Appeared In
Special Issue
WWD/DNR CEO Summit issue 11/11/2008

Alla Verber, Vice President of Mercury Distribution, wants to set the record straight about Russian women — they’re not fashion victims.

This story first appeared in the November 11, 2008 issue of WWD. Subscribe Today.

“They are very stylish right now and are buying many beautiful things,” Verber said.

Popular images of women in babushkas — or at the other extreme, glitzed out in gold and fur — have lingered. But as Russia’s most powerful fashion buyer and a native of the country, Verber has a point of view based on first-hand experience. She’s built a career on elevating the offerings in Russia and has been on a mission, shopping leading design houses in Europe and the U.S. and convincing them to open franchised stores with Mercury, or supply Mercury’s retail destinations.

Mercury operates about 50 franchised designer boutiques in Russia, owns the iconic Tsum department store in Moscow and operates other retail destinations containing designer shops. The company also runs dealerships with firms such as Ferrari and Harley-Davidson. The 15-year-old Mercury, which is based in Moscow, plans to open a DLT department store in Saint Petersburg and the Sochi Luxury Village in the Black Sea resort town, which will host the 2014 Winter Olympics.

Mercury is the luxury leader in a country where Communism once stifled any form of style and expression, but has now become one of the world’s most important markets for upscale goods.

“In our country, for 70 years we really had nothing,” Verber said. “It was a Communist country and everybody had to be equal. Everybody had to be in gray. Everybody had to be the same. People were afraid to be different. If you are different, you go cool off in jail for 10 years and then you come back.”

The first designer store that opened in Russia was Versace, and it was a fashion milestone. “The new Russian woman [post-Communist] wanted to buy something and there was nothing else to buy but Versace,” Verber recalled. “Of course, whoever had money would go to Versace and buy this style and when they would travel from Russia, they always looked overdressed and colorful. These were the people who had money.

“The second brand we brought in was Gucci, and then Dolce & Gabbana, and then Kiton, Armani, Loro Piana, and many more followed. And the last brand we brought to Russia was Ralph Lauren.”

Among the most popular fashion brands in Russia currently are Dolce & Gabbana, Gucci, Prada, Ralph Lauren, Louis Vuitton and Christian Dior, Verber said.

But she cited Dolce & Gabbana as a standout among the standouts, and a major partner with Mercury. “We have three monogrammed, big, beautiful boutiques. There are three corners in the department store. Russians love the look of these clothes. Their clothes fit the Russian woman and make her look beautiful. There is a joke, a Russian saying: ‘If you put on a Dolce & Gabbana dress, it’s like you went to a plastic surgeon.’”

Russian women, she acknowledged, like to look sexy. “They like to show their curves. The Russian woman likes to walk into a room and make an impression. I don’t know why. Maybe it’s the history. Russia is a very beautiful, [culturally] rich country. Until 1917, before the Revolution, all the books, Tolstoy, Dostoevsky — women had to look like women.”

However, as far as being flamboyant dressers, Verber doesn’t see it in her people. “I am Russian-born, raised in Saint Petersburg. I don’t remember when I was growing up that the Russians wanted to be glitzy. The furs were [popular] because it is cold in Russia. Saint Petersburg is freezing. People needed to wear fur. It was a matter of necessity more than style.”

But brand awareness has been important to many Russians, Verber noted. She also sees an attitude shift in recent years. “People are looking for new brands. They are looking for something young and new. They are looking for something not as expensive. They are looking to mix it up.”

Verber has about 30 years experience in fashion, starting as a buyer, and even opened a boutique in Toronto called Katia of Italy. In 1991, she took an offer from a Canadian company to be its representative in Russia. Two years later, the company opened a flagship called Trading House Moscow on Kutuzovsky Prospekt. In 1994, the company was sold to Mercury, where Verber became a buyer, then commercial director, and eventually vice president. Her biggest projects were a huge makeover of the 387,500-squarefoot Tsum department store in Moscow, bringing in St. John, Juicy Couture, Theory, Gucci, Prada and Bottega Veneta, among other labels. She also created the Barvikha Luxury Village, just outside Moscow, which has architecture resembling a chic Swiss chalet and houses Tiffany, Armani, Gucci and Polo Ralph Lauren.

“Russia is not an easy place” for foreign brands, Verber said. “You have to understand the mentality of the Russian people. It’s difficult to bring in merchandise. It takes a long time.  There are high taxes. There are [challenges] purchasing real estate. There are so many reasons why it is difficult [for designers and brands] to go on their own” in Russia.

