Because Leroy Merlin continues to do business in Russia
The Adeo group, owner of Leroy Merlin, rejects any comment on the Russian invasion of Ukraine. Here because. The article by Mario Sassi, author of the Blog-notes del lavoro
Round and round the French owners of Auchan and the connected galaxy are always in the spotlight. This time they want to stay in a country that many others are leaving after the invasion of Ukraine.
Here, Auchan, despite other conditions, left very quickly. In France, the Mulliez family has understood very well that in order to continue growing it must even concentrate on trying to acquire an important competitor of theirs. Pay attention to it, but it's been a while since the large family has always found a way to be talked about.
Renault caved. However, other French and other realities have declared that they want to stay in Russia . Leroy Merlin, on the contrary, does not speak but seems willing not to leave at all. But Europe not only in the east and Ukraine are in turmoil.
The controversy is in white heat. The straw that broke the camel's back was the bombing of a shopping center in Kiev on Sunday 20 March in which there was also a Leroy Merlin shop. The Ukrainian Minister of Defense declared on social media: “Leroy Merlin has become the first company in the world to finance the bombing of its stores where their employees also die. According to a provisional assessment, eight people would have died during the air raid on the shopping center including an employee of the Leroy Merlin store ”.
The pressure on Western companies to leave Russia is growing as well as criticism of French companies that are becoming an international symbol of commercial realpolitik in wartime. Neither the French environmentalists who demonstrated under the Group's headquarters, nor the Ukrainian President Volodymyr Zelensky, who explicitly requested it in his speech to the French Parliament, managed to convince the Mulliezes or others.
A petition signed by the employees of Leroy Merlin Ukraine has also started calling for the cessation of the activities of the Adeo group in Russia. Last week, Leroy Merlin's head of Ukrainian human resources, Liudmyla Dziuba, had deplored on Linkedin the exclusion of Ukrainian employees from Leroy Merlin's internal communication system. In fact, they can no longer communicate with anyone. The company has entrenched itself behind concerns of possible hacker attacks on the system. After the bombing of the shopping center, a will to boycott is mounting.
The Adeo group, owner of Leroy Merlin, rejects any comment on the Russian invasion. A strategy considered unsustainable even by the French trade unions. CFCT, Force Ouvière and CFDT protest the "deafening silence".
Obviously the company has its reasons. It is useless to deny it. The business accounts for over 18% of its business (with 36,000 employees and 112 stores in 56 cities). In 2021 they represented the second and sixth foreign company by turnover. Auchan, has 30,000 employees and 255 stores (63 hypermarkets, 193 super) in the country and generates 10% of its turnover. Decathlon, also belonging to the Mulliez galaxy, operates 61 stores in Russia.
However, what triggered the indignation is that not only does the brand not want to leave Russia but it would also like to take advantage of the departure of its competitors to grow. In the letter sent to suppliers, Leroy Merlin plans to replace imported products "for the next three to four months", those "for which there are currently production or supply difficulties", with goods produced in Russia given the increase in requests.
This weekend, the British newspaper Telegraph dedicated an article on the strategy of the Mulliez group in Russia which was widely covered, most notably by the news website Business Insider . There is no shortage of supporters of the brand in Russia. Leroy Merlin's choice to stay earned him praise from Russian Foreign Minister Sergei Lavrov.
“Sales of Leroy Merlin (household and gardening items) have increased significantly” since Russia invaded Ukraine on February 24, according to The Telegraph . The retail giant's decision to expand business operations in Russia comes as other brands temporarily close stores in the country. Retail giants such as H&M, Starbucks and Ikea, one of the company's competitors in homeware, have all stopped direct operations in Russia since the invasion began on Feb.24.
The Mulliez family is not doing well in France at all and therefore, also affecting the Russian market, could turn into a mistake with possible heavy effects on the future. As well as not calculating the consequences on corporate branding and on the activities in the rest of the markets where it is present. For a transnational company this is certainly not an easy decision.
French politics that counts, sketches. Nestlé gave in to the pressure and decided to leave Russia after being under cyber attack. Anonymous published the database by taking 10 gigabytes of data, e-mails, passwords, Nestlé corporate customers, along with a sample of data from more than 50,000 business customers. A disaster. Difficult to make a decision for any company also because, for the first time since the end of the Second World War, many multinationals are engaged with important economic activities on both fronts. Not to mention the future consequences on potential allies not explicitly in the field today.
I always struggle to imagine companies with their helmets down. Especially those of the food and non-food large-scale distribution. It is not in their nature. But multinationals can do a lot. Both to give clear signals to the host countries and to the refugees and the populations involved. But also later in the reconstruction phase to come. The example that German companies and other companies are setting is very important. Humanitarian commitment and consistency in behavior are fundamental at this stage.
Article published on mariosassi.it
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia-on-demand/perche-leroy-merlin-continua-a-fare-affari-in-russia/ on Thu, 24 Mar 2022 09:02:25 +0000.