Seeking Russian Gold: Despite Turmoil, Brands Rush to Booming Market

Fashion and retail firms are heading to Russia in droves, attracted by a vibrant economy, a free-spending elite and a demand for style and status.

“The business is very good,” said Dior president Sidney Toledano. “Russians like to spend; they like to have fun, go out and to party, and they like fashion. Also, men like to buy gifts for the women in their lives.”

“It’s a very fashion-driven clientele — they love color, print, patterns — and have a more bold approach to buying,” agreed Rose Marie Bravo, chief executive of Burberry, which opened its first Russian location last March in Moscow. “There’s really an enthusiasm for fashion and luxury.”

A recent survey of the Russian market by Pambianco Consultants in Milan showed 98 Italian brands present with 326 stores, and 23 French brands operating 40 stores. Pambianco pegged the luxury share of the fashion market in Russia at about $600 million, with growth of about 6 to 8 percent expected for the next two or three years.

“Russia is a country of culture and history. They know what a watch is and they know what fine jewelry is,” said Bernard Fornas, president of Cartier International. “The potential is not only in the domestic [Russian] market. But it’s also elsewhere, because the Russians are traveling and spending money on luxury products.”

Cartier, which has been present for four years in Russia, now operates four shops, including a 5,000-square-foot flagship in Moscow.

“Russia represents the best ‘emerging’ country for our fashion house,” said Paolo Di Spirt, ceo of Emanuel Ungaro, which has opened two franchised boutiques in Moscow in the past two years and has begun distributing its ready-to-wear and diffusion lines. “Over the next three years, we expect an increase of 25 percent per year in keeping with the growth of the local economy.”

Despite Russia’s proximity and reputation for high-end consumption, many European luxury players only recently arrived on the scene. But all were aware of the spending power of the richest Russians, having welcomed them at boutiques in European fashion capitals and resort locations.

Yves Carcelle, ceo of Louis Vuitton, was vacationing in Dubai around New Year’s Eve and he estimated about 60 percent of the tourists there were Russian nationals.
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