THE NEW RUSSIA: LAND OF LABELS
A SEEMINGLY INSATIABLE DESIRE FOR DESIGNER GOODS FROM EUROPE AND THE U.S. HAS HIGH-END RETAILERS FLOCKING TO MOSCOW AND ST. PETERSBURG. IS THERE ROOM FOR EVERYONE?
Byline: Natasha Singer
MOSCOW — Russia is in the throws of high-fashion boutique mania, with new upscale stores appearing almost weekly, and customers depleting stocks within days.
Gucci, CK Calvin Klein, Max Mara and Givenchy opened freestanding Moscow boutiques in the last few weeks. Versace, which already has a Moscow flagship, just opened its doors in Saint Petersburg. And Georges Rech is opening its Moscow flagship on Thursday.
To top off the spate of high-profile ready-to-wear debuts, Yves Saint Laurent Rive Gauche and Thierry Mugler are due to open stores here at the end of this month, along with a Versace jeans couture superstore on Tverskaya, Moscow’s main street. Meanwhile, freestanding Christian Lacroix and Claude Montana boutiques are scheduled for launch during the first week of October. Later in October, Fendi and Ermenegildo Zegna also will introduce boutiques here.
The initial sales figures have been phenomenal at boutiques run by East & West Moscow International House, the firm that owns the Moscow franchises of Givenchy, Max Mara, CK Calvin Klein, Nina Ricci, Kenzo and Mandarina Duck. According to Mikhail Kousnerovitch, senior partner at East & West, first-week sales at Max Mara hit $230,000 — with $43,000 in sales on the second day alone; first-week sales figures at Givenchy were $150,000, and CK Calvin Klein had a first-week sales turnover of $273,000. All three stores opened in mid-August.
“I would say the turnover at Givenchy and CK reached our sales targets, but the spending at Max Mara is just plain out-of-control crazy. The demand has been enormous and we’ve already put in a huge reorder,” Kousnerovitch commented.
He said he hopes eventually to open other Max Mara trademark stores in Moscow along with related labels Max & Co. and Maria Renaldi shops. He predicts a first-year turnover of $4 million at Max Mara and $3 million at Givenchy.
Gucci, which opened in late August even before the Gucci sign was up in the windows, and which hasn’t even opened its second floor men’s department yet, is experiencing a similar boom. More than 90 percent of the $1,800 evening gowns were sold in August during the week preceding the Moscow Film Festival and more than 60 percent of women’s suits, priced at $1,400 to $2,400, are already sold out. All the larger sizes of black leather shoulder bags with an $880 price tag are also sold out.
“Gucci is selling terrifically well, but what surprises me is that 80 percent of the clients we’re seeing at Gucci are new to us. They’re not our regular customers who buy Jil Sander and Chanel next door at our multimark Moscow Trading House. They’re newcomers who want Gucci,,” explained Alla Verber, chief buyer for Moscow Trading House.
The plethora of new boutiques raises the question of whether Moscow has enough fashion-hungry customers to support so many high-end venues. While there are a few naysayers, most local retailers are optimistic. They believe that within Moscow’s population of nine million there are enough big-spending clients to sustain a wide variety of international designer stores, and that the fashion market here is nowhere near saturation levels. Troika-Dialog Bank, an American-Russian joint venture, this week predicted a 6 percent economic growth spurt for Moscow in the coming year.
“Gucci is selling out, but our sales of Christian Dior and Jil Sander next door haven’t decreased one bit, so I think Moscow can sustain all these new boutiques and more. The same people who already shop in designer stores will be buying in the new shops, but now they’ll have wider possibilities. It’s a great thing and quite reasonable that now in Moscow a woman will be able to wear Max Mara suits to the office and Lacroix gowns in the evening,” noted Verber of Moscow Trading House.
“Moscow is experiencing an economic boom, which explains the retail boom. But you have to keep in mind that there are also lots of fashion-starved clients in the provinces and in other Russian cities who come all the way to Moscow to shop and stock up,” she added.
Banking on Russians’ bottomless hunger for new clothes, Russkaya Zolota [Russian Gold], a conglomerate with construction and real estate as well as retail interests will open three new designer boutiques this fall; the Mugler shop, at 2,000 square feet, will open downtown at the end of September on a street with fur shops and a Chevignon store; Claude Montana, at 1,700 square feet, is scheduled to debut in October on a pedestrian street next to a Hugo Boss store; Lacroix, a 1,700 square feet two-story boutique, will open on Kuznetsky Most, a shopping mecca that is already home to Cartier, Versace, Valentino, Faberge jewelers and Claude Litz furs.
“All our new stores will do well because enough Muscovites have large disposable incomes, and we’re not worried about competition. You have to understand that upscale Moscow shoppers have very specific habits. They like to buy new clothes each and every season,” explains Varvara Nekrassova, fashion manager for Russkaya Zolota.
