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Bosco’s Russian Renaissance

<P>Mikhail Kusnirovich doesn’t strike the image of a merchant prince. Nor does he fret about it. <BR><BR>“I’m no fashion guy. I’m just a retailer,” he told the audience of U.S. retail and fashion executives. <BR><BR>Then...

“We couldn’t take responsibility for the nuclear problem. But we believe one human right is to have stores full of good merchandise. So we choose that direction.”— Mikhail Kusnirovich, Bosco di Ciliegi

“We couldn’t take responsibility for the nuclear problem. But we believe one human right is to have stores full of good merchandise. So we choose that direction.”— Mikhail Kusnirovich, Bosco di Ciliegi

John Calabrese

Mikhail Kusnirovich doesn’t strike the image of a merchant prince. Nor does he fret about it.

“I’m no fashion guy. I’m just a retailer,” he told the audience of U.S. retail and fashion executives.

Then the 38-year-old Russian retailer apologized for being overweight, and showed off the latest shopping bag for his stores. It’s got a quaint, but hardly fashion-forward, illustration of him and his family. “Now, our customers know our faces, so we are even more responsible to them.”

He also said naming his company Bosco di Ciliegi, which means “cherry forest,” was a mistake. “It’s difficult to pronounce, even for us Russians.”

What doesn’t get lost in translation, however, is that this affable, self-deprecating chairman of the Bosco di Ciliegi conglomerate, based in Moscow, has become one of Russia’s leading luxury purveyors through a growing number of single- and multibrand designer stores it owns and operates, perfumeries and chic restaurants and cafes.

This year, his 11-year-old company bought a 50.25 percent stake in GUM, the country’s most famous shopping destination. For about a decade, Bosco rented space for its boutiques inside GUM, starting with about 5,400 square feet and currently occupying more than 54,000 square feet. Since he was paying a ton of rent anyway, he decided he might just as well buy a controlling stake in GUM.

“I’m going to do my best to make GUM one of the most important retail spaces in the world,” Kusnirovich said. “Starting tomorrow, you will all hear more good news about it.”

He may not mean tomorrow, literally. But in his broken English (which he also apologized for), he made it clear that at GUM, a magnificent glass-roofed, 800,000-square-foot retail center built in 1893 on Red Square, things are heating up. What was once a setting for hundreds of small wooden trading stalls now has nameplates such as Louis Vuitton and Moschino, among other designer brands, and next year, Burberry, Sonia Rykiel, Zara and Christian Dior will open shops there.

“More than that, we will open our own institutional GUM stores. A GUM food emporium. A GUM toy store. GUM merchandise,” Kusnirovich said.

He later explained that the merchandise and shops under the GUM label will be a “very flexible” concept that could be as diverse as T-shirts, ice cream or chocolates, and to a large extent keepsakes and the kind of products that would encourage more visitors, either Muscovites or tourists, seeking something they could only have bought at GUM.

The GUM stores under development are strictly for inside GUM. There’s no plan to roll out to other locations, Kusnirovich said, explaining that he considers GUM a unique retail destination that could not be effectively transported.

“GUM is not a shopping mall or a department store. GUM is an environment,” he said. “And the key message of Red Square is not just location, location, location. It is environment.”

It’s the kind of place, he suggested, where people spend money because they want to have fun and not because they need something.

“They spend their money on coats not because they are cold. They don’t buy soup because they are hungry. I think that at GUM, they spend their money because they want to [have] a good time, with free choice and opportunities. They want to spend their time without any obligation to buy, without being pushed to spend money. Don’t worry. They spend without any pushing.”

He likes to think of himself as holding the keys to the commercial side of Red Square. “I take the keys with me. The keys are locked in a box, which means my doors are open for you….And I promise to do my best to keep the doors always open — at least on my side of Red Square.”

Bosco di Ciliegi is among a handful of Russia’s emerging luxury megacompanies. In the last few years, the Crocus International group built Crocus City, a 656,598-square-foot upscale mall with 180 boutiques ranging from Lanvin to Celine located on the outskirts of Moscow. In addition, and not far from the Kremlin, the Mercury group has erected a 107,639-square-foot luxury shopping venue and opened Armani, Gucci and Prada boutiques there.

According to Russian government statistics, spending is on the rise in that nation, to $146 billion in 2003 from $121 billion in 2002, and Moscow has become a magnet for luxury shoppers.

Kusnirovich is amazed that there’s a concentration of luxury consumers right by the Kremlin. “It’s incredible that on the main square of the country, Red Square, where for a long time you could see just the parades of the Soviet Army, there are two buildings facing each other — the office of the Russian president in the Kremlin, and GUM, a historical trading center.”

But Russia has been more identified in the media with politics, terrorism, nuclear weapons, human rights issues and empty stores. “We couldn’t take responsibility for the nuclear problem. But we believe one human right is to have stores full of good merchandise. So we choose that direction,” Kusnirovich added.

Bosco owns and operates boutiques in Moscow, St. Petersburg, Samara and Novosibirsk, including Max Mara, Moschino, Etro, La Perla, Kenzo, Iceberg and Alberta Ferretti. The company also operates and owns multibrand designer shops under the Bosco and Bosco Sport names.

The retailer has an annual volume of $250 million, draws about three million customers a year and has more than 56 points of sale, according to Kusnirovich. The average rent for his stores in prime Moscow real estate is about $300 a foot, but stores do more than $550 a foot annually to cover the expense. The Russian version of Forbes ranked Bosco 98th among the top 200 companies in the country.

By buying GUM, Bosco also gained control of 24 retail properties that GUM owned throughout Moscow, amounting to 1.6 million square feet and valued at $200 million. Kusnirovich has previously said he plans to sell some of GUM’s Moscow properties and rent out others.

Before Bosco took over GUM, it already had a big stake there. The company renovated on the ground floor and added such shops as Max Mara, Marina Rinaldi, Max & Co. and Iceberg.

The company’s businesses at GUM also include its own high-end perfumery, called Articoli; a Bosco department store; a Bosco Café and a Dior boutique. Bosco also operates three Italian gourmet restaurants.

Aside from the mix of labels it sells in a variety of stores, Bosco is building its luxury brand image via advertising and marketing. The ad campaigns appear in Russian magazines and on Moscow billboards, and the company also launched Bosco Sport, with a red-and-white logo. Bosco sponsored and outfitted the Russian Olympic team for the games held in Salt Lake City and Athens, with the uniforms bearing the Bosco logos. The company will sponsor future Russian Olympic teams as well. Bosco sells similar sportswear and merchandise to Muscovites in its Bosco Sport store in GUM.

Kusnirovich started his company with a bunch of college buddies in the Nineties. His wife, Ekaterina Moiseeva, is director of retail operations. Many of his friends and family work for him. “I work with my wife, my mother, my cousins, my uncles, my aunts and with school and university friends. And today we are more than 1,700 people. They are all members of my family.”

“I got married in October 1991. In December 1991, Mikhail Gorbachev broke up the USSR. We finished one history and we started a new one. In Soviet Russia, we had a dream. Maybe most of us don’t want to remember anymore. But we had a dream about blue jeans, sneakers and lipstick.”

— with contributions by Natasha Singer