Russian fashion industry grows up
By FashionUnited
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Meanwhile, all the European luxury brands have found their way to Russia, and Moscow's countless shopping malls are home to the likes of Zara, H&M, Gap and Uniqlo. The stores are just as airy and organized as anywhere else in the world and the window displays play an important part in attracting shoppers. The majority of the retail brands has been introduced to the Russian market through franchisees or agents, but an increasing number of companies choose to 'go it alone' after the first few years. The Spanish fashion conglomerate Inditex is a good example. Inditex (Zara) entered the Russian market in 2003 via the Finnish retail conglomerate Stockman, but established its own company in Russia after only a few years in order to roll out its retail activities and to organize its administration properly. Inditex now has over three hundred shops in Russia for its various brands and even launched a Russian web shop for its Zara formula in late August.
Major growth Russian denim market
It is an interesting market for fashion companies, particularly in the mid segment. Russians spend between ten and fifteen percent of their income on clothes. That is over twice as much as, say, in Germany (5,6 percent). Besides that, Russians are very price conscious. Expensive brand bags and shoes are status symbols for which people are prepared to pay a lot of money, but with apparel the focus is less on luxury brands with Russians demanding more value for money. There is also a visible shift towards a more casual way of dressing. Russians used to dress extremely formally - according to Döpfer every Russian carried a comb - and Russian women still prefer skirts over trousers. With the arrival of a more informal dress style, a large market for the smart casual segment developed within a relatively short time. This edition of CPM - which took place in the first week of September - is only the third time that the trade fair has hosted a separate section for Fashion & Denim, with brands like Desigual, Scotch & Soda, Cheap Monday and Mavi. The Fashion Consulting Group - a local research firm - predicts that in the next five years the denim market share in Russia will increase by up to 40 percent.However,
Customs union with protectionist measures
Moreover, in the past three years, entering the Russian market has become more difficult for foreign companies due to the establishment of the Eurasian Customs Union (EAC), a customs union between Russia, Belarus and Kazakhstan, and the first step to forming a broader economic collaboration of former Soviet states after the EU model, including protectionist agreements that regulate the import of apparel and textiles. Next year - officially per 1 July 2014, but already applicable to all deliveries of the spring collections - the rules for labeling are being expanded for the sake of consumer safety. A radical measure for which, according to Reinhard Döpfer, 98 percent of foreign fashion companies active in Russia are not yet prepared. "All vertically operational companies have already made the necessary arrangements, but small and mid-sized European brands in Russia which sell directly to stores; local agents and distributors who operate as intermediaries and have not established an 'OOO', and most of the independent stores and boutiques in Russia are going to feel the effects of this measure." The establishment of an OOO (a limited liability company) is expensive - according to Döpfer Hugo Boss recently paid 250,000 euros for one - but necessary if you want to acquire the mandatory EAC-labels and pay taxes. Quite similar in fact to the EU.Text: Esmerij van Loon
Translation: Wendela van den Broek
CPM
IGEDO