“We’re sure there’s already sizable market for Lacroix, Mugler and Montana. There is a particular strata who will adore Mugler — I’d describe them as women who love to dress up, for whom being a wife is a full-time occupation. But I think there’s even a huge market for more exotic designers who aren’t even sold here yet, like Yamamoto and Demeulemeester. Even with all the new boutiques opening this season, many new retail possibilities remain,” she averred.
Despite the growing number of retail success stories, most of the 150 million people who live in Russia are not wearing designer clothes and have never heard of Thierry Mugler.
“Most people are just trying to survive. Of course, we’re very happy that the grand names of world fashion are here. Even if people can’t afford to buy it, they can at least walk by beautiful window displays, and what they see helps develop their taste,” notes Moscow fashion maven Maria Ter-Markarian.
“But what’s sad about the retail situation here is the extremes, the designer clothes on one hand and the cheap Chinese and Turkish trash on the other. There’s nothing for the middle class to buy — no Stefanel, no Gap, no Marks & Spencer. Normal people have nothing to wear,” she opined.
Meanwhile, Russians continue to shop in droves both at home and abroad.
“One of the reasons we’re so happy to open in Moscow is that we’ve been seeing so many Russian clients in Paris for several years already. They buy a lot, usually several suits at once, along with accessories, to create a total look,” relates Lena Alm, director of retail of Givenchy’s women’s division.
“Muscovites are hungry for high fashion and want to wear luxurious clothes. Givenchy can provide the luxury Russians want. The Moscow fashion market is still in the developmental stage, but not to be here now would be a mistake,” Alm noted.
Indeed, if the crazy success of Max Mara is any indication, Moscow’s fashion appetite for new names is at least temporarily insatiable.
“In America, nothing matters but the salary. In Switzerland, nothing matters but the bank account. In Russia, it’s a tradition to dress well, and how well you dress here correlates with how much you spend. In Russia, nothing matters but the price tag,” said Kousnerovitch, the Moscow Max Mara franchise owner.
Kousnerovitch emphasized, however, that discerning Moscow fashionites are already demanding discreet shopping venues and boutiques that create an atmosphere, along with simply selling clothes.
The 2,200-square-foot Max Mara and 1,600-square-foot Givenchy boutiques are in Petrovsky Passage, an elegant shopping mall built in 1903 for Moscow’s merchant traders that now houses a number of upscale retail stores, among them Nina Ricci, Kenzo, Stephane Kelian, Bally and Lacoste.
Although Max Mara has been on sale since 1992 at four multibrand stores in Moscow, the Petrovsky Passage boutique is its first exclusive outlet. Clothes from the winter 1997-1998 collections of six lines are on sale, among them Max Mara, Maxsport, Max Weekend and Piano Forte, as well as accessories.
Max Mara is joining a number of Italian designers who have flagship Moscow boutiques. Versace, Trussardi and Laura Biagiotti stores opened in Moscow several years ago, while Valentino and Gianfranco Ferre made their debuts here more recently.
“Architecturally, the Max Mara boutique, itself, and the location are beautiful. But what’s most important to us is that the clothes be sold in an ambiance that says Max Mara and perfectly presents the Max Mara image. What’s great about the Moscow boutique is that it’s at the same level or better than our boutique on Madison Avenue,” said Gabriele Zambelli, Eastern Europe marketing director for Max Mara.
The Moscow store is just part of Max Mara’s grand plan to develop in the emerging Eastern European market. The company already has two Warsaw stores — one of which opened in October 1995 and the other in December 1996 — and an outlet in Slovenia. At 2,800 square feet, the first Max Mara boutique in Prague debuted this July. New Max Mara stores will open this month in the Croatian capital of Zagreb and in the industrial Polish city of Lodz.
“Eastern Europe has great potential. Obviously some cities are better than others — I would say in terms of potential market development, Moscow is number one and Prague and Warsaw are tied for second place. But everywhere in the former Communist bloc, women have a strong desire to be fashionable and up to date, and they demand both style and quality,” Zambelli noted.
Max Mara is looking at other potential Eastern European locations, such as Budapest and Tallinn, the capital of Estonia, for new monomark boutiques.
“We’re also in the long term looking at other cities in Russia, including Perm in the Urals and Vladivostok in the Far East. And of course, like everyone else in fashion, we’re taking a serious look at St. Petersburg,” Zambelli added.
Moscow, he described, “is taking its first steps in fashion.” He said, “It’s a really interesting market right now. If you walk down the main shopping streets, you can see the major fashion houses of the world have set up representative stores. It’s a market that can only get better.”
Zambelli might be right. Versace, one of the early players on the Moscow retail scene, which just opened a boutique in St. Petersburg, is banking on an ever-expanding Russian client base.
A vast 3,900-square-foot Versace Jeans Couture megastore — where jeans, the Versus line, accessories and Versace houseware products will be available — is due to open this month on Tverskaya, on the ground floor of the new Mariott Hotel.
“Moscow everyman will be our customer — middle-class, upper-class, everyone from age 18 to 40,” said Olga Mansourova, Moscow manager of Versace Jeans Couture. “I predict we’ll be mobbed.”