Byline: Natasha Singer

NEW YORK — These days, massive billboards plastered all over Moscow featuring a young woman shopaholic urge patriotic purchasing with the slogan: “Whatever I want, I can buy it Russian-made.”
Never mind that the model looks a little depressed and shabby, or that the ad campaign is sponsored not by local retailers, but by government bureaucrats. It’s the sentiment that counts. And at a moment of fiscal conservatism in the lead-up to this month’s presidential elections, the trend among consumers is to support the home team.
Although the market has stabilized somewhat since the Russian financial meltdown and collapse of the ruble in 1998 — still referred to locally as “the crisis” — retailers continue to feel the aftershocks of an economic downturn that brought severe cuts in middle-income consumers’ purchasing power and widespread job layoffs.
The era of the flourishing nouveau riches and of a retail landscape in which new boutiques, from Versace to Valentino, opened weekly is over. New labels are still being launched, but they’re now a trickle reduced from a flood. Sensing an opportunity for new consumers — for whom, in more flush times, local labels were anathema — Russian designers are stepping up to fill in the gap in lower-price goods. Moscow High Fashion Week, held earlier in the winter, signaled that the shift from international big names to local stylists had reached a serious stage.
In previous years, the event, attended by Russian retailers and consumers alike, had attracted predominantly A-list European designers, from the Fendi sisters to Alber Elbaz when he was at Guy Laroche. This year, although there were presentations from Mila Schon, Trussardi, Balmain and Genny, the major European houses stayed away, giving local designers like Igor Chapurin (Moscow’s answer to Badgley Mischka), punk stylist Andrei Sharov and leatherwear enthusiast Katya Leonovich a chance to stage their own full-fledged shows before huge crowds who paid between $4.30 and $43 a ticket to get into the Rossiya Concert Hall.
“High Fashion Week was different this year because we had more Russian designers than ever before,” conceded Alexander Dostman, the event’s promoter. “Russian designers cannot expect to get attention from Russian buyers because there are almost no boutiques that would dare to sell Russian clothes. But I consider it good work for High Fashion Week to popularize Russian design.”
Russian designers say their client base is expanding exponentially and stylists who once turned out small collections are looking for ways to cater to an audience of millions. Last fall, Moscow rtw designers banded together to stage their own Russian fashion event for local industry executives with a first for Russia — their own look books for buyers. The event was so successful that the group planned a Russian rtw week for the end of this month, showing fall-winter 2000-2001 looks.
“The point is, we’re declaring that there is such a thing as Russian fashion — wearable art made by Russians that can be mass produced,” said designer Iulia Dalakyan, whose rtw outfits sell in three Moscow boutiques and who also counts a high-profile stable of actors, artists and models among her private clients. “Until now, Russia has been the only major nation not to have its own real fashion industry. We hope to change that.” Designer Vladimir Zubets, who has his own line of clothes for Moscow socialites and working women, has joined with local manufacturer Paninter to produce a lower-priced line. It’s being snapped up by hip teens and twentysomethings in mega-kiosks across the city. Zubets described the trendy line, called Euphoria 2000, as “inexpensive fashionable Russian-made clothes.”
“The goal of our first rtw week was to prove we could make commercial clothes that would sell in stores to Russian consumers. In this economic climate, it’s important to us that the clothes be accessible and inexpensive. The Euphoria 2000 line is well-made, technologically advanced and contemporary — it looks like this season internationally, not like some knockoff of something that showed in Milan two years ago. It’s Naf-Naf style with acceptable prices,” Zubets explained.
The funky, chunky knitwear in black and gray includes asymmetric skirts and sweaters with cutouts in unexpected shapes and places; pieces are no more than $50. So far, Zubets’ designs are available in 20 locations in Moscow and are selling fast to students and young working women. This represents a demographic switch for producer Paninter, which previously targeted 40-year-old women, but whose reliable clientele was hit hard by the ruble crisis; with the new emphasis on teen buyers, according to Paninter commercial director Pavel Priamostanov, the youth market already represents 25 percent of his company’s sales.
Although growth has slowed, European houses and their Russian franchisers are adapting their strategies to a tighter market, focusing on less whimsical and more medium-priced designer clothes, as well as on labels rare to Russia that retain a high cachet.
Crocus International, a company that owns Sergio Rossi and Charles Jourdan boutiques, and a chain of 40 Moscow discount stores, is opening the Italian rtw boutique Les Copains this month while the Moscow Trading House, a multibrand department store that also has stand-alone Zegna and Fendi boutiques, is unveiling a Chanel in-store shop.
Also this month, East West International, which runs its own chain of upscale department stores as well as freestanding Givenchy, Kenzo and Nina Ricci boutiques, is opening 5,400 square feet of MaxMara and Marina Rinaldi boutiques in the GUM galleria, along with a new cafe. The company already has a CK boutique, a Max&Co store and a gargantuan beauty emporium called Articoli in GUM facing Red Square, as well as freestanding Max Mara and Marina Rinaldi boutiques several blocks away in the Petrovsky Passage arcade. And in April, Jamilco, the company that owns freestanding Dior, Cerruti, Swatch, Wolford and Chevignon boutiques, plans to open Moscow’s first Yohji Yamamoto store.
“The psychology of consumers has evolved since the crisis. Immediately following the market crash, consumers were so practical that we couldn’t keep MaxMara in stock, but sales of Kenzo and Givenchy were way down.
Now, people are back to the trendy items and those are the hottest sellers. We’re doing between $11,000 and $27,000 in sales per month per square meter of retail space,” noted Mikhail Kousnirovich, director of East West. (That translates to roughly $1,022 to $2,500 a square foot.)
Marina Rinaldi, he added, “is selling great because there’s no competition for that niche in Russia.
“But what puzzles me, particularly with the economic situation, is why the medium-priced lines like DKNY and CK don’t do as well. Labels like Benetton and Stefanel are just managing to survive here. The Russian market is still evolving and the customers for things like Gap and Banana Republic don’t exist yet, but they will,” Kousnirovich predicted.
Russkoye Zoloto, the firm that owns the Moscow Donna Karan boutique and Kookai stores and that closed its Claude Montana boutique and is considering the same fate for its Herve Leger store, is eyeing the most elite labels that have yet to make their debuts in Russia.
“We’re in talks with Prada, Armani, and Hermes,” avowed Alexander Bichen, commercial director of Russkoye Zoloto. “We’re not back to the record-breaking sales that existed before the financial crisis, and it’s clear that retail is not likely to get back to that level any time soon. But the market has regained a certain stability and people are ready to buy again. The time of unbelievable profits, when we made huge orders and sold designer clothes at prices 50 percent higher than in Europe, are long gone. But with more conservative buying and competitive European pricing, we’re doing well. The Donna Karan boutique is seeing monthly turnovers of $150,000 to $200,000.”
And European designers are still looking at Russia as a long-term growth market with 150 million potential consumers of fashion and beauty products. Trussardi, which opened its Moscow flagship in 1993 in the Radisson Slavyanskaya Hotel, recently opened its fifth Moscow outlet, a 3,055-square-foot store on the city’s main street — Tverskaya — near the Escada and Versace boutiques. Store manager Vadim Kabanov said he noticed his customers have shifted from pre-crisis habits of buying the first line to post-crisis mode, “buying the second line and jeans, T-shirts and knitwear. They’re spending less, but we’ve managed to get back to pre-crisis sales levels by increasing retail acreage.”
Still, Trussardi seems cautiously optimistic about Russia.
“We opened an additional boutique in Moscow in order to strengthen our position in the Russian market and we intend to broaden Trussardi’s presence in other cities,” said Tino Fontana, manager for Trussardi in Russia. “We have a boutique in St. Petersburg. We have clients in Samara, Novosibirsk, Odessa, and we are planning to open exclusive boutiques there.”
Indeed, the retail pioneers who were selling in Russia before the banks crashed in 1998 seem unfazed by the ongoing sluggish market and are committed for the long haul.
“Last time I came to Russia, I promised to open a boutique. Now it’s already been opened for several years, selling men’s and women’s clothes, and we’re preparing to open an exclusive women’s boutique,” commented Alain Hivelin, director of Pierre Balmain, who was in Moscow during High Fashion Week. “Clearly, we realize that Russia is in a tough financial situation and that makes working here difficult. We have adapted prices to stay competitive in the market.
“Our next project is to start direct sales of Balmain cosmetics here. It can create up to 50,000 jobs in Russia. We just started this in America and within three months, we created 9,000 jobs there. It is the right time now to start this in Russia with prices adapted to the Russian market,” Hivelin added. “Some day Moscow, like Milan, will become a center of world fashion.”
For the moment, Moscow is the Siberia of world fashion. But if Slavic designers succeed in their campaign to get consumers to dress domestically, Russian style will some day come in from the cold.

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