After several store closures in the past two years, namely Vilebrequin, Ermenenegildo Zegna, Hugo Boss, La Martina and Victoria 46 (Dior), the Romanian luxury market, mostly concentrated in the capital of Bucharest, is showing signs of revival.
Michael Kors is opening this Fall its second store in Bucharest and Armani Jeans is opening its first mono-brand store, also later this year – both new openings at the Baneasa Shopping City Mall. Victoria 46 multi-brand store is reopening at Baneasa Shopping City this Fall almost 2 years after the closure of its street-level store on Calea Dorobantilor.
The Romanian luxury fashion market also saw the surprise arrival of Vionnet with an oversized mono-brand store, last year, at The Grand Avenue shopping gallery (JW Marriott Hotel, Bucharest).
‘Survivors’ of the economic downfall of the past 3 years include the Bucharest mono-brand stores of Max Mara, Gucci, Brunello Cucinelli, Burberry, Emporio Armani, Escada, Roberto Cavalli, Valentino, Ermanno Scervino, Dolce Gabbana, Moschino, Canali, Porsche Design, Paul & Shark. Louis Vuitton remains the best performing luxury fashion brand in Romania with an estimated turnover of 3,2 million euros for the full year 2015, followed by Dolce & Gabbana, while Burberry and Gucci (franchised by a company led by Alessandro Amato, co-owner of Cellini) are among the worst performing, both due to location issues – Burberry a side street location and in the case of Gucci a rent which makes the operation unfeasible. Both brands are operated under franchising and CPP estimates a full year turnover of less than 2 million euros for each brand.
The feeble recovery of Romania’s luxury market is due to the overall recovery of the economy (country GDP growth is estimated at +3,5% for 2015) but also an abrupt shift towards a different consumer target – the upper middle class, rather the the ‘ultra rich’, many of which lost a great part of their fortunes following major corruption scandals. Over 50% of such ultra-rich consumers completely disappeared from the books of the luxury brands with a mono-brand presence in Romania.
Another positive factor has been the revival of Bucharest as a tourism destination with the biggest increases in arrivals from Western Europe and the Middle East, led by Israel in 2014-2015. Chinese residents in Romania, most of them running import/export businesses and wealthy consumers from the neighboring Republic of Moldova account for almost 20% of luxury sales.
Other luxury sectors such as cars and hotels have also registered a rebound in the past year, each with improved performances. In contrast, the watches and jewelry sector has remained stagnant, especially due to the grey market (”private” imports on order – tax-free) and the fact that local connoisseurs still prefer to make their purchases abroad. In terms of jewelry, Carrera y Carrera launched in 2013 is one of the most dynamic luxury jewelry brands, represented in a hughstreet Bucharest store operated by B&B Collection.
Romania’s luxury watches & jewelry sector is dominated by local retailers B&B Collection and Cellini, both operating a large number of stores not only in Bucharest but throughout the largest cities in the country. Their mix is made up mostly of affordable luxury brands, mainly fashion brand watches (Diesel, Emporio Armani, Fendi, Versace etc). In 2014, the owner of the Cellini retail network told ZF.RO that sales of watches above 5.000 euros had dropped by 50%.
Cellini is also the franchisee of Swarovski, operating 4 mono-brand stores of the Austrian upscale brand. Recently, Cellini closed its hughstreet flagship store location on prominent Calea Victoriei (steps from the Gucci store) however, in compensation, the company plans to enlarge it store at Baneasa Shopping City, later this fall.
Article source: http://www.cpp-luxury.com/
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