Weapons of mass consumption: the power of consumer brands



I made my first visit to Russia in the early 2000s – about a decade after the collapse of the Soviet Union, and shortly after Vladimir Putin became Prime Minister for the first time. My host took me on some store visits, so – after an obligatory visit to Red Square – we went to the magnificent GUM mall, in the shadow of the Kremlin, and then to the iconic TSUM department store.

Both GUM and TSUM, even 20 years ago, were meccas for western brands. My host, who had grown up in communist USSR, could not have been more proud of his country’s progression. The mere presence of western brands symbolised once and for all the end of communism, the entry of Russia into the western world, and the start of a new era of plenty. The presence of western brands in Russia very clearly stated: mission complete. Capitalist diplomacy had won the day.

GUM
Moscow department store GUM.

It has now been more than two weeks since Putin began his horrific invasion of Ukraine. In that time, the world has mobilised to condemn the actions of Russia and support the Ukrainian people. Most of us have felt helpless, able only to be bystanders against Putin’s formidable aggression and to will on President Zelensky of Ukraine and his brave soldiers and citizens.

Companies in our consumer industries have, however, been able to take decisive action against Russia – and it’s been humbling to witness the determination of our leaders to do the right thing.

“Companies in our consumer industries have been able to take decisive action against Russia – and it’s been humbling to witness the determination of our leaders to do the right thing.”

In the past fortnight, most major corporations in our sector have suspended or limited their Russian operations, as part of a coordinated global response to denounce Putin’s actions. McDonald’s, Starbucks, Coca-Cola, PepsiCo, Unilever, and H&M have all stopped selling in Russia, while the likes of Meta, Apple and Google have limited their services. Disney and Warner Bros have paused new cinematic releases. Luxury giants – essential for the prestige of Russia’s wealthy class – such as LVMH, Hermès and Kering have shut their boutiques.

Some businesses, such as Ingka Group-owned Mega are staying open only to allow ordinary Russians to access essentials goods. Similarly, while the Russian Federation has blocked Facebook, Meta has committed to doing everything it can to restore the service in Russia to provide citizens with a way of connecting with loved ones and accessing information. Likewise, PepsiCo – which employs 20,000 people in Russia – is suspending sales of its global drinks brand (including its namesake cola) but maintaining essential goods brands, including a sizeable dairy operation.

As well as halting sales in Russia, many companies such as IKEA are auditing their entire supply chain to eliminate Russian-sourced product from their businesses. As you can imagine, in a world of interlinked and multinational sourcing strategies, this is no easy task.

In the coming weeks, there will be increased focus on exiting energy supply contracts from Gazprom, a subsidiary of Russia’s state-owned gas and oil company. The firm provides around 20% of the UK market with energy, heats many stores and hospitality businesses nationwide, and powers a substantial number of our manufacturing plants.

Lays crisps in Russian language
Major corporations within the consumer sector have suspended or limited their Russian operations.

Beyond imposing sanctions on Russia, we’ve seen businesses rally around the people of Ukraine with humanitarian aid. Seb James, CEO at Boots, on Monday announced that the health and beauty retailer would be sending 1.4 million essential hygiene products and first aid kits to support the humanitarian effort in Ukraine. Pet retailer Jollyes has joined forces with Northern Irish pet food manufacturer Mackle to donate 5,000 tins of wet food, as well as tonnes of dry food, to Ukrainian refugees who are accompanied by their pets. Shwartz Group, which owns the Lidl and Kaufland retail brands, has also donated non-perishable foods, home textiles, and hygiene products to support refugees in the border regions of Ukraine. Kingfisher-owned Castorama in Poland is providing power generators, chargers and torches to those coming over the border. Where companies have employees in Ukraine, essential steps have been taken to ensure their safety, such as overseeing evacuation efforts and providing a budget for relocation.

There have also been efforts to financially support Ukrainian people and small businesses. Etsy is cancelling $4m (£2.99m) worth of outstanding fees for its sellers based in Ukraine, in a move to support creators financially impacted by the invasion. Vogue showed its support by running an article highlighting independent Ukrainian fashion designers.

Many in our sector have made sizeable donations to charities providing aid to refugees, committed to matching internal donations and provided links to places where customers can donate through their website.  Phillips Auction House donated nearly £6m, its share from one evening sale, to the Ukrainian Red Cross. Kurt Geiger has donated 100% of its store profits from last week to the British Red Cross Ukraine Crisis Appeal, echoing a similar move in June 2020 when it donated the first month of post-lockdown profits to the NHS.

“In a grim and emotionally hard-hitting situation, we can be proud that leaders in our sector have made difficult decisions that balance employee wellbeing, commercial imperatives, complex logistics and serious moral considerations to try and do the right thing by the people of Ukraine.”

In a grim and emotionally hard-hitting situation, we can be proud that leaders in our sector have made difficult decisions that balance employee wellbeing, commercial imperatives, complex logistics and serious moral considerations to try and do the right thing by the people of Ukraine. And it is working – to quote this week’s New York Times, Russia is being “cancelled”. We should not underestimate the power of removing western consumer goods and services from the Russian high-street: the symbolism here to the people and leadership of Russia is stark and unambiguous.

Many of the responses we have seen from consumer companies now feel somewhat familiar. The topic of corporate social responsibly has been rising up the agenda for a decade – but few could have predicted how many significant moral decisions leaders would have to make since 2020.

refugee and her dog
Pet retailer Jollyes and Northern Irish pet food manufacturer Mackle donate pet food to Ukrainian refugee pet owners. Image credit: animal rights and rescue group, Casa Lui Patrocle.

In some ways, the past two years have prepared businesses for their leadership role in this latest global crisis. As a result of the pandemic, businesses are accustomed to shuttering operations at a moment’s notice, auditing their supply lines and adapting their propositions to meet rapidly developing political and commercial landscapes. From closing entire store networks to sending provisions around the world, things that felt impossible two years ago have today been implemented rapidly and without fuss.

“As a result of the pandemic, businesses are accustomed to shuttering operations at a moment’s notice, auditing their supply lines and adapting their propositions to meet rapidly developing political and commercial landscapes.”

Beyond practicalities, we now live in a world where businesses are expected to speak out against violence and inequality. The likes of Co-op and Morrisons have stopped selling Russian Standard vodka. Bolt is donating 5% of all order revenue to Ukraine-based NGOs. Tesco Mobile has dropped charges on any calls made to Ukraine. In our sectors – whether it be the Black Lives Matter movement, Covid-19 or now Ukraine – we know that being a bystander is no longer an acceptable response to injustice. Businesses must respond in any way that they can.

Today’s consumers grant companies a ‘social license’ to operate. Now more than ever, businesses are expected to have a moral compass. According to Yale Professor, Jeffrey Sonnenfeld this week, more than 300 companies have so far halted Russian operations in the last two weeks – far exceeding the 200 companies that quit South Africa over apartheid in the 1980s, obviously over a much longer timeframe.

Expect the consumer interventions in Russia in recent weeks to be a sign of more robust interventions from the consumer sectors in world affairs in the years to come. The consumer sectors are amplifying their voice – and quickly.

Elliott.goldstein@thembsgroup.co.uk | @TheMBSGroup