Luxury does better in Serbia, compared to Romania
The smaller population, the smaller amount of millionaires, the low average income or the recent conflicts have not prevented the top luxury brands from reaching Serbian consumers
There are 7.5 million people, 2 million of them crowded in Belgrade and its suburbs. The average income is not small, nor high – some 500 dollars per month. The GDP – somewhere between one third and one half of Romania’s GDP. The millionaires are less in numbers and not as noisy as Romanians. Still, they seem to spend quite a few bucks, when it comes to luxury. This is a brief portrait for Serbia, a country that managed to consolidate a better luxury market than Romania, despite all problems.
When it comes to shopping, Serbians choose Made in Italy and Made in France labels. “The label is not everything, is just a must. They check for quality before buying”, says Oliver Petcu, managing partner with CPP – Management Consultants, the only company specialized in luxury markets in the Central and Eastern Europe. Checking for quality and having some knowledge in the area may very well be the fundamental difference between the Romanian and the Serbian luxury buyer.
The outcome rising from this difference is easy to spot: the Sportina Group, a company that practically built the luxury market foundation in Serbia, has recently opened the largest luxury multibrand store in the Central and Eastern Europe. The 1,200 sqm XYZ store, placed in the USCE mall (50,000 sqm to rent) has a “shop-in-shop” design, with various brands placed in the corners of the store, so that any brand would be easily spotted and identified. (Just for the sake of comparison: remember the Romanian multibrand stores, where Prada bags lie in the same basket with Escada shirts and a couple of no-name scarves!)
XYZ offers the latest collections from Hugo Boss, D&G, Joop and Polo Ralph Lauren, all these brands having separate spaces for women’s and men’s collections. Along come Armani Collezioni, Iceberg, GF Ferre, Galliano, Versace Jeans Couture and Armani Jeans.
For the analysts with CPP-MC, this initiative seems somewhat oversized, considering the size of the market and the unhappy timing – considering the economic turmoil. Still, the recent history of the luxury market makes the future evolution of XYZ difficult to predict.
More than that, Sportina seems able to finance the initiative for quite a while from now on, since the group also operated a wide luxury multibrand network – covering Slovenia, Croatia, Serbia and Bosnia – and a medium-level monobrand franchises, including Tom Tailor, Bata, Celio, Morgan, Jack Jones, Camper and Diesel.
A better downtown
Compared to Bucharest, Belgrade makes a strong impression due to the Parisian-style cafés, clean public gardens and the fully restored old buildings in the old downtown. Service is excellent and gourmet restaurants aren’t as scarce as in Bucharest. People prefer trendy fashion, unlike the Bucharest average, where becoming invisible seems to be the main target when searching through the wardrobe. Women in Belgrade are well connected to the international trends.
Monobrand franchises operating in Belgrade include Hugo Boss, Escada, Max Mara, Marella, Tommy Hilfiger, Paul & Shark, Cesare Paciotti and Bally (mentioning just the most notorious names). In the pedestrian downtown area, multibrand stores offer most of the common Western fashions, from Armani Jeans, Kiton and D&G to Etro, Valentino, Ellie Saab and Blumarine, each brand offering the latest collections. An impressive success is the Hugo Boss store, operating on the market fro ten years now.
Still, there are also some similarities between Serbian and Romanian luxury customers: “There are some 5,000 citizens with a net worth of over 30 million Euros in Belgrade, each spending some 100,000 Euros for luxury items every year. The luxury consumer profile is similar with the Romanian, Bulgarian or Ukrainian one: their passion for luxury brands comes from a vibrating social life, similar to the Latin profile. Serbians enjoy showing off, dressing up and impressing”, says Petcu.
Showing off may be a common attribute in Serbia and Romania, but Belgrade proves to be a better host for the aristocratic luxury – Hugo Boss and Bally are doing fine on this market, while Bucharest saw both monobrands shutting down in 2009, after years on doing business on the verge of bankruptcy. An explanation for the Hugo Boss success may reside in the fact that it is a family business that offers highest standard services, using the same recipe of the Canali success in Romania.
With top service, loyal customers, well performing management and a GDP that stays positive even at the peak of the economic crisis, the luxury market in Serbia may come out of the rain unaffected. “We believe that that sales in Serbian monobrands will not decrease more than 15%, compared to the ECC countries, where some brands already see 30-40% losses”, CPP-MC analysts say.
An article published in SAPTAMANA FINANCIARA: link