ROMANIA

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• ROMANIA
• Luxury Market
• MARKET REVIEW
• 2009

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• Table of Contents
• GENERAL COUNTRY PRESENTATION
• FASHION
• ACCESSORIES
• JEWELRIES / WATCHES
• HOSPITALITY
• SPA
• OTHER LUXURY SEGMENTS
• AUTO
• TRAVEL
• SELECTIVE RETAIL
• INTERIOR DECORATIONS / FURNITURE
• 8. ORGANIC CONCEPTS/CHOCOLATERIE
• 9.DATA ON THE LUXURY INDUSTRY IN ROMANIA
• 10. OPPORTUNITIES

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• 1. GENERAL COUNTRY PRESENTATION
• Romania is the second largest market in Eastern
  Europe, coming in second after Poland with 23.5
  million inhabitants. Romanian peoples tastes and
  high interest for luxury goods and services make
  this one of the most attractive markets in the
  region. There is a rising segment of wealthy
  people on the market, proven by the recent tops
  made for people with money. Case studies
  highlight the fact that there are over 800 people
  with an income greater than 10 million Euros per
  year and 100 people with an income of over 100
  million Euros per year. A case study recently
  made by CPP reveals that there are 13.000 people
  with an income greater than one million euro per
  year, most of which are in target for luxury
  goods and services. There are 12 international
  banks on the market which have private banking,
  summing up over 9000 Romanian people with
  deposits of at least 100.000 Euros. One major
  player on the market, Unicredit Tiriac Bank, has
  stated recently that the eligibility rule for
  private banking clientele has reached 300.000
  Euros instead of previously accepted 100.000
  Euros.
• Bucharest is home to some of the wealthiest
  people in Romania, most of which reside in the
  northern part of the city, in areas like Pipera
  or Baneasa. The central areas which concentrate
  most of the wealthy people are Primaverii,
  Herastrau, Domenii, Floreasca, Dacia, Dorobanti.
  In the second half of 2008, the northern area
  Pipera/Tunari has reached a new height in the
  decline of sales for luxury houses and condos.
  Construction sites on halt have added to the
  general negative image of the area, making some
  people classify the area as mass market. Some of
  the other reasons that lead to this were the fact
  that both the construction for DN1 and the
  Bucharest-Brasov Highway was put on hold. A
  recent case study published by The Economist
  placed Romania in top of the countries with the
  highest increases in salaries in 2007, but the
  trend did not continue in 2008. In fact, starting
  with September, weve witnessed a decline in
  salaries and increase in the unemployment rates,
  on the background of the international crisis.
  The average net salary estimated in 2008 was 550
  Euros. The rate of unemployment has risen with 2
  percent by the end of 2008.

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GENERAL COUNTRY PRESENTATION (cont.) Romania
has five cities with a population of over
300.000 inhabitants, each with an annexed
international airport which increases the general
attractiveness for foreign investors. The
wealthiest part of the country is Transylvania,
with cities like Timisoara, Cluj, Sibiu and
Oradea. Concerning the demand for luxury goods,
Constanta and Iasi are at the top, with most
wealthy Romanians preferring luxury branded goods
and services. Most Romanians in Transylvania have
an Anglo Saxon type of attitude, the decision to
buy being based more on whether the product or
service is qualitative and less on the brand
notoriety. TOP Capital 300 a previous edition
which listed the wealthiest people in Romania,
underlined the fact that more than half of them
reside in Bucharest. Capital magazine has
stated that the summed up wealth of the top 300
reaches over 40 billion dollars. www.capital.ro
Adevarul newspaper has published in 2008 its
first top of the wealthiest people in Romania.
Except for the top ten positions probably changed
by marketing and promotion reasons, this top had
many similarities as the one published in the
Capital magazine. www.adevarul.ro
Concerning increases in GDP, Romania is fifth
in Europe, after Poland. 2008 has seen an
economic growth of 5,9 percent. The most
productive sectors have been constructions and
businesses, at least for the first 9 months of
2008. However, massive drops have been recorded
as soon as access to credits has been limited by
the banks in Romania. Drops in prices registered
in the last 3 months of the year across all real
estate segments, as well as at the Bucharest
Stock Exchange, have almost cancelled all growth
registered in the first quarters of 2008.
Inflation has steeped starting November 2008 and
purchasing power has dropped by 18 due to the
slow down in personal loans.
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• GENERAL COUNTRY PRESENTATION (cont.)
• Many wealthy people found themselves at a lack
  of cash, especially those who have invested
  heavily in real estate and did not sell or rent
  at the proper time. All real estate segments have
  registered heavy drops during the last three
  months of 2008. This has lead to a halt in
  furniture and luxury decorations sales. We
  estimate that drops for these segments are at 30
  percent compared with last year.
• 2008 has seen the launch of BANEASA Shopping
  City, the biggest Mall in Romania with 115.00 sqm
  (www.baneasa.ro). However, it looks like due to
  the global crisis, people in Bucharest have kept
  themselves away from this commercial center, even
  with the high number of brands available. During
  week days, all traffic is 50 percent lower than
  that registered by the competition Plaza
  Romania and Bucharest Mall.
• At the end of 2008, during the unfolding crisis,
  Mivan Kier has launched the sixth mall in
  Bucharest Liberty Center (www.libertycenter.ro)
  Being much smaller than the competition, it looks
  like Liberty has succeeded in gathering a large
  number of visitors, especially because of being
  located in a densely populated area.
• While Baneasa Mall has two stores with luxury
  brands (M Missoni and Bvlgari/Chimento) and a
  multibrand with Red Valentino, Alexander McQueen
  and Versace , Liberty is an exclusively mass
  market mall. Efforts made by Baneasa to attract
  other luxury brands were sold with negative
  answers. It was also said that multibrand fashion
  store Peek Cloppenburg (Joop, Boss, Diesel, K
  Lagerfeld, Energie) in Baneasa Mall has
  positioned itself as luxury. However, a middle
  level concept that sells casual lines 2 and 3 for
  luxury brands but also outlet products cannot be
  positioned as luxury.
• International Transport has also seen an
  important growth in 2008. International airport
  Henri Coanda Bucharest has registered over nine
  million passengers in 2008, with new companies
  opening new direct lines with big capitals of the
  world. However, by the end of 2008, Tarom had
  retired from the Milano route and Alitalia had
  kept but one flight out of five. This was because
  of the global crisis but also because of the
  explosion of low cost flights. Limited flights
  were scheduled for Istanbul and Budapest, other
  important shopping destinations for luxury
  products.

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• 2. FASHION
• The luxury fashion market has seen considerable
  development during the first part of 2008,
  especially due to international luxury brands
  that have entered the market through multibrand
  stores. Christian Dior, Burberry, Bottega Veneta,
  Ralph Lauren, Missoni, Givenchy are among the
  brands represented by products from the newest
  collections. Although still small in numbers, the
  fact that they have entered the market shows a
  sign of maturity for the market. Until recently,
  wealthy people used to go for luxury shopping
  exclusively abroad, in Paris and Milano.
  Customers have become more selective and educated
  concerning brands. Unfortunately though, there
  are still some multibrand stores that sell last
  year collections and counterfeit products.
• MONOBRAND / FRANCHISE
• Most of the brands available in franchise
  systems (Max Mara, La Perla, Canali, Pal Zileri
  and Zegna) have registered constant growth in
  2008, with an average of 20 to 30 percent. Hugo
  Boss is the only brand in a monobrand franchise
  whose sales stayed constant throughout 2008,
  recording losses by the end of the year.
• The owners of the franchise Max Mara have
  launched monobrand franchises Mariella Burani and
  Marella on Calea Victoriei, while RTC Holding
  took over the monobrand store of luxury brand
  Bally on Magheru Boulevard from Furlas franchise
  owners. 2008 has also seen the openings of
  franchises for Paul Shark (Calea Victoriei) and
  M Missoni (Baneasa Mall). We think that, on a
  long term, the least performing ones will be
  Mariella Burani, Marella and Paul Shark. This
  is because of the fact that all three have little
  notoriety on the Romanian market but also they
  have limited attractiveness.
• On Calea Victoriei theres also been launched a
  monobrand store through means of exclusive
  distribution for the brand Cerrutti 1881. The
  shop is owned by a company from Bacau, Romania
  which is also the distributor for Ramsey (mass
  market brand from Turkey). The products sold here
  are made in Turkey by a company who owns a
  partial license in order to manufacture under the
  French name. The classic style, basic collections
  could prove unsuccessful for the store on a long
  term basis.

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• FASHION (cont.)
• Worldwide luxury giant Louis Vuitton has opened
  its first store in 2008, at the JW Marriott
  commercial galleries. However, most of the
  businessmen who take part in conferences at JW
  are unlikely to represent targets for the Vuitton
  store. Unfortunately, it looks like Vuitton did
  not make the best choice in this matter,
  something that CPP has signaled since the
  official announcement. As a matter of fact, a
  series of brands including Korloff, Davidoff and
  Mont Blanc have decided to relocate. From our
  sources, two other monobrand stores will have
  left the galleries by mid-2009. The reasons for
  this are exclusively corporate traffic, mid
  level weddings, mid level corporate events,
  inaccessible location for wealthy people who live
  in the center, center-north and to the north.
• Valentino and Versace (both first lines)
  monobrands are planned to open late 2009. Hermes
  has recently confirmed to CPP its interest in
  opening in Romania and Bulgaria mid to late 2010
  under a frachise / concession type of
  development.
• MULTIBRAND
• Victoria 46, the biggest multibrand concept
  store is also located on Calea Victoriei, around
  Odeon theatre and Majestic Ramada hotel. Although
  it has an excellent mix of brands and exquisite
  architecture, Victoria 46 is still avoided by
  most of the wealthy people in Bucharest because
  of limited parking space and specialized
  employees. The poor representation of season
  collections and the small number of orders are
  still unsatisfying for most of the brands that
  are present. Best selling brands from Victoria 46
  are still Roberto Cavalli, Alexander Mc Queen and
  Christian Dior, worst performing are YSL, Chloe
  and Baldessarini.
• Another important player on the luxury fashion
  market is The Place Concept Store, a multibrand
  concept initiated by ID Sarrieri Group on Calea
  Dorobanti. In 2008, The Concept Store has
  introduced the brands Bottega Veneta, Zac Posen,
  Marni, Jimmy Choo and Givenchy, extending the
  line of products with Vertu cell phones and
  luxury laptops. Starting with 2008, The Place has
  moved all mens fashion in the ex accessories
  store, also on Calea Dorobanti. This was in an
  attempt to better show mens fashion collections
  that were not in the attention of the public.
  Most of the luxury market associates Iulia
  Dobrins image with womens fashion, and less
  with mans fashion. Once the global crisis had
  made itself felt, the owners right hand, Izabela
  Coman, has left the company in order to join
  Louis Vuitton Romania on a consultancy PR
  position.

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• FASHION (cont.)
• The Place Concept Stores direct competition is
  Mengotti, owned by the Italian business man with
  the same name. With an exceptional design, the
  multibrand store was opened in spring 2008. The
  brands present here are Giorgio Armani (main line
  accessories), Dolce Gabbana (first line
  accessories), Prada (accessories), Neil Barret,
  Fendi (fashion, accessories) and Dior Homme. The
  largest volumes of Mengotti are on Fendi and Neil
  Baret. Unfortunately, the extremely limited
  product range, as well as the lack of any
  marketing strategy/promotions, has brought some
  difficulties to Mengotti. Sources in the market
  say that the store will almost certainly close by
  mid 2009. Mengottis strategy has been to
  identify franchises in the big cities in the
  country so that it could keep a constant level of
  orders for its brands. However, since they did
  not have a coherent concept, they were unable to
  correctly identify a possible franchised in the
  country. This was also because the conditions
  imposed were impossible to apply in a reasonable
  business plan.
• Jolie Ville Galleria is the first multibrand
  opened in Bucharest, dating from 2003. Its
  location is Jolie Ville Mall, in the residential
  area Iancu Nicolae. Although surrounded by luxury
  real estate, Jolie Ville did not manage to
  attract the residents in this area. Besides being
  a multibrand for fashion and accessories, Jolie
  Ville also includes a medium sized super-market.
  More recently, a World Class health club has been
  launched in Jolie Ville, trying to further
  attract customers in the area. One of the reasons
  for Jolie Villes lack of success is the fact
  that the brand selection has been changed
  numerous times. Currently the following selection
  of brands can be found GF Ferre, Valentino Red,
  Emilio Pucci, Versace Jeans, Just Cavalli, John
  Galliano, Moschino Jeans. Most of them are outlet
  products or older collections. The customer
  service level is at its lowest here, compared to
  all other luxury multibrand stores in Bucharest.
• Salvatore Ferragamo has entered the Romanian
  market in 2008 through a mulibrand store located
  on Calea Dorobantilor including Testoni as well.
  Unfortunately the launch in summer 2008 coincided
  with the beginning of the global crisis. Another
  problem is the subdued, classic style of
  Ferragamo which targets very few wealthy people
  in Romania.

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• FASHION (cont.)
• Estimated turnover figures for MONOBRANDS in
  2008
• Max Mara EUR 2,1 million
• Pal Zileri EUR 1,3 million
• Ermenegildo Zegna EUR 2,3 million
• La Perla EUR 800.000
• Canali EUR 1,8 million
• Hugo Boss EUR 1,6 million
• Escada Sport EUR 650.000

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• FASHION (cont.)
• Estimated turnover figures for MULTIBRANDS in
  2008
• Exquisit EUR 550.000
• Distinto EUR 900.000
• Ferragamo/Testoni EUR 350.000
• The Place EUR 1,9 million
• Otter (Baneasa) EUR 650.000
• Jolie Ville EUR 800.000
• Victoria 46 EUR 2,6 million
• Mengotti EUR 1,1 million
• Fashion Victim EUR 1,5 million
• CLOSED DOWN Stores in 2008 Escada Couture mono
  brand Escada Sport (Calea Victoriei)
• Both closures have happened due to the fact that
  the franchise owners did not know how to manage
  these brands in Romania. Another reason for this
  is the fact that no feasibility study or market
  analysis has been made prior to the launch. Such
  an analysis would have shown the small levels of
  attractiveness that the Escada brand has among
  wealthy women in Romania. We also know the fact
  that some of the Escada clientele have constantly
  mentioned the low customer service levels in the
  respective stores.

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• 3. ACCESSORIES
• The monobrands have remained the same Cesare
  Paciotti, Bally, Le Silla, Furla. The only brand
  that has expanded was Furla, opening a new store
  in Brasov. Pacciotti resellers have moved the
  location of the store on two different locations
  on Calea Victoriei, both smaller and unfaithful
  to the original concept of the Italian brand.
• Moschino is now being distributed in five other
  stores Distinto (1), Musette (3), Shoe Art (1).
  Lancel is only present in one location the
  Carrefour galleries in Baneasa Mall.
• ElleGanza is in the same category of
  multibrands, with a location on Magheru
  Boulevard. The brands found here include
  Moreschi, Sandro Vicari, Valentino and Fratelli
  Rosetti.
• At the moment Victoria 46 is market leader, with
  the following collections Chloe, Roberto
  Cavalli, Christian Dior, Ralph Lauren, Burberry,
  Yves Saint Laurent, Alexander McQueen. There is
  also a multibrand store specialized in shoes
  Exquisit, located at ground floor Unirea Shopping
  Center. Here you can find the newest collections
  for brands like Sergio Rossi, Marc Jacobs,
  Carshoe, Churchs, Givenchy. Ranking second after
  Victoria 46 is multibrand Distinto, located on
  Calea Dorobantilor. Brands like Testoni, Casadei,
  Moschino (line1), Pollini are exclusively
  distributed here.
• Distinto has confirmed for CPP losses smaller
  than 5 percent, because of the international
  crisis. We could not obtain any answers from
  Mengotti, Jolie Ville, Exquisit and Victoria 46.
• One of the world leaders of the accessories
  market, Hermes, has confirmed in December 2008
  for CPP its interest for the Romanian market.
  Currently Hermes analyzes the market potential,
  trying to establish the best moment in which to
  launch its products. Hermes is taking into
  account the possibility of closing a concession
  partnership in order to enter the Romanian
  market. This is also where Dolce Gabbana is right
  now. By mid-2008, Prada has confirmed a change in
  its strategy regarding the market in Romania.
  Specifically it concerns a direct investment in
  2010.

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• ACCESSORIES (cont.)
• The market for counterfeit luxury items is
  slowly rising. Among the counterfeit brands that
  are being sold in Romania are Vuitton, Dolce
  Gabbana, Prada, Chanel and Dior. The products are
  being imported via the route Turkey-China-Malaysia
  .
• We are also dealing with outlet goods that are
  being sold at prices for new collections. This is
  the case with Fashion Victim in Unirii Boulevard,
  followed by Alta Moda in Dacia Boulevard. The
  aggressive promotional strategy for both outdoor
  and indoor media has assured high sales for both
  of the stores. Among the best selling brands we
  can mention DG, Ferre, Versace, Dsquared,
  Richmond.
• Estimated turnover figures for MONOBRANDS in
  2008
• Cesare Pacciotti EUR 650.000
• Furla EUR 900.000
• Bally EUR 400.000
• Le Silla EUR 250.000
• Lancel EUR 360.000

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• 4. JEWELRY / WATCHES
• Currently there are three major players on the
  market
• Cellini. This is the biggest jewelry and watches
  retailer, with more than 9 stores in Bucharest
  and 3 in other big cities in Romania. Brands that
  are being sold here Faberge, Mauboussin,
  Swarowski, Baraka. In 2008 Cellini became the
  first official distributor for Vertu. The best
  selling brand in Cellinis portfolio in 2008 has
  been Bell Ross.
• Micri Gold has two locations on Magheru
  Boulevard. One of them is dedicated to Bvlgari
  and Chopard (with two distinct spaces) while the
  second is dedicated to Damiani, Dior, De
  Grisogono, Versace si Claudio Fiorentino. Micri
  gold is considered the specialist in jewelries,
  starting in 1994 with its own collection of
  jewelries made out of gold and platinum. In 2008
  Micri Gold has launched a second store in Baneasa
  Mall, with two dedicated spaces for Chopard and
  Chimento.
• Helventansa is one of the oldest retailers for
  watches and jewelries, starting in 1991. At the
  moment they have only one location on Calea
  Victoriei, with jewelries from Chaumet and
  Piaget. Helvetansa represents all the brands
  owned by Group Richemont, including Cartier,
  Piaget, Vacheron Constantin, and so on. Even if
  they are on the market for over 10 years,
  Helvetansa did not manage to establish an
  exclusivity contract with any of the brands in
  its portfolio. A multibrand system like this one
  is an opportunity for international retailers for
  luxury watches and jewelries who are analyzing
  the market. In 2008, Helvetansa has become
  authorized dealer for Boucheron and Dior
  (jewelries). From our sources, Audermas Piguet is
  the poorest performer in Helvetansas portfolio.
• Another important name on the watches and
  jewelries segment is Korloff, with an ever
  growing segment of customers. The monobrand
  franchise store situated in Marriott Shopping
  Gallery has been closed at the end of 2008. The
  stores owners had in plan the relocation of the
  store on Magheru Boulevard, which is planned for
  March 2009.

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• JEWELRY / WATCHES (cont.)
• The watches segment is probably the most
  developed one on the local luxury market and most
  of the international luxury brands are already
  present on the market. Another player on the
  market, Galt, owns two locations one on Calea
  Dorobanti and the other at Marriott Shopping
  Galleries. Galt sells the following brands
  Girard-Perregaux, Zenith, Omega, Longines, Rado,
  Boss, Sector, Revue-Thommen, Mondaine and
  Grovana, being the official distributor for the
  brands Longines and Omega in Romania. However it
  is still surprising the lack of expansion for the
  company, even with all these brands in its
  portfolio.
• In spite of all announces about an expansion,
  Chronolink, the distributor for Rolex has limited
  its growth to just one store at JW Marriott
  Shopping galleries. Unfortunately the lack of a
  coherent marketing and communication strategy and
  the location contribute to keeping away the
  customers. The Rolex store in Marriott also
  distributes the Mikimoto jewelries collection.
• 2008 has also seen the opening of the monobrand
  of FRANCK MULLER within the Marriott galleries.
  It has been developed by the same company that
  owns the boutique in Sofia, Bulgaria.
• The sole international brand for luxury watches
  that is not yet present on the Romanian market is
  Patek Phillippe. However, customers in Romania
  are loyal to the brand in Paris, New York or
  London.

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• 5. HOSPITALITY
• Bucharest is one of the most developed markets
  in the region on the five star segment JW
  Marriott, Athenee Palace Hilton,
  InterContinental, Crowne Plaza, Howard Johnson
  and since spring 2008, Radisson SAS.
• The target market are represented by business
  people. Rack prices place Bucharest on the third
  place after Moscow, at 200 Euros per night, with
  a decline in the trend since 2007.
• Analysis made on the hospitality business show
  that in Bucharest there is enough demand for
  almost 2000 luxury rooms, especially when high
  class events take place. Kempinski, Four Seasons
  and Mandarin Oriental are just some of the
  international luxury brands interested in
  Romania. Four Seasons now holds hotels in
  Budapest and Prague and Mandarin has recently
  opened in Prague, with Moscow to soon follow.
  Kempinski owns hotels in Budapest, Sofia and
  Moscow and added a new hotel in Prague in 2008.
• The occupancy rates for the five star hotels
  have been around 65 during the first 9 months of
  2008, dropping to 50 percent during the last
  months of the year. This trend will continue in
  the same direction in 2009, especially for the
  Radisson and Howard Johnson hotels.
• Hilton announced its first franchise hotel in
  Romania Palace Resort Spa in Sibiu. This
  decision is quite peculiar judging from where it
  is located and how it is equipped. A positioning
  like Hilton Garden Inn could have been better.
• The most expensive and luxurious hotel in
  Romania, Carol Parc Hotel, has registered good
  performances in 2008, having had some exceptional
  VIP guests. The global crisis also affected Carol
  Parc, starting with November 2008.
• Romania is one of the most luxury-based
  countries from Eastern Europe, due to economic
  growth and Latin origin of the people. More and
  more people show off with the brands that they
  buy. The same pattern can be applied on the
  hospitality market, for the five star cafes,
  ballrooms and shopping galleries in the hotels.

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• HOSPITALITY (cont.)
• Opportunities
• The five star hospitality market in Romania is
  ready for a luxury project, like one coming from
  companies such as Four Seasons and Mandarin
  Oriental. The only condition is identifying a
  central location. 
• Projects
• The most attractive project is Casa Radio with a
  hive star hotel that would include 200 rooms.
  Elbit Medical (Israel) announced at the beginning
  of 2008 that they closed a deal with REZIDOR, the
  deluxe division of Radisson SAS, for Plaza Center
  Complex. Elbit Medical announced in January 2009
  that the project would halt for a couple of
  months, because of the international crisis. The
  developer would concentrate on opening smaller
  Malls in Romania, which would not require big
  investments.
• In 2008, Cefin Holding announced the opening of
  a 400 room hotel on Barbu Vacarescu Boulevard,
  scheduled for 2010. This is following the signing
  of a management contract with Swissotel. The
  hotel will have the biggest SPA and health club
  in Bucharest, covering 4000 square meters.
  Swissotel officials have confirmed for CPP that
  they dont have any hotels opening in 2009/2010.
  The crisis might have forced Cefin to revise the
  strategy for this project, which is also relying
  on office spaces.

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• HOSPITALITY (cont.)
• Starwood has been unable to confirm its Le
  Meridien / Sheraton franchise for the Calea
  Victoriei building currently under construction
  (near Casino Palace) due to a legal dispute
  between The Romanian state Post and the Comnord
  private company that is developing the site.
  Works have began enthusiastically, but the
  November change in political governance has put a
  halt on the construction.
• Positioned in a central area, Grand Hotel du
  Boulevard, was supposed to be past the process of
  restoration and renovation by the end of 2008.
  However, this did not happen. Having 89 rooms
  individually decorated and the best of services,
  Grand Hotel du Boulevard hoped to be part of an
  international luxury hospitality chain. The hotel
  is located on the corner of Calea Victoriei and
  Elisabeta Boulevard and will have a small
  shopping gallery at the ground floor. Most likely
  the holding that owns the hotel has revised its
  strategy, as fewer banks nowadays are willing to
  finance projects like this one without a
  franchise contract or international management
  chain.
• Opera Plaza Hotel in Cluj is no longer the only
  five star hotel outside of Bucharest. Aurelius
  Imparatul Romanilor is the new five star hotel in
  Poiana Brasov. This hotel is owned by the chain
  Imparatul Romanilor. Unfortunately, its opening
  coincided with the peak of the crisis and
  apparently the management is having a hard time
  in attracting customers.
• The Romanian seaside now has two five star
  hotels, with Vega being the most recent one,
  opened in Mamaia. However the leader remains
  Grand Hotel Rex, which is open all over the year.
  The hotel owners have invested in 2008 in making
  a lounge and restoring several apartments.

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• 6. SPA
• The SPA segment is the least developed one from
  all the sectors of the luxury industry. There are
  many beauty saloons in Bucharest that describe
  their services as being SPA, but there is still
  a long way towards reaching that objective (Miko
  Beauty, Blues Line and so on)
• The market for health clubs in five star hotels
  is dominated by the Swedish company World Class.
  The company owns three locations in Bucharest JW
  Marriott, Radisson SAS and more recently Jolie
  Ville. Estee Lauder owns two treatments rooms at
  its store on Calea Victoriei.
• Silhouette is another beauty center that managed
  to get a hold of the market in the last years.
  They use the Academie professional cosmetics for
  their SPA treatments. Silhouette is also one of
  the main distributors for Guinot cosmetics.
• Eden Spa is one of the pioneers for the beauty
  sector, offering a large range of corporal
  therapy and facial treatments. Eden SPA services
  are being sold directly to corporate system as
  well, adding to the brands notoriety. One
  obvious stage for further developing Eden SPA
  centers would be the amount of know how obtained
  from the association with international
  companies. Eden has opened in 2008 its third
  location Asian SPA, in the four star hotel Monte
  Carlo Palace.
• Currently there are no SPA services for men, the
  only cosmetics lines sold in Romania with mens
  lines Clinique, Clarins, Lancome, Shiseido.
• There are many international brands that have
  expressed their interest over time to enter the
  Romanian market. Among these we could mention
  Molton Brown, Biodroga and Givenchy. ESPA
  announced the signing of a contract for project
  Silver Mountain (Radisson) in Poiana Brasov, but
  it looks like it is going to be postponed by the
  international crisis.
• Tiriac Imobiliare announced that the SPA
  Shiseido is to be included in the residential
  project Stejarii, in the northern part of
  Bucharest. The company has declared that the
  project is not postponed, and it looks like 2009
  will see the opening of the first sections for
  this project.

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• 7. OTHER LUXURY SEGMENTS
• AUTO
• Almost all international luxury brands are
  officially represented. Rolls Royce, Maybach,
  Maseratti, Ferrari, Audi, Porche, and so on, each
  with its own showroom. In 2007, sales in the
  region were after those in Russia and the
  Ukraine. Maserati is the only luxury auto brand
  in Romania that stated that they are not affected
  by the international crisis.
• In May 2008 the official launch of Ferrari took
  place. Forza Rossa opened a showroom on Bucuresti
  Ploiesti street, close to the Confort hotels.
  Although officials that own and manage Forza
  Rossa stated many times that there have been no
  canceled orders, we disagree with this statement
  due to our sources. Actually, the target for 2009
  will be impossible to reach. The extremely small
  service and limited array of services that are
  offered drive the customers to choose Forza Rossa
  only for parking in car sitting mode, while they
  rely on Germany or Austria for new acquisitions.
• In 2008, Porsche Romania has opened the first
  Bentley / Lamborghini showroom, located in the
  north of the city (Pipera). Bentley is one of the
  best selling luxury brands in Romania. Its
  official presence in Romania is a good sign for
  potential customers but also for those that are
  already owners.
• From our sources, BMW Group has sold only 2
  Rolls Royce cars in 2008, but this is yet to be
  confirmed officially. Many customers probably
  prefer the more extended locations from Germany
  or Austria.

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• OTHER LUXURