Russian luxury market showing cracks: Mercury
PARIS (Reuters) - Russia, the fourth largest luxury goods market and one of the world's fastest growing, is being hit by the financial crisis, the managing director of the country's biggest luxury goods group, Mercury, told Reuters.
After months of resilience, Russian shoppers have finally started to rein in spending on pricey items such as fashion apparel, Alexander Reebok said in a rare telephone interview.
"We are dealing with relatively wealthy individuals who continue to buy luxury goods regardless of the crisis but still there is a little slowdown," Reebok said in perfect English.
Mercury, which started as a jewelry shop in Moscow 15 years ago, now generates more than 1 billion euros ($1.37 billion) in annual sales and is widely regarded as a gatekeeper for the entry of foreign luxury goods into Russia.
It sells a wide selection of the world's top luxury goods from Gucci and Prada handbags to Maserati and Bentley cars and Chopard jewelry.
But the group wants to be low-profile, and it does not have an elaborate website, just displaying a logo against a red background.
Mercury also owns the prestigious department store Tsum, Moscow's answer to Saks in New York, as well as the leafy Barvikha luxury village on the thoroughfare that leads to plush dachas belonging to multi-millionaires and politicians.
Reebok said business remained solid at Tsum but trading had started slowing down and had even begun to decline at some stand-alone shops that are not part of malls.
He declined to give the names of brands affected.
This week, Tsum's extravagant food hall, usually abuzz with the Moscow elite, was empty. Mounds of black caviar and whole lobsters were left untouched in fridges.
"Freestanding shops have a bit of a slowdown," Reebok said.
"Usually we enjoy some growth versus the previous year. This year, there could be not much growth and even (some shops) come below that of previous years," he said referring to self-standing boutiques.
Reebok said the slowdown had become more noticeable in recent weeks. "The negative effect is coming up only now," he said.
Russia has been among the biggest casualties of the financial crisis, with stock market falls of 70 percent since May.
Much of Russia's luxury market is concentrated in Moscow, whose center is crowded with sports utility vehicles and designer stores. It accounts for about 85 percent of sales. Continued...