“Some big companies like Dior, Chanel and Louis Vuitton opened their own stores in our country, but it took them 12 years. We [owned] a Chanel for 12 years. We showed them how much business can be done in Russia before they went on their own.”

At Mercury, the first shop Verber opened was Ermenegildo Zegna. “I came to Ermenegildo himself in Italy and said, ‘We would like to have your wonderful brand to sell in Moscow because we need to dress a man who wants to be a businessman and make an impression on the world.’”

Initially, such brands were deemed strange, but gradually, as the lifestyles of the Russians changed, post-Communism and post-perestroika, tastes changed, Verber said. The country opened up, and so did the attitudes of its people. Russians began traveling, were exposed to new ideas and trends, adopted different tastes and became increasingly receptive to outside influences.

“If you go to the south of France, you hear more Russian than French sometimes,” Verber said. “In New York, there are a lot of Russian immigrants that came 20 or 30 years ago. Ten years ago, the fashion magazines came to Russia: Vogue, Harper’s Bazaar, In Style. There are a lot of new magazines, big parties, many store openings. A lot of designers have been coming. There are a lot of activities. People have learned a lot. They are not as they were before.

“A lot of the Russian people have been almost everywhere,” she said. “But now many also love to stay in Russia. They love to go to Moscow. They love to go to Barvikha Luxury Village to shop. We built a seven-star hotel with 60 rooms. All the Russians realize right now that we have very good service. We provide them with the best service; we bring clothes to their houses. We know our customers. We know who we are selling to. For Russians, service is very important. They say the service they get in our country, they can’t get anywhere else. So a lot of them prefer today not to spend the holidays [in other countries] and go to their country houses.”

It took awhile before Verber became bullish on bringing American brands to Russia. “Until we bought Tsum department store, until I became fashion director of that store, there were not that many American brands. It seemed like America was too far. Basically, all the European brands are in Russia. So I started looking for something new and because I am very Americanized and I love America, I was building the young department, the fourth floor. I was thinking I have to go to America and look for brands there. So I came to New York. I went to Los Angeles. I went to every department store and I thought to myself, the lifestyle we are missing is Ralph Lauren. Maybe because Ralph’s roots are Russian. I thought it would be
great to have this brand.”

In May 2007, Lauren opened two stores simultaneously, one in downtown Moscow and the other in the Barvikha luxury shopping village. “There was a big opening of Ralph Lauren [downtown]. People were trying to get into the store even a day before. We [bought] 18 Ricky bags, and I couldn’t sleep. I thought, who was going to buy these bags? But I remember one woman said, ‘I need to have a couple before my friends buy it.’ They sold out.”

Generally, Mercury’s experience is that apparel is the number-one selling category, even in the brands like Gucci and Bottega Veneta, where accessory offerings play a greater role.

“The Russians still buy ready-to-wear first, then shoes, and then handbags,” Verber observed. “We sell from four to five pairs of shoes to every one handbag. Sunglasses are very important and cars are very important. I think cars are the priority. Before they buy an apartment, they buy a car.”

As far as consumer spending amid the current global economic turmoil, “We are alive right now,” she said. “We still have the urge. People want to shop. We just started getting people to give us their phone numbers and addresses so we can send them information about what is happening in our stores. We are lucky. People still like to spend money. They can spend their last dollar. That’s good. They don’t worry that much about tomorrow.”

However, inside Mercury, the mood is somewhat more cautious. “For the last couple of weeks, as a company we have been very worried,” Verber said. “At the same time, I don’t think our customers are going to stop shopping right now. They will be more careful. We will have to [scrutinize] what we buy, how we spend our money. I will be more careful with the buyers.

“Imagine, it was not that easy to build this [Mercury] empire. It took a lot of hard work — every day. It’s always been difficult to introduce brands. It’s been difficult to work on brand awareness.”

It has also been a challenging process to prove to the brands and to the Russian consumers that Mercury can be an effective purveyor of luxury goods and provide the right level of service, and the proper in-store presentations, Verber noted. “It has been difficult to show that we know what we are doing. To give them service. To do everything.”

There are more challenges ahead. “What happened in the last couple of weeks is going to make [the brands] more careful,” Verber said, referring to the economic upheaval and how companies are scaling back as consumers retrench. “It’s not easy anywhere in the world right now.”

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