Bulgaria, an oversized market for many luxury brands
CARTIER, ST. DUPONT, LA PERLA are among luxury brands with an oversized presence in a rather small luxury market like Bulgaria, mainly due to the push by the brands themselves. Without taking into account the realistic potential of a market the size of Bulgaria, such prestigious international brands have opened mono brand stand alone locations in the capital city of Sofia. By contrast, neighbouring markets SERBIA and ROMANIA which boast twice the number of wealthy luxury consumers have small corners of these brands within multibrand shops. For instance, CARTIER in Bucharest occupies a mere 5 sqm within the multibrand Helvetansa store, while in Sofia, CARTIER has a monobrand stand alone location of over 100 sqm. The same applies for the other above mentioned brands.
The brands in question might argue differences between local partners and their potential to develop the brands. We beg to differ, reckoning that the most important aspect to be considered is the feasibility of the brand in a specific market. According to our in depth market research, in 2009, Romania has over 9.000 luxury consumers, Bulgaria has 5.000 and Serbia (including Montenegro) has 7.000 luxury consumers. Our luxury consumer profile assumes a minimum yearly income of EUR 500.000 and a yearly budget of minimum EUR 50.000 on luxury goods and service. The current turbulent economic conditions will only make it harder for the owners of these franchises to survive, considering they all distribute other brands and operate other stores.
Recently, we have seen the first victim of the crisis on the Bulgarian watches and jewelry market – the Maestro store on pedestrian highstreet Vitosha. The Maestro store was the largest luxury watches and jewelry store in the capital Sofia, with dedicated corners of AUDEMARS PIGUET, BELL&ROSS, ULYSSE NARDIN etc.
The other 2 major players in the Bulgarian market are La Tiara, which rely on their exclusive distribution of BVLGARI and VERTU and Royal House which rely on ROLEX. Both distributors have taken a more cautious approach, maintaining shop in shop corners for BVLGARI and VERTU and opening a 15 sqm stand alone boutique for ROLEX. However, in the following 9 months, we shall see more shop closures and relocations, including the possibility of some brands disappearing from the Bulgarian market. These developments will be kindled by the decreasing buying power but also by the constantly high price of high street rentals. Currently, the average rental price on Vitosha street is at EUR 100, which makes it unfeasible for any brand to perfom even under stable market conditions.