During last two years the situation in Russia, likewise the luxury market, has been impacted by various geopolitical and macroeconomic events. Significant government expenditure on Olympic Games, economic sanctions imposed by the US and EU, decrease of oil prices led to an economic slowdown and significant rouble devaluation. Russian tourist demand in 2014 decreased by 30 % compared to the same period in 2013. The low level of Russian currency had impact also on the luxury products market: luxury brands and distributors were forced to increase prices, while consumers were reasonable in their spending.
All this led to Russian luxury consumers bringing forward their domestic luxury spending. Sales of high-end cars rose strongly by the end of 2014. Richemont Group also evidenced that domestic demand was offsetting the impact of a significant withdrawal by Russians from the foreign markets where they were used to go and spend their money.
In general, the trend in the Russian luxury market is that attention is paid to absolute luxury goods as investment pieces. The wealth try to protect their assets, i.e. invested in art, cars, jewelry, watches and real estate. The most sought after products were those “ones of a kind” or as parts of limited collections, manufactured by worldwide known craftsmen and made of precious and unique materials. That is why the demand for vintage luxury products was activated in Russia.
Also, the economic slowdown pushed many brands to switch their attention from regions to the extension of their presence in Moscow and St. Petersburg, the cities with the biggest concentration of high net worth individuals in Russia (70%).
2014 was also characterized by reduced traffic in the leading shopping centres as a result of the growth of the number of shopping centres and outlets which led to less concentration of consumers per one centre. The main means of consumer attraction for big luxury retailers are discounts and entertainment.
As for trends in internet retailing in Russia: the number of Internet users in Russia is constantly growing. Online shops provide consumers with the possibility to shop luxury products which are not present in traditional retail channels or, in general, in Russia. However, the sale of alcohol and of goods made of precious metals and stones was banned in Russia in the second half of 2014 and made it impossible to buy cheaper products from these categories from foreign internet sites.