PESTLE Analysis

Political

Corruption in the process of trademark registration

Russia enters  WTO.

Economic

Consumption crisis in 2009

Rising  prices especially for cotton clothes:

(Global aspects: The global cotton price has been rising for several years: in 2009 it grew by 30%, in 2010 by 60%. A particularly sharp rise in cotton price started in mid-2010. Therefore clothes made of natural materials will be transferred to the higher price segment)

Increase in the retail sales price of clothing and other finished products

Market recovery in 2010

During 2010, total industry sales increased by 14% in current value terms.

The Russian apparel market is very attractive to foreign companies; it is not particularly consolidated and is recovering rapidly from the financial crisis.

the strengthening of the local currency (ruble) and increasing quantity of retail volume sales in 2010 clearly indicated the apparel the increase in purchasing ability in Russia.

But the clothing market is already close to saturation, and double-digit annual growth is not expected over 2010-2015.

Opportunities in the Russian apparel market are open not only for fast-fashion, but also for foreign brands operating in the premium and luxury segments.

Good opportunity to penetrate the market for outlets offering quality and fashionable clothes at reasonable prices

  

Social

In 2009 companies working in the clothing industry attested to the decline in consumer activity (Russian consumers stop buying the same volume of clothes)

In 2010, with evidence of stabilization of the local currency, people started to spend money again and permit themselves a more comfortable standard of living.

Decline in unemployment and rising real disposable income supporting increased consumer confidence and spending.

Demand for mid-market clothing saw a gradual rehabilitation of the Russian apparel industry

 By the end of 2010, the Russian apparel market had grown by 14% in current value terms. Predicting consumer demand, retailers had been actively purchasing collections

 The growing popularity of healthy lifestyles. This stimulates sales of sportswear, footwear and sports accessories.

The lack of consumer response to significant discounts in retail stores.

Increasing quality retail infrastructure in the region.

Technological

The reduction of industrial stocks of raw materials

 Russia does not produce cotton, and therefore depends entirely on world prices for this raw material.

Increasing interest in Franchising  and e-commerce between Russian entrepreneurs.

Companies working with Russian intermediaries in most of cases decide to enter the market directly.


Legal

Complex set of measures for the registration of a foreign trademark.

Environmental 

Low public concerns of ecology as a whole. But the population of big cities are getting  more interested in these problems. At the same time American Apparel positions itself as a "green" company, so this fact can provide the additional advantage for the company.