Eastern Europe sees more educated customers


It may be difficult to believe, but the “bling culture” of the Central and Eastern Europe has finally come to a point where a new class of “true luxury connoisseurs” has started to take shape. The simple fact that there is a significant group of people – consumers, retailers, experts – able to issue a judgment call on the phenomenon proves it. The first to admit that things have changed in the paste few years are the retailers, who say that education and information are on a speeding pace.


The media – general or specialized newspapers and tabloids – had a word in this education, even though it was almost unwillingly. During the past years, the media disseminate quite a few misleading, false or biased information, promoted worthless brands and accepted a lot of undiscriminating advertising pages. Still, the press was important: consumers eventually understood what lies beneath a true luxury brand – heritage, stories, values, all things worth more than just a price tag proving a social status.


Simply finding out about these things made a lot of customers eager for more information. The average level of luxury brands culture has increased in constant acceleration during the past decade. Despite the fact that there are still millionaires with the left sleeve of the suit a bit shorter, so that anyone would be able to admire the luxury timepiece, there are also the people able to understand the innovation, the work hours, the patents and the spectacular side of the movement hidden beneath the platinum case.


“We certainly owe a lot to the luxury watches market, they were the first to invest in the education of their customers. Many of our clients came to shop in our stores as a result of natural subsequent steps – they bought, at first, a car and a suit, then a watch, then they realized that accessories are required – a belt, a bag, a suitcase, buttons, writing instruments and so on. At this point, there are some clients – not many, but they exist, nevertheless – who seem to know about several brands more than the selling personnel”, explains Laurentiu Iusein, managing partner with Exclusive Brands (distribution of accessories signed by A. Dunhill, S.T. Dupont, Montblanc, Serapian and Tavecchi).


“It is certain that the level of education skyrocketed in the past few years. We are delighted to see that out clients are true connoisseurs, able to appreciate the way the price / quality report”, adds Sorin Seitan, manager of Canali Boutique Bucharest, one of the most successful luxury stories in Romania.


“Our customers are more and more surprising, and we see it day by day. They are passionate, they read, they find out and become true connoisseurs. Some things are more surprising than others. For instance, we had a couple visiting the store, preparing for an anniversary. Although men are those who usually prepare and find documentation before an acquisition, this time it was the lady who seemed to have read more about the subject. They left to visit other stores, then they returned and bought a certain watch. The decision had nothing to do with the price or some aesthetic criteria, it was a certain particularity of the movement that they chose”, says Melania Alexe, country manager Horologivm (Maurice Lacroix and pre-owned watches).


The trend is also obvious in the rest of the CEE states, especially in Hungary. The crisis did not significantly affect the profile of luxury consumers. There a still a lot of sport icons and “new rich” among them, but a new class with a taste for the best things in life, that of wealthy professionals – doctors, lawyers, corporate executives – is building fast, bringing a new wave of knowledge-hungry clients in stores.


As a general profile, the CEE luxury consumers are aged above 35, are budget conscious, they choose the price category they fit in rather aware of their financial and social status, and tend to ignore the popularity of a brand among their friends and colleagues, pricing instead the brands’ history and values. They like to gather “complete collections”, therefore are more likely to become attached to a certain brand. As for the categories spending money in luxury stores – the top products bring in just as much cash as the lower-end (still fine) products.


Regarding the communication channels, many prefer personal, but non-invasive – messages, such as e-mails and mobile phone messages. Communicating through media channels proves to be more efficient in editorial advertising, transmitting information, instead of large photos, holding the “air” of a brand, but without any message or data.


The crisis peak in the East European states led, in most cases, to the loss of some of the young consumers. The market for accessories was least affected by this phenomenon, counting roughly the same amount of clients. Serbia is an exception, clients aged 20 to 25 being just as eager to buy any kind of luxury as before the crisis.



“Some of the clients look a bit more temperate, but those who really afford luxury didn’t change their attitude towards these products, and haven’t proven so far any changes in their spending habits either. For the moment, there are less customers in the young executives and young lawyers category, but hopefully we’ll see them back soon”, says Sorin Seitan. The Horologivm officials say the customers have an unchanged interest in their offer, and that a decrease of sales would only prove that the market returns to its natural levels. “Most of all, in our case, it is important how the customers got to visit our store. Most of them are genuinely interested in timepieces, they are aware of their taste and needs, they hold knowledge in the subject. That’s how we developed our philosophy – we don’t try to sell watches, we just try to help clients define their needs”, adds Melania Alexe.


“It’s also about accessibility”, explains Laurentiu Iusein. “I believe that the luxury retailers who focused only on high-end products are the ones who suffer the most. People still want to buy, but sometimes the budget doesn’t help.  If you only sell 7,000 Euros purses, let’s say, you may see sales dropping 50% or more at the end of 2009. But if you also make available some purses between 1,500 and 3,000, there’s a chance to drop only by 10-15%. Luxury consumers, at this point, are in two categories: directly and indirectly affected by the crisis. Those affected indirectly will surely survive. In Romania, we have to take into account that we deal with an atypical market: we still have clients who want to impress, to exhibit luxury symbols, although their social status is not really anywhere in the financial clouds”.


Serbia is another atypical market, where youngsters spend a lot, new clients come and go over night and the number of millionaires grew partly to the grey area of the economy. Sales dropped more than in Romania – roughly some 30-40%, including at Movem Co, owners of franchises for Canali, Hugo Boss and Trussardi. “The businessmen were the most affected, more than those in sports and entertainment, since they were the ones suffering from the economic downturn. Despite this there haven’t been too many changes in the profile of luxury consumers, except for the amounts they spent. Two categories went unaffected – the youngsters, aged between 20 and 25, and the women, who would buy all the time, whether there is enough money or not”, says Njegoslav Trifkovic, general manager at Movem Co. “The strange thing is that we had some clients that came out of the blue, spent 10 or 20 thousand Euros, then they disappeared. We’re currently implementing a CRM system, and we’ll try to track them down and find out what happened”, adds Trifkovic.


In the end, the most important aspect is that the East European luxury market didn’t lose any of its enthusiasm. People make plans for development, diversification, investments in customer relationship management systems and others. Horologivm, being owned by the only Romanian to ever graduate the classed of the most important Swiss watch making school, Wostep-Neuchatel, is about to open an “haute holorogerie” school in Romania. Exclusive Brands will launch special cards for its most loyal customers, covering all ranges of spenders – entry level, middle and “black”. At the same time, they look forward into creating second-hand market for writing instruments. But the most promising aspect of all is that “the rich still have money”. To the end, the future sounds fine.

Radu Rizea