Expert comment on New Look’s decision to pull out of Russia
Russia Warwick Business School’s Kamel Mellahi is professor of strategic management and researches emerging markets.
Professor Kamel Mellahi said: “It is amazing how much has changed in a year. A year ago most key indicators were suggesting that New Look was going to escalate its commitment to the Russian market. Its operations were profitable and therefore it had sufficient financial slack to accelerate its international strategy. Also, Russia, among other emerging markets, was considered one of its key markets. Most observers were expecting it to increase the number of its stores in Russia. More importantly there were indicators that it was planning to deepen its commitment to the Russian market by buying out its franchise partner and move to a more committed mode of operation via a joint venture.
“When the firm announced in August that it was having a closer look at its operation in Russia, pulling out was not perhaps what was expected. To make such a bold decision it must have felt that the current political uncertainties in the region, and the current tensions between Britain and Russia in particular, were going to have strong adverse effects on its operations in Russia. But, I think, New Look’s highly diversified international strategy will help it dampen the negative effects of pulling out of the Russian market. It is doing very well in China and other key emerging markets.”