What: The Russian luxury market remains resilient as brands and retailers adapt to sanctions by leveraging third-country logistics and alternative distribution channels.

Why it is important: The continued flow of luxury goods into Russia underscores the limitations of sanctions and the importance of alternative supply chains in global retail.

Despite stringent EU sanctions on luxury goods, Russian consumers continue to access a broad selection of high-end European brands, often at significant price premiums. Moscow’s Tsum department store and other retailers have maintained extensive luxury assortments by routing goods through intermediaries in Turkey, the UAE, and China, effectively circumventing direct trade restrictions. This workaround has led to handbags and watches selling for double their EU prices, reflecting both the enduring appeal of Western luxury and the adaptability of global supply chains. The resilience of the Russian luxury market highlights the challenges regulators face in enforcing sanctions and the resourcefulness of both brands and logistics providers in maintaining market presence. As luxury brands navigate compliance and reputational risks, the Russian example underscores the complexities of global retail, where demand, desirability, and alternative distribution channels can sustain markets even under restrictive conditions.

IADS Notes: The persistence of European luxury goods in the Russian market, despite EU sanctions, is emblematic of the complex and rapidly evolving dynamics facing the global luxury sector in 2025. As detailed by the Financial Times in September 2025, brands like Brunello Cucinelli have had to publicly defend their compliance strategies, emphasising strict adherence to price caps and legal distribution channels, even as short sellers and regulators scrutinise their Russian operations. Inside Retail’s August 2025 analysis highlights how new EU and US tariffs are forcing luxury brands to rethink pricing, with the resale market emerging as a key beneficiary as consumers seek more affordable alternatives. The Financial Times and Vogue Business, in July and August 2025, report that luxury brands are easing off on price increases and facing significant declines in tourist spending, particularly in Europe and Japan, as sanctions, tariffs, and shifting consumer sentiment reshape demand. Le Monde’s July 2025 coverage underscores the margin pressures facing French luxury houses as US tariffs compound the effects of a global market slowdown and declining Chinese consumption. Forbes in April 2025 and WWD in September 2025 further document how tariffs and inflation are accelerating market polarisation, driving affluent consumers toward the secondhand market and forcing brands to adapt their strategies. Collectively, these sources illustrate how regulatory, logistical, and reputational challenges are prompting luxury brands to innovate in distribution, pricing, and compliance while navigating a fragmented and highly scrutinised global marketplace.

At TSUM Moscow, Russian shoppers pay double for sanctions-hit luxury goods from Europe