, and other platforms. This helps make up for the drop in physical traffic.
2. Develop omnichannel capabilities: integrate online and offline channels, such as showrooms, pick-up points, pop-up stores, and “order online, try on offline” services.
3. Optimizing logistics and supply chains: adapting to changes in supplier regions, developing warehouse solutions, fulfillment, and inventory management.
4. Digitalization, personalization, and IT solutions: the use of CRM, AI recommendation systems, online consultations, virtual fitting rooms, and improved UX applications.
5. Strengthen branding and focus on values (flexibility, quality, awareness): the premium trend shows the importance of style and value proposition, not just the logo.
6. Collaborations and partnerships: partnerships with other local brands, joint projects, sales spikes through special collaborations.
7. Effective assortment management: focus on basic goods, capsule collections, quick response to consumer demand.
8. Precise management of costs and investments: reduction of rent, transition to less costly models, optimization of operating expenses.
9. Use of the secondary market: possibly testing new channels through resale, especially for premium assortments.

Galina Kravchenko-Manyukova, founder and CEO of the consulting agency K&P AGENCY, author of the Telegram channel “GALINA KRAVCHENKO-MANYUKOVA | FASHION | CONSULTING”:

The most important thing: revising approaches to assortment management, clear planning of gross profit margins, monitoring the implementation of plans for this indicator, and actively developing our own online stores.

Own internet platforms serve a dual function: on the one hand, they are visual advertising showcases for buyers and a tool for demonstrating new collections and brand identity; on the other hand, they serve as a platform for testing new promotion tools, including advertising mechanisms and influencer marketing, which allows you to attract an audience both to the store's website and to offline points of sale.

This approach will have a positive impact on sales growth in the marketplace channel. For brands operating on online platforms, the key task now is to transform from a “brand” into a full-fledged brand. It is necessary to form a community of buyers by using both classic promotion tools and online channels — own stores and social networks.

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Russian fashion brands have found themselves in a real test of strength. Difficulties with material supplies, logistical collapse, the departure of major international platforms, and general economic uncertainty have created a survival mode for them, in which not everyone manages to survive.

Closing a brand is always a painful step, behind which lie not only numbers but also the hard work of many people. However, these difficulties force those remaining on the market to look for new ways forward: to develop local production, communicate directly with customers, and strengthen the community around their business.

Despite all the difficulties, the future of Russian fashion continues to take shape. It will be built by those who have been able to adapt, show flexibility, and communicate sincerely with their audience. Their experience shows that even in the harshest conditions, there is room for creativity and sustainable development.