UKRAINE’s luxury market enters stabilization phase, yet growth is unlikely in 2011
Maurizio Aschero, Ukraine’s leading luxury industry professionals shares his insights on Ukraine’s luxury market: its specifics, consumer profile, opportunities as well as future outlook.
CPP: You have been at the helm of Helen Marlen, one of the largest luxury retailers in Ukraine for more than 7 years and you are considered one of the most experienced luxury industry experts on Ukraine. What motivated your decision to quit the company ?
M.A.: After 7 years I felt that I ended up my job there. I contributed in building the brand Helen Marlen and its management structure. But I have my visions, the owners theirs. Motivations are important and when they disappear, money is not enough. Moreover ,a demotivated top manager is dangerous for the company, so better to quit and find for new challenges.
CPP: How would you describe the evolution of the company from the moment you took over and the moment you quit ? Looking back, which are the things you have done differently and which are the achievements you are most proud of ?
M.A. The company evolved from a 3 multibrand stores to 20 stores among which 8 monobrands, plus an agreement with Louis Vuitton. So quite a change!
Today, looking back, I would not have rushed in trying to change the world in few years. Unfortunately, being a foreigner with an international experience, I see what it will be a bit faster, but I then have to struggle with the local reality and the local understanding of the business. This can create conflicts inside the company. I am proud of having negotiated and achieved all the targets we fixed. Included the LV one. But most of all, I am extremely proud of having participated in the creation of the team of managers, from the shop assistants to the top management, who will run the fashion business for years to come in Ukraine. They are all my brothers, sisters and children. And I am proud of having created now my own baby: Maas Markets Ltd, a retail and project management company based in Kiev.
CPP: One of the challenges facing luxury brands when expanding in emerging markets is customer service. What do you think about the level of customer service in luxury stores in Ukraine ? Are there experienced professionals ?
M.A. The level is still low, improving fast but unfortunately ( besides the main stores where the real professionals are at the best worldwide level), you find a horrific standard around. But this could be a business, also. A nice Service Academy, why not?
CPP: Ukraine’s luxury market has been one of the most affected in the Eastern European region. Is the crisis over ? If yes, in which luxury sectors ? What are your views on 2011 ?
M.A.: As I told previously, it could have been worse. But the luxury retail in this country was at its beginning before the crisis, and suffered less than abroad. We don’t have tourists here (why they should come, without infrastructures?) and therefore we didn’t lose any…. (like in example happened in other East European countries). The crisis it is not over. It just stabilized and this is now a long term reality. And my forecast for 2011 is of a little growth, with few news. Only at the end, some big guy will start coming in, as far as I know.
CPP: What do you think is the value per year of the Ukrainian luxury market ? (fashion, accessories, watches, jewellery).
M.A.: It was around 200 mln Euro, now I suppose that a 30% of it left in ashes.
CPP: To your knowledge, are there new entries planned for 2011 ? (fashion, accessories)
M.A.: Yes, I guess you will witness to the arrival of some very important Italian and French brand.
CPP: The proximity to Russia and the historical ties often lead to a perception of similarity between the Ukrainian and Russian market. How different are the two luxury markets and how different is the profile of the luxury consumer?
M.A.: The only difference is the Russia in much bigger, advanced, more complete as well in terms of retail and its understanding. Clients are now very demanding in terms of quality, service, price level.
We are 5 to 7 years backward. We have not yet a premium/luxury department store in all Ukraine. Moscow has many already, since many years. Department stores change dramatically the retail dynamics of a big city. In Kiev the investors are starting just now to consider if when and where. Welcome to the past.
The client profile t is usually the same: 90% of filthy rich people with no idea of what they buy, and 10% of real lovers and connoisseurs who buy luxury items for the real value and meaning they have. Of course, the brands love the 100% of the audience.
CPP: Given your expert understanding of the Ukrainian luxury market, which sectors do you think still represent opportunities for growth ? Which luxury sectors are least developed ?
M.A.: Generally, mass market and premium segment will definitely grow. New big names are coming , they will last long and re-shape finally the market. In luxury, life-style is still at the beginning. Interior design is also very weakly represented. Luxury real estate is ridiculously positioned as well.
CPP: How has the crisis influenced the buying habits of the wealthy Ukrainians ? Which target segments have disappeared, if any ? Are there new profiles ?
M.A.: The wealthy Ukrainians left, are still buying all the necessary and not necessary things. Many of them, though, are starting to appreciate mass-markets brands like Top-Shop and others that once were left only to the low –end of the market. The designers of these popular brands are copying very well. Nothing has disappeared as far as I see. On the contrary, the more offer there is, the more is bought. Just, clients are more careful to quality. The big retailers are offering now not only expensive brands, but also seasonal funny and trendy names, who then disappear and are replaced by new ones. This is good. In this business you cannot stay afloat on your old boat. Either you go fast, or you sink.
CPP: You have been a fervent supporter of local fashion designers. How would you characterize Ukrainian fashion design in comparison with Western fashion design ? How do you see the potential of these designers to sell abroad ?
M.A.: In Ukraine there is a great potential, and there are very fine designers. And they are not only following the trend, but often anticipating them ( Fedor Vozianov, Elena Burenina, in example, are great innovators). They have no system behind, thought. One of the major goals of Maas Markets ,my company, is to help them in being introduced on the foreign markets and compete with the other international brands.
I am proud to say that Lilia Poustovit (www.poustovit.ua) is part, from the next season, of the” Dolce & Gabbana Spiga 2” new multibrand store. This is a major achievement for Lilia, the most respected Ukrainian designer, and a great news for all the Ukrainian fashion movement. Moreover, as now I am in the Board of the Ukrainian Fashion Week as Head of the International Dept, I will do my best to keep promoting more local talents abroad. So expect great news from Ukraine.
Maurizio Aschero is Managing Director of MAAS Markets in Ukraine