Andriy Zhuk answers – Retail&Development Advisor’s partner, co-founder, and Chairman of the Board of Retailers Association of Ukraine.
Mass protests are gaining momentum, becoming more critical with every minute. Banks, commerce, and the Internet are paralyzed and mobile services are unstable. Of course, those problems will affect retail in short and long terms. For now, retailers calculate damages incurred by riots and heist. Will retail chains leave the market?
Let’s start with trading stock and its reduction because of heists. Not only storming of government buildings follow political confrontation. For example, street retail is also increasingly afflicted by looting in shopping centers. Most retailers worldwide uninsured against stealing goods and property damage in the case of war, occupation, or mass protests. In world practice, hostilities, popular uprisings, takeovers, and terrorist attacks related to force majeure subject to no compensation. All losses are decommissioned, meaning retailers’ responsibility for product safety in cases of force majeure circumstances. Remember, how much damage retailers like ATB, Metro, MacDonald’s, and Cash And Carry experienced because of war in Donbas.
Here is another important question. How will retail change in this country? Will stores and chains continue to work or start closing? For example, looting is not the reason for international chains to close businesses and give up development. Of course, much depends on the conflict’s intensity, the longevity of the conflict, and further evaluation of investment risk. Well, it's too soon to make predictions. Besides, mostly local companies and franchising represent Kazakhstan’s retail. Just a few foreign brands have their own stores. Small businesses are the first ones to go down. Further market development depends on the safety margin of each retailer, the longevity of the crisis, and retailers’ reaction speed. For instance, some commercial companies presented in Kazakhstan has experiences in running businesses in eastern Ukraine. It deals with Metro, Cash And Carry, MTI group presented by Intertop, Armani, and Pandora. In this case, it’s highly recommended to lock the doors, cover every windows with plywood, and take out material assets until the situation is resolved.