In 2015-2016, 29 new stores in the luxury segment opened in Moscow, which is a 42% more than in 2013-2014, according to CBRE, a real estate consulting company that examined the luxury goods market in Russia. In addition, some brands have switched to independent development in the Russian market in the last three years, including Bvlgari, Gucci, Burberry, Tiffany & Co., and Hermes.
In 2016, the Russian luxury market stabilised, mainly because of a reorientation of demand, an influx of Chinese tourists, and operational reductions by numerous retailers, CBRE said. The number of Russians traveling to West European countries decreased by 32% in 2015-2016, compared with two years earlier, because of the economic crisis in Russia and the falling incomes of its population. However, this led to consumers spending money inside the country, including on luxury clothes and shoes, CBRE explained.
The results of the research also showed that after Moscow’s largest retailers reduced prices for luxury goods by 10-25%, the products again became competitive and were comparable to European prices and lower than those found in Asia. This led to an increase in foreign purchases, primarily from Chinese tourists, CBRE noted.
It is worth noting that special conditions and preferences for people from China (including signs and services in Chinese, tax-free shopping, the ability to pay with China’s UnionPay cards, and visa-free trips to Russia for groups of 5-50 people for up to 15 days) led to a y-o-y increase in the number of tourists from the country of 28.5% in 2015 and 15% in 2016, according to CBRE.
Despite the crisis in the Russian economy, the country is still a key market for virtually all international luxury brands, CBRE noted, proved by the continuous appearance of new luxury brand stores and expansion of existing ones.