Paris The protest against the hardware store chain Leroy Merlin started on March 21st. A Russian missile hit a shopping center in Kyiv, largely destroying it and killing several people. A branch of the French dealer was also destroyed and an employee died. Ukraine’s Defense Ministry tweeted: “Leroy Merlin is the first company in the world to fund the bombing of its own businesses and the killing of its own employees.”
Since then, the employees in France have been criticized for the chain’s activities in Russia, even insulted: “I wish that your children die under the bombs,” it says online. Terms such as “murderer” or “Nazis” are included, and social networks call for a boycott of the chain. Employees are asked to go on strike.
But Leroy Merlin, the number one DIY store in France with a market share of more than 37 percent, does not want to withdraw from Russia. The chain is represented there with 113 stores and 45,000 employees. For the company, it is the second most important market after France. The pressure on Leroy Merlin is increasing. Ukraine also accused the company of financing the Russian war with its taxes. As a result, employees of the company in Ukraine started a petition to stop trading in Russia.
The competing German hardware store chain Obi, which belongs to the family company Tengelmann, went even further. She has completely stopped her business with Russia, saying the Russian raid contradicts Obi’s “core values”. The head of the company and majority owner Christian Haub told the “Manager Magazin”: “For moral reasons I simply could not imagine doing business in Russia and thus indirectly supporting the regime there financially.”
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After the Russian invasion of Ukraine, many western companies withdrew from Russia or at least put their business there on hold. According to the French Ministry of Economic Affairs, companies from France are the most important foreign employer in Russia with 160,000 employees. Ukrainian President Volodymyr Zelensky called on the French to “stop being the sponsors of the Russian war machine.”
Companies like Sanofi and Danone have been denounced in France. The pharmaceutical company Sanofi said it does not want to give up Russia because patients will continue to be cared for there. Danone wants to feed the population. However, both groups want to forego new investments.
The car manufacturer Renault has also announced that it will stop production in Russia. Because of Russian imports, the oil company Total Energies is under particular pressure. The energy company is also accused of financing the Kremlin’s war machine.
“Closure would open way for confiscation”
At Total it was said that one could not do without Russian gas, that would be a problem for the economy throughout Europe. Some of the contracts run for a period of 25 years. Only governments could order an exit. However, the purchase of Russian oil is to be stopped by the end of the year at the latest.
France itself is much less dependent on Russian gas than Germany, for example, and heating is increasingly being done electrically. Nuclear power plants cover around 70 percent of the electricity demand. According to Eurostat figures, the share of natural gas in the total energy supply in France is 15.5 percent in the total energy supply and 31 percent in the share of Russian gas. In Germany it is 26.1 percent and 55 percent respectively.
Leroy Merlin is also a family business. Adolphe Leroy and Rose Merlin opened it in 1923 as an American surplus and later home improvement store. In 1981 it was taken over by the French entrepreneurial family Mulliez, who also own the sports outfitter Decathlon and the Auchan supermarket chain, which is well established in Russia. The Association Familiale Mulliez from Roubaix in northern France, which was founded in 1955, has around 700 members. It is a compound of the widespread family, which is considered very discreet. It owns more than 60 companies.
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Gérard Mulliez opened the first Auchan discount store in Roubaix in 1961 and expanded from 1967, first in France. Decathlon was founded in 1976. From 1979 the family became partners in Leroy Merlin. But things have been going less smoothly for the Mulliez for some time. Auchan in particular is attracting fewer and fewer customers.
Now the family also has to fear a loss of image because of Russia. When asked by the Handelsblatt at Adeo, Leroy Merlin’s holding company, which is 85 percent owned by the Mulliez family, the answer was: “No,” they didn’t want to withdraw. The closure would “open the way for a confiscation that will strengthen Russia’s financial resources.” You can’t punish the Russian collaborators for a war they didn’t decide. The management referred to “the responsibility of the employer”.
Decathlon is shelving business in Russia, but for different reasons
In an interview with local newspaper La Voix du Nord, Adeo boss Philippe Zimmermann said he understands the position of the Ukrainian president, but was alienated by the fact that the group is seen “as a sponsor of the war”. Employee representatives at Leroy Merlin in France also support the decision. According to Jean-Marc Cicuto of the CFTC union, which is the largest in the company, Russian employees cannot be left in poverty.
Auchan, in turn, agrees with the argument of the Danone group: “It is our job to do everything possible so that the people in our countries of operations have access to high-quality food at an affordable price and thus cover the basic food needs of the civilian population.” Chain has been in Russia for 20 years, has 232 stores there and employs 30,000 people. Auchan makes 4.5 billion euros of its total turnover of 30.5 billion euros in Russia. In Ukraine, the company has 43 stores with 6,000 employees.
The hardware store chain belongs to the Mulliez family and remains active in Russia.
(Photo: AP)
Also part of the Mulliez family is Decathlon, which is also very active in Germany. In Russia, the sports discounter operates only 60 stores with 2,500 employees. The sports equipment supplier has been pausing business there since the end of March. Don’t let public opinion intimidate you. It is also not a question of a conscious departure from Russia: the delivery conditions no longer allow the activities to continue under strict compliance with international sanctions, it said.
While Decathlon mostly gets its goods from China, Leroy Merlin is supplied 90 percent from Russia. The hardware store is more likely to continue business without breaking the embargo. Auchan can also fall back on the Russian market to a large extent.
More: For companies such as Henkel, Ritter Sport and Ehrmann, doing business in Russia is becoming a reputational risk