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b2b Magazine
08.11.2016 | Лидия Соколова

Upper limit

part 1     part 2         part 3

 

Sustainable trends

 

According to Mikhail Gorshikhin from SmartUP CG, contrary to expectations, the crisis did not have such a strong impact on the premium segment as it would be logical to expect. "On the contrary, according to Bloomberg data, fashion brands in Russia not only increased ruble sales, but also increased in currency," the expert notes. At the same time, some retailers are trying to further increase turnover by lowering prices. We have all seen the advertising campaign of TSUM, as in Milan, when Mercury reduced the price of some lines by 10-25%. I still don't think that this has allowed a sharp increase in sales, since the demand in this market is very inelastic, because in Russia the supply of the premium segment is still very limited. My words are also confirmed by the fact that new premium boutiques continue to open, while actively populating outlets, and thus receive not only Russian buyers, but also whole buses of Chinese tourists. To make prices look low, it is advantageous to open diffuse brands in the first place. There has also been a change of trends in the promotion of fashion brands: digital technologies have become much more common now.

 

According to PwC's estimates of the retail and consumer goods sector in Russia, the Russian consumer is radically changing his behavior, and these changes are long-term. In April, real disposable incomes fell by 7.1% - this is the most serious decline since May 2015, when incomes, according to Rosstat, decreased by 7.7%. At the same time, the desire of Russians to spend money economically, apparently, has developed into a stable habit that will change the consumer environment for many years to come. Thus, 84% of PwC respondents said that they have begun to take measures to reduce their expenses: 36% of survey participants said that they can afford much less goods and services; 52% of respondents began to buy less or began to buy cheaper goods and products. At the same time, the role of the brand, even in the current situation, remains very important - 65% of respondents say that the brand plays a big role in making a purchase decision, and the level of brand loyalty in various categories turned out to be similar to last year. However, some customers are already not ready to vote in rubles for a "true premium" even in a basic wardrobe. In particular, due to the fact that even Karen Millen, according to Daria Nuclear, will cost about 125 thousand rubles today (dress, jacket, belt, bag and scarf, shoes). "The audience of the premium can be divided into two groups," explains Anush Gasparyan. – The first – those who appreciate design, want to have trendy things in their wardrobe; they do not spare money for new collections of interesting brands from young designers. The second – consumers who buy classic basic clothing in the premium segment – high-quality, good-quality, verified cut and designs. These consumers can safely do with a classic black pencil skirt and straight quality trousers "out of time" for more than one season. Today, those who cannot spend as before are looking for an alternative in outlets, or in other, similar-style brands of a lower price segment. However, regardless of stylistic preferences, a modern buyer wants to purchase new wardrobe items every season, it's just that now he has to buy them less often.

 

 

According to FCG, the cost of premium-level clothing in Moscow and St. Petersburg today is as follows: trousers – 15–35 thousand, blouse – 16–35 thousand, skirt – 16–40 thousand, classic sheath dress – 20–50 thousands of rubles. Oksana Bondarenko from "Li-Lu" believes that, despite the prices, the so-called average basic onion still does not do without at least one expensive thing. As a result, Russian buyers become apologists of the philosophy of "less is better", customers of permanent sales sites (KupiVIP recorded a 55% increase in orders by the end of 2015) and outlets.

"Russian buyers generally like to dress well, are well acquainted with world brands, and, as we have noticed, are just crazy about luxury brands," says Brandon O'Reilly, Managing Director of Fashion House Group. The commitment to the premium in Russia is higher than, say, in Poland and Romania, where we work. First, buyers look around at the outlet, then they come to buy, and, as the experience of the Moscow outlet shows, the average check for buying expensive brands is higher here. The number of buyers in this segment has also grown – having got used to a certain level, it is difficult to move to a lower segment. This is especially true for the clothing market, since clothing is perceived as an element of status. Thus, most customers are trying to maintain the level, buy high-quality clothes, but, given the economic situation, they are looking for opportunities to do it cheaper, which means they start going to outlets. Noticing this trend, at Fashion House Outlet Centre Moscow we have specially opened an alley with a red carpet (Red Carpet Alley) – a place for the most famous brands such as Versace, Blumarine, FURLA, PINKO, Trussardi, Marlboro Classics, Cerutti, Gerald Durrel, Baldessarini, Dirk Bikkembergs, Bea Yuk Mui, P.A.R.O.S.H, Doucal's, Moreschi, Zanotti and Luca di Marco. It became a hit among visitors.

However, retailers trading in "forced premium" were expected to have another difficulty – a significant increase in the request for service. "Customers, even those who were forced to come to the middle price segment, have already got used to the level of service and are waiting for decent service," explains Igor Frolov. – Brands have to match ». 

Author: Ekaterina Reutskaya

Photo: Shutterstock.com

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