Can Sochi become a ‘Russian Las Vegas’?
The Russian resort of Sochi has officially been granted permission for gambling. The tourism and sport facilities created for the 2014 Winter Olympics will be transformed to re-create a ‘Russian Las Vegas’. Several luxury fashion retailers have thus grasped on the opportunity.
The first luxury retailer to open mono-brand stores in Sochi was Russian luxury retailer Bosco di Ciliegi: La Perla, Etro, Max Mara and Gucci and Bosco Sport. Bosco di Ciliegi’s owner also controls Moscow department store GUM.
Angel Fashion Group, which operates luxury retail in the cities of Krasnodar, Novorossiysk, owns and manages the Excelsior Sochi luxury shopping complex. By February-March of 2015, the company has plans to open a department store retail concept, which is currently under construction near the marina.
International luxury companies which operate directly in Russia (Prada, Richemont Group, Hermes) are also reported to be keenly looking at Sochi as a potential location for their stores. LVMH’s Louis Vuitton, was the first major luxury brand which operates directly in Russia, which opened last year in Sochi.
Besides gambling, retailers are expecting an influx of domestic travellers this October, when Sochi will host the first Grand Prix of Formula One Russia. Mention must also be made that the Russian State Authorities are also making efforts to persuade Russians to spend holidays at home.
But it is not only retail which could benefit from the new strategic transformation of Sochi but also the many upscale hotels opened for the Winter Olympics. Presently, there are three five star hotels operating in Sochi, out of a total of 42 hotels. Accor, FRHI and Rezidor are the main international operators present in Sochi.
The versatility of the Sochi resort, which offers both sea and ski, also has the potential for an extended season. With the addition of casinos and shopping and a well planned schedule of events, Sochi could indeed become a feasible alternative for many of the Russian upper middle class, for both weekend / events driven breaks but also holidays. Domestic travel is also likely to be boosted, given the implemetation of visa formalities by the E.U. and the U.S.
However, the HNWI Russians are unlikely to opt for Sochi, which many still associate with its past U.R.S.S. image. For a long-term strategy, Sochi should not replicate any international destination but build on Russian heritage. For instance, Sochi will never be able to recreate the long-established lifestyle of Las Vegas – its shows, its clubs, its spirit of freedom.