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Nikolsakya Street, popular shopping locale in Moscow | image courtesy of Way to Russia Nikolsakya Street, popular shopping locale in Moscow | image courtesy of Way to Russia

News Business

The Russian fashion industry revisited: part one

Dienstag, Nov. 16, 2010, 10:40 / Russia

After a decade of conspicuous consumption, the Russian shopper’s spending habits are changing with a big impact on luxury brands and high-street retailers. The market is clearly moving into a new direction – mature, savvier and more predictable for a long-term strategy and thoughtful planning, creating potential for low-to-medium priced fashion.
The country now represents the largest retail market and the fastest growing economy in Europe. Over the past twenty years, Soviet modesty was replaced with a notion of luxury wealth that Russians considered, till recent times, their new ideology. Comprised of big spenders and a “there is no tomorrow” attitude, it’s a cliché everybody fell in love with – after all, what can be more tempting than making big money from kids spending cash to highlight their new financial and social status.

High-end fashion is still flirting with the customer de jour: Lagerfeld’s picturesque pre-fall 2009 collection Paris-Moscou was inspired by the style of Russian Tsars and Coco Chanel’s love affair with Russian composer Igor Stravinsky. The following Chanel AW2011 collection included fur hot pants, while Erdem Moralioglu of London-based label Erdem called his SS2011 collection Le Jardin De Les Russes (the Garden of the Russians).

However, this sort of branding might not compile with the maturing attitude of wealthy and middle-class Russians. Macro-economic developments such as the global financial crisis and the resulting decline in oil prices contributed to strongly shrinking domestic economy. Russia’s economy suffered its worst contraction in fifteen years in 2009, with the gross domestic product (GDP) declining by 7.9 % and the predicted growth of only 3.5 % in 2010. Bloomberg calculated that the 25 richest Russians lost a combined $230 billion in 2008, and stated there are now only 27 billionaires left in Moscow, compared to 74 before “the crisis” took place.

All bad news? “Not at all,” argues Vladimir Gridin, Fashion Editor of Ya Pokupayu, the leading Russian network of shopping-guide magazines. “This is the greatest chance for medium-priced and mass-appeal brands; they will be absolute winners if it comes to retailing opportunities. While almost all high-end brands have or had their flagship stores in Moscow and some in St Petersburg, 98 % of the population cannot afford the clothes priced at 500 € and more.”

The closure of Alexander McQueen, Stella McCartney and Lanvin boutiques in the last 12 months, and the opening of Zara (ironically located where Lanvin once stood) and H&M in Moscow and St Petersburg is a clear sign of a significant shifting taking place. The market has become more competitive, characterised by strong product and price segmentation, variety of distribution channels and a growing number of stores for low-to-medium priced products. H&M’s last quarterly report from the third quarter in September 2010 reveals a total sales number of 629 billion Swedish krona (approximately 67.8 billion euros), with this year alone suggesting a strong and steady growth in Russia. Nils Vinge, Head of H&M Investor Relations comments: “There is a big potential on the Russian market. We have started with the stores in Moscow and St Petersburg, and do not exclude an opportunity to open a few more in the regions in the near future.”

Price is clearly playing an important role for the new target group in Russia – this so called middle-class made up of professionals potentially hold the biggest purchasing power, and they think twice before spending it on clothes. Even the rich have learned that there are more sensible ways to invest their money than buying another Birkin bag. Olga Mikhailovskaya, former Fashion Director at ELLE Russia and a columnist for Kommersant newspaper makes the point that “people have come to their senses. They have realised that it is only worth paying a solid sum for something unique and well-manufactured, and that a 30 € T-Shirt can be as good as the one costing 300 €. The success of Botega Veneta can well be explained through the changing notion of taste and appreciation for added value.”

Vitaly Kozak is a former consultant to Escada and now runs his own blog Love Boat with support from Vogue Russia. He sees a huge potential for affordable and OK-quality clothes: “It is kind of funny that there is absolutely no way you can find a nice pair of trousers that would suit my taste. It is either cheap ware sold for 50 € and made in China everyone is wearing, or an expensive 500 € item that I cannot and would not buy.”

So is the argument that the luxury items will sooner or later be replaced by COS and its counterparts now actualised in Russia? Not quite, points Nastia Gronina, a business-to-business consultant working for Liveshowroom, a distribution agency specialising in footwear and accessories representing Italian manufacturers Rocco P and Giorgio Brato. Liveshowroom has counted a few successful seasons in Russia and did help push sales for hand-manufactured high-end priced leatherwear. “Price is important, but not the only criteria in purchasing decisions,” says Gronina, “Buyers are looking into the entire package now. We have expanded our portfolio from five to 10 brands in the last year, this shows that there is a huge interest in Italian well-made leather shoes.” But Gronina argues expectations need to be managed well among retailers and manufacturers, as the times of enthusiastic buy-all purchases seems to be gone, and smaller and medium-sized retailers have become aware of their limitations both in terms of budgets and the customer’s buying power.

As the market changes, so does the notion of luxury among Russians. The price-quality ratio has become significant, and brands and retailers remain optimistic. Dusseldorf-based company Igedo has just announced the February edition of trade fair Collection Première Moscow. “The interest taken in the Russian market by foreign brands has grown significantly, not least due to the again higher corporate morale in the country and the positive mood in the Russian apparel trade,” says CPM Project Director Christian Kasch.

And while the mood is optimistic, we certainly hope the expectations to make large profits immediately will be replaced with thoughtful planning, taking into consideration local issues such as distributional infrastructure, resources, and understanding how the Russian fashion industry works.

Part two of our focus on the Russia fashion industry examine the necessity of having several fashion weeks in Moscow and St Petersburg, and question why the country with the largest retail market fails to make its own fashion signature. To read part two, visit

Ya Pokupayu:
Love Boat:
Igedo’s The Russian Fashion Retail report:
PriceWaterhouseCoopers shopping survey Russia:
Jones Lang La Salle consultancy Russian retail market overview:

Natasha Binar | TribaSpace

Produkt-Gruppen: Sales, Production, Footwear, Consulting, Buying, Casual Wear, Fabrics, Creation, Textiles, Representation, Couture, Ready-to-Wear
Märkte: Men's, Women's, Other, Children's

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