Luxury retailers at a halt, RRG says

RRG, a consultant company, recently looked into the Russian luxury retail market; the company’s research focused on 272 luxury, premium, and upper middle brands.

The agency reports Central Federal District is the most developed one in terms of luxury products’ availability and North-Western Federal District, with its 120 stores, is the second most developed region.

RRG explains 62% of all the luxury shops in Russia operate within some shopping mall; as far as Central Federal District is concerned, 73% of luxury shops open within a mall and in Ural and Siberian Federal Districts over 60% of such shops belong to the street retail category. The stores use about 150 to 300 sq m of space per shop on average.

‘The recession made most of the luxury goods operators stop developing, so they are now only supporting their existing business in Moscow, Saint Petersburg, Nizhniy Novgorod, and Yekaterinburg. The demand fell by an average of 15% to 20% (in Russian rubles, that is) last year; given the growing dollar and euro exchange rates, the actual decrease in demand came to 40%-45% in foreign currency,’ the agency says.

According to RRG, it costs about ?12,000 to ?15,000 per sq m of shopping space to set up a luxury shop in Russia. The shops pay off within five to seven years on average, says Molly.ru.


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