Sales of online luxury fashion and accessories goods sold by international e-commerce websites to Romanian consumers grew by 10 percent in 2010 and the rate growth is likely to be maintained throughout 2011, according to research developed by CPP Luxury Industry Management Consultants and revealed at the Business of Luxury Forum 2011 edition, at which Business Review was a media partner. The report continues in analyzing the local high end fashion market and in making estimations for 2011, some of which were also revealed in one of our previous articles. Read more below.
For the moment, there is no local authorized online seller, as the quoted source ahows. Most of the websites operating are selling stocks or stolen goods.
Concerning the local luxury fashion market, the report developed by CPP, makes a short review: 2010 saw the addition of major international luxury brands Gucci and Emporio Armani, both openings with mono-brand stores, in franchising operations with local partners. Gucci opened within the ground floor of Athenee Palace Hilton, in the very heart of the Romanian capital of Bucharest, an enviable location with large windows, corner entrance and a generous space (approx. 220 sqm). Gucci’s location is better than Vuitton which opened in 2007 within the shopping gallery of the JW Marriott, outside the city centre. Emporio Armani opened also on Calea Victoriei, 200 meters further down, on a corner location, with two floors, large windows and with easy access to the parking within Novotel as well as walking distance from the parking of the Hilton hotel.
Gucci has been close to opening a direct operation, like in neighboring Hungary (Budapest), yet the financial crisis must have driven a franchising opening, with a local medium and luxury watches and jewelry distributor, which also operates the franchise of Paul & Shark, therefore, with limited experience in luxury fashion retail.
Burberry might open a store in 2011 and Victoria 46 is planning online sales
A much expected brand, Burberry is reported to be in advanced discussions with a potential local partner, a group of companies specializing in IT, alternative energy, real estate and distribution of fitness equipment. The opening was initially scheduled for June 2011, yet it is uncertain when it will be open.
Major luxury multi brand operator Victoria 46, which has four locations has had a stagnant 2010 and 2011 is likely to remain stable, state CPP consultants. Victoria Men, the company’s store on Calea Victoriei has registered positive results in 2010 and a 5 percent increase could be expected for 2011, driven especially by brands such as Corneliani. Victoria 46 is also planning online sales. Over half of the turnover of the women’s flagship is made by Dior, a key brand for Victoria 46.
Moreoer, as the report continues to show, it seems that all multi brand stores have been facing increased competition of the growing outlet retail market which doubled in 2010, oddly such stores opening mostly in the city centre of Bucharest. Some shops even combine outlet stocks with counterfeit products, making matters even worse for mainstream retailers. Another growing competition for the luxury fashion and accessories multi-brand stores is represented by leading European luxury e-commerce sites Net-A-Porter and Vente Privee, which have had an aggressive PR campaign in 2010, most glossy fashion magazines featuring editorials and pictorials mentioning products available at the two sites, rather than local stores.
The Place reports stable results and menswear brands continue market domination
The Place Concept Store, the only concept store multi-brand owned by lingerie producer Sarrieri reported stable results for 2010. The owner’s intentions to relocate the store could have positive effects.
Casa Frumoasa, which operates three multi-brand stores, two for men (added Tom Ford to its portfolio in 2010) and women (added Ferragamo to its portfolio in 2010) also operated a summer temporary boutique at the Black Sea Side within luxury Grand Hotel Rex, however with modest results. The company’s turnover continues to be dominated by menswear and key brands such as Scabal and Brioni, for which made to measure services are provided.
Louis Vuitton remains leader
The leader of the fashion and accessories sector remained, for a third consecutive year, Louis Vuitton, its impeccable customer service attracting a constantly growing clientele, reveals the information from CPP. As indicated by the regional CEO, the company’s short term priority is to expand retail space in most existing stores, the Bucharest one being probably among the first to be considered, either for a space enlargement (less likely due to the lack of attractiveness of the entire gallery at JW Marriott) or relocation to a larger location downtown, within the end of 2012. The brand’s performance has been exceptional, considering the size and location and the lack of ready to wear collections, registering better results than most stores in the Central & Eastern European region.
Stolen goods reach alarming levels
Sales of stolen goods through various networks from abroad increased to alarming levels in 2010, goods being sold directly to consumers, at their workplace, on the internet or in large outdoor markets. Most counterfeited and stolen goods are of the following brands: Vuitton, Chanel, Armani while Gucci, Burberry and Ralph Lauren are ‘’leaders’’ of counterfeit sales, with three types of product classes, as designated by the sellers: A Class (best quality) from Turkey, B Class from China and worst quality of C Class made in Romania and elsewhere. Authorities have been tacitly condoning the phenomenon, there being no checks of goods origins, invoices, any authorizations etc. This is mostly due to the high level of corruption at the level of local authorities, including Police and local administrations.
CPP has already initiated a media campaign to raise awareness with facts being present at CPP’s 2011 edition of its annual event Business of Luxury Forum. A concerted effort is needed to involve more retailers and international luxury brands as well.
In picture, Oliver Petcu, Cpp Luxury Industry Management Consultants managing director