February 2010

Dear Mr. Vartanian,

I am researching an article and would appreciate your expertise with regard to the following issues:

What are the opportunities for apparel retailers and brands interesting in doing business in Russia and Eastern Europe?

Opportunities still exist for companies with a strong lifestyle or fashion offer in all segments particularly mid-market western brands. Many foreign companies such as Zara, Finn Flare, H & M, Giorgio Armani, Starbucks and many more are still expanding in Russia and CIS. A number of opportunities exist also in the non-core cities of Russia. Lingerie and basic footwear particularly standout.

A few years ago pre crisis, it was all but impossible to find a good shopping center or high traffic location for a reasonable rent though this has changed.

 

What are some of the mistakes companies make when trying to do business in these countries?

Probably 3 key mistakes are not having a winning strategy, not understanding the customer, and the operational challenges of doing business. Ukrainians like flash, Muscovites high heels and Czechs more practical generic items.

Brands like Douglas are slowing growth, Kookai, Stella McCartney, Boyner Holding, Lanvin, Alexander McQueen and even Carrefour is pulling out of markets like Russia, though now the country is on a rebound.

Overall, these markets are all still underserved. The importance of having an adjusted business model needs to be understood. Stores and brands often do not merchandise well or underestimate the sophistication of their foreign customers shopping habits and abilities.

 

What are some of the key strategies retailers and brands should employ when entering these markets for the first time?

Companies need to have a flexible model, understand the market, and how to adjust the home base strategy as necessary. Styles, sizing, customer expectations are usually different than those in western markets.

For companies with a tolerance for risk, luxury may be making a comeback on the back of the economic rebound. Smaller companies need to work with distributors and develop multi-brands.

 

 


Nancy S. Mautner
Associate Editor
Inside Fashion - Fashion Technology Magazine - Fashion Retail
www.insidefashionLive.com