Reviving Russian luxury market outpaced by rivals
By Amie Ferris-Rotman
MOSCOW (Reuters) - Luxury boutiques are popping up across the country again, the capital's streets are gridlocked with Bentleys and top designers are steadily trickling back in.
Russia's luxury market may be worth only half of what it was pre-financial crisis, but its thirst for excess is making somewhat of a comeback, though uncertainty over its ability to grow lingers.
"Slowly, slowly, people are starting to live again," said Alla Verber, Russian clothing mogul and head of fashion at plush designer store TSUM, Moscow's answer to Saks Fifth Avenue.
Verber said the severe blow dealt to the luxury market during the crisis two years ago -- which slashed the near $8 billion market in half and forced stores such as Alexander McQueen and Vivienne Westwood to board up their windows for good -- eased toward the end of last year.
Like almost every aspect of Russia's economy, luxury's recovery has been pegged to the price of oil -- which influences a trickle-down of wealth in the world's top energy producer.
With oil prices rebounding to almost $115 a barrel last month -- more than triple the devastating lows seen during the crisis -- the monogram brown and gold bags of Louis Vuitton and the red-soled heels of Manolo Blahnik are returning to Moscow's streets.
Eighty percent of Russia's luxury goods are sold in Moscow.
"We are still seeing some uncertainty, but obviously commodities markets are returning, the price of oil is increasing, and it gives confidence," said Matthew Stephenson, managing director of auction house Christie's in Russia. Continued...