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In 2010, Romanians spent 450 million euros on luxury products and services. Industry players have no reason to complain. This year they managed to release 50 million from the pockets of more wealthy Romans. No wonder that 2012 will start with the entry of four new brands on the market. Luxury products and services generated in 2010 a market of 500 million euros, not to mention hotel and perfumery segment. The highest percentage in the industry, 50-60%, belongs to luxury cars. Follow fashion and accessories (excluding jewelry) that holds about 30% of the luxury market.
This means that major brands such as Gucci or Hugo Boss, beat a market of 150 million euros. The rest is generated by jewelry, watches, spas and travel (airlines, five-star hotels and exotic). “The industry has a very low value compared to other European countries. This does not mean that Romanians do not give money luxury, but as they shop abroad,” he told Business 24 Oliver Petcu, managing director of CPP Management Consultants, only company consulting company specializing in the luxury industry in Romania.
Luxury market in Romania was in great demand in 2011. Gucci, Alfred Dunhill, Valentino and Ermanno Scervino opened their first stores in the local market. How did Romania one of the most popular destinations for luxury brands in Eastern Europe? Max Mara, Burberry and Gerard Darel are just some of the international luxury brands that have invested in Romania, considered the second largest market in Eastern Europe after Poland, according to CPC-luxury. Max Mara has announced the relocation of the store, in a space three times while Gerarrd Darel opened a second store in a mall. Burberry has signed a franchise agreement, and will open its first store in March 2012.
German brand Escada, which has been present in Romania with three stores by 2007, said it will re-launch in the local market with a new store. Despite investment in the luxury austerity measures adopted by the Government led to a decrease in the purchasing power of the Romans. National economy, although praised throughout Europe lacks FDI and try to avoid catastrophic effects on the financial crisis in Greece can have on the
banking system in Romania, considering that most banks are subsidiaries of Greek banks.
Real estate and partnerships can be a good motivation for international brands. JW Marriott Hotel has played an important role in the decision to choose Louis Vuitton representatives Romania. Burberry launched a major influence on the local market had real estate. Company officials chose a secluded hideaway on Calea Victoriei, although the Romanian media said it will buy Burberry Stefanel space.
The financial crisis affected the real estate market in Romania, which makes it one of the cheapest in Eastern Europe. In 2013, Romania is considered a destination for many international brands, announced the launch of the Prada, Bottega Veneta (franchise) and Tiffany. After the record results achieved in 2011, experts estimated a decrease in the rate of market growth in sales for luxury retailers, according to a report by HSBC Global Research. “Forecasts by specialists show a slowdown in sales by 10% in 2012 and 9 percent in 2011,” the report said HSBC said on CPP-Luxury.
A concern for retailers luxury market are results from U.S. and European markets, affected by the sovereign debt crisis. Analysts expect lower results than those obtained U.S. market in 2011 when the global economic situation does not improve. It is expected that the sales growth does not exceed four percent. In 2011 players on the market of luxury products and services have managed to release 500 million euros in the pockets Romans, after a year before this market sales were estimated at 450 million euros. The highest percentage in the industry, 50-60%, belongs to luxury cars. Follow fashion and accessories (excluding jewelry) that holds about 30% of the luxury market.
This means that major brands such as Gucci or Hugo Boss, beat a market of 150 million euros. The rest is generated by jewelry, watches, spas and travel (airlines, five-star hotels and exotic). “The industry has a very low value compared to other European countries. This does not mean that Romanians do not give money luxury, but as they shop abroad”, said in late November for Business 24Oliver Petcu, managing director of CPP Management Consultants, the only consulting company specializing in the luxury industry in Romania. In 2012, Romania was “enriched” with brands like H & M, Valentino and Gucci.
Sales of luxury goods market in Romania fell by 30% in the first six months in 2012 compared to the same period in 2011, according to CPP Luxury Industry Management Consultants Ltd. The most significant decreases were recorded segments of fashion, accessories, jewelry and watches, as CPP-Luxury. Belstaff and Pal luxury brands announced results day laborer down last month. In June, more than 40% of the premium locations on Victoria Avenue were closed.
Furla and Guess brands closed their shops, moving in one of the most important malls in Romania. The worst results recorded luxury brands in the first six months of this year in Romania belonged firms Gucci, Moschino, Alfred Dunhill, Valentino, Emporio Armani, Hugo Boss and Burberry. Louis Vuitton has maintained its position as market leader, but it is unlikely that its turnover to reach a record last year, namely 5.1 million. Brands Zegna, Canali, Gucci, Max Mara and Emporio Armani register each business an annual 1.5 million euros per year. Although stores on Calea Victoriei are half empty, rents have dropped significantly.
Christian Dior, which has a shop on Calea Victoriei 46, is the best selling luxury brand with a wide range of products. Brands that have disappeared from the market multi-brand stores are Chloe, Bottega Veneta, Fendi, Givenchy and Yves Saint Laurent. Pressure to reduce costs and improve profitability have led to luxury retailers like SODO Miglia, Gucci franchise in Romania, to close some stores and jewelry watches. Another retailer, Alsa Group, Max Mara and Ermenegildo Zegna franchise for Romania, had to sell his stake in Emporio Armani brand Pal and close day laborer.
Most brands of watches and jewelry are present in multi-brand boutiques. Following the economic crisis, many luxury retailers have reduced employee wages or less qualified staff recruited. Uncertain political and economic context, as the crisis in Italy and Spain will continue to affect Romania, including the luxury goods sector. So brands like Prada, Hermes, Chanel or Ralph Lauren Tiffany, which operates in Romania will not open large stores by 2014.
Declines in the luxury market in Romania was caused by the uncertain political environment in the last three months, when President Traian Basescu was ousted and USL coalition took over. On July 29, a referendum was held, but the Constitutional Court, the only institution authorized to validate it has postponed the decision on august 31.