Russian Luxury market raised in 2016 but still lagging on ecommerce
Contactlab and Exane BNP Paribas continue to analyze how Fashion&Luxury brands perform online. This time we shift our focus to the Russian luxury market after having tested the market in India, South Korea and China.
Russians’ consumption of luxury has declined sharply in the past three years… Russian consumers drove much of the growth in the luxury market through the 90s and it is now accounting for more than 6% of the global luxury spend. After the economic sanctions against Russia the spending on luxury goods seemed to be worsening but the worst seems to be behind now and 2017 could see a stronger than ever comeback.
A number of indicators are bringing hope back up again: consumer confidence is up and going, unemployment is coming down; car sales are booming, residential construction growth is already in positive territory.
In terms of luxury, Russian clients are now more attracted to shopping luxury locally rather than going abroad.
Local retailers are willing to attract customers by offering prices, which are even lower than the ones in major travel destinations, for the most Russian travelers like Milan, London and Dubai.
This is very important to do, having in mind that Russian customers are very valuable due to the fact that their yearly spending is c.60% higher than Worldwide average.
As far as online shopping is concerned – the ecommerce penetration in Russia is still low, but growing. This hides a huge potential for retailers of luxury, who are not yet enough exploring the area.
As mentioned previously the Digital luxury has a long way to go in Russia. Digital performance in Russia is c.20% behind the USA in ‘strategic reach’ and c.40% in ‘digital customer experience’ when we apply our Digital Competitive Map methodology.
Dolce & Gabbana, Burberry, Balenciaga, Valentino and Armani are in the top 5 on ‘strategic reach’; Ralph Lauren, Michael Kors, Tory Burch, Saint Laurent and Hugo Boss are in the bottom 5. Burberry, Louis Vuitton, Loro Piana, Armani and Cartier are in the top 5 on ‘digital customer experience’; Tory Burch, Michael Kors, Ralph Lauren, Salvatore Ferragamo and Coach are in the bottom 5.