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Despite the crisis, the city of EKATERINBURG maintains its leading position in the Russian luxury market

BUSINESS OF LUXURY has recently interviewed Mr Riccardo Cascianini, Vice President of WEDA, the leading luxury retail company in Ekaterinburg. With a vast international experience in luxury retailing and an expert understanding of the Russian luxury market, Mr Cascianini has successfully lead his company through the crisis, WEDA maintaining its leading position and laying the grounds for a solid future development.

CPP: WEDA has maintained its leading position of luxury retailer in the region of Ekaterinenburg, despite the international financial crisis. What are the key structural elements of your business which have contributed to the stability and growth of your business?

R.C. The effects of the crisis, particularly in the Ural region were devastating. Causing  of this new “ scenario” we have been forced to reorganize our structure, reduction of the costs, reduction of the Purchase Budget, but we have maintained and in some cases  increased our investiments in promotion  and advertising. This allowed us to remain highly visible to our customers and increase our leadership.

CPP: Please describe the basic profile of your typical customer (age, family, occupation, annual income).

R.C. First that we have to keep in mind speaking about customers in Ekaterinburg is that the structure of the business starts to develop with some delay if to compare it with the central part of Russia and Moscow in particular. Mostly they starts to rise in the beginning-middle of 90′s. It was the smart people who was at the right place at the right moment. They were 22-25 years of old. Later in the beginning of new century their business starts to be big enough and the new generation of the top-managers appears. So inside the structure of the our data base we can easily identify two groups: owners of the business and top-managers.

Owners

They are 37-45 years old, they have family 2-3 children. They have countryside houses. Most of them use to live in special closed suburban villages. They are socially active, travel a lot but majority of them doesn’t speak foreign languages, they invest money. This group of people is our core data base. They spend not only on themselths but also spend money on family, relatives, girls. They are not experienced in luxury and we could easily influence on their activity.  The adult sons and daughters start to form the golden youth. It’s another category of the clients. They doesn’t have their own money, but very active.

Top-managers

Very ambitious, educated, professional and smart. As a rule they are from 29 up to 35 years old. They have good education speaks foreign languages, travel a lot, open minded. They are egoists and invest only in themselths. luxury for them is not truly way of life is a necessity. They have to maintain their status. The annual income for them is from 90 000 up to 350 000 EURO.                 

CPP: Which are the main differences in luxury consumer profile between Ekaterinenburg and the capital city of Moscow ? Is there a different preference for certain luxury brands ?

R.C. The specific feature of luxury business in Ekaterinburg is that we have local customers only. Some of them comes from satellites regions like Tyumen and Chelyabinsk. We don’t have the foot flow of foreigners at all. It explains that 80% of all sales are identified. It means that customers use their personal cards. The average foot flow is several time less when in Moscow but conversion rate is more higher and approximately estimates 35%. Local data base explains that the most important category for us is RTW.    

CPP: Have you noticed any major changes in the luxury consumer profile in the past two years ? What measures has your company taken?

R.C: Certainly in the past two years many things have changed, is  changed profoundly the “approach” to buying. Our client has become much more careful, for this reason, we are devoting more attention, in a nutshell,  we are more cuddling.

CPP: Which are the brands that you operate in mono brand ? Do you have plans to add other brands to your portfolio?

R.C.Our company operates in the fashion world for over 15 years, its particular features is that we operate on three levels of distribution:

The “mass distribution” with 5 mega store of Benetton,  four Sisley store, 4 Mango, 3 motivi store and the newest is the opening of the first OVS Store with  Coin Group in all Russia, all of them are largest and bigger spaces more than 500 sq/m.

Then we have what we call “premium” with  the new boutique of Max Mara, Max & Co, Marina Rinaldi, Marella and Miss Sixty, and finally the “luxury” with a boutique Gucci, Ermenegildo Zegna, Emporio Armani, Canali and Brioni

But we do not stop here, we are finishing the construction of the most important “mall luxury” of the Urals (dicembre2011) with the new boutiques Dolce & Gabbana, YSL, Roberto Cavalli, Dsquared, Giorgio Armani, in total more than 15,000 square meters  dedicated to luxury and all that it is closely related, a new experience “shopping” which includes, cosmetic, perfumery, jewelry, spa and restaurants.

CPP: Which is the best-selling brand from your portfolio?

R.C.: Inside of our brands, there is one that excels over the others, but those who show a better performance are Gucci, Max Mara, Zegna and other new brands distributed in our multibrands mall.

CPP: What is the average shopping budget your loyal customers spend in one visit in your shops ?

 R.C.: The average one visit cost for us is RUB 27 000 (EUR 630). Calculation based on division of daily sales on  quantity of people buying. The average shopping budget for season for one constant client is RUB 500 000 (EUR 12.000) .   

CPP: What was the evolution of your sales during the first 9 months of 2010 compared to the previous year? What is your outlook for the Christmas season ? (ideally, it would be to provide figures, if not, you can mention percentages)

R.C.: First difference that we checked is that we change the structure and balance of sales. We start to sell more men’s collection and we change the balance from 30%/70% to 40%/60% between men’s and ladies.     

CPP: What was the evolution of your sales during the first 9 months of 2010 compared to the previous year? What is your outlook for the Christmas season ? (ideally, it would be to provide figures, if not, you can mention percentages)

First difference that we checked is that we change the structure and balance of sales. We start to sell more men’s collection and we change the balance from 30%/70% to 40%/60% between men’s and ladies.     

CPP: Which are the luxury industry sectors of the region of Ekaterinenburg which present the biggest opportunities for growth ?

R.C.: I do not see any the luxury sectors with a important increase , at least for the next 2 / 3 seasons, our sales dependent on local customers and the surrounding cities, we are not in Moscow. It ‘also important to underline  the Ural region is rich in mining and processing of ferrous materials, it is a “core business” business but now that is not giving many signs of recovery, certainly RTW and jewelry are the areas in which to invest.

 CPP: Given your expertise and deep understanding of the local luxury market, as well as your databases of wealthy consumers, do you consider venturing into different  luxury industry sectors ?

R.C.: Our new project is a new adventure, we offer to  our existing customer and a number of potential, new way to buy, I means  new for local clients, we can not only offer luxury RTW, but we are building around a scenario, where it can travel through the most varied experiences, without ever losing sight of the high quality of our services.

CPP: What do you think is the motivation for the Russian clients to buy locally and not at international locations?  How do you persuade them to keep buying locally?

R.C.: Over the past two years we have invested heavily in creating a new customer service and a new and more organized client data base, we know each of them, every aspect, his preferences, tastes etc.. In addition, our “shop assistance”  become more exeprtise  of  product, they can listen to the customer advising him know  his choices and makes them feel more comfortable

CPP: Which are the most important professional skills for a retail executive in an emerging market such as Russia ?

 R.C.: I often find myself talking with my colleagues in these matters and the characteristics that a manager must have in these new markets are, the experience, professionalism, fairness, education, elegance, and without a shadow of doubt ’love for this wonderful world.

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