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UKRAINE’s luxury market continues downfall, creating opportunities for other countries in the region

The newly elected Ukraine President Viktor Ianukovici.  faces a daunting task to take immediate action to revitalize an economy which many consider as nearing bankruptcy. The world financial crisis, the strained relations with Russia and the political instability have brought down Ukraine’s economy in less than 3 years, at the time one of the most dynamic markets. The luxury sector saw a boom until 3 years ago, with the majority of international luxury brands opening stores in Kiev, Ukraine’s capital city. With the exception of CHANEL and HERMES which proved to be more cautious, all other major luxury brands such as LOUIS VUITTON, GUCCI, DOLCE GABBANA, VALENTINO, YVES SAINT LAURENT, SALVATORE FERRAGAMO opening monobrand boutiques and corners in the 3 luxury department stores of which Sanahunt is the most luxurious. All major luxury car brands also opened dealerships and showrooms while hospitality saw the arrival of InterContinental and Radisson, with several other luxury projects in construction. 

The luxury sector in Ukraine has also been one of the most affected economic sectors, with sales dropping by up to 40 and 50 % on all product and services categories, the remaining top wealthy consumers preferring to buy abroad at lower prices. The red tape and continuously changing legislation and customs regulations have been making impossible for retailers to forecast feasible business plans. Financing also remains blocked, with many banks expecting governmental actions. 

The crisis of the Ukraine luxury market is likely to create opportunities for regional countries, especially Romania, Poland and Serbia, all three economies boasting an underdeveloped luxury market in many sectors. The opportunities are mainly in hospitality, SPA and fashion/accessories retail.  

Oliver Petcu, CPP

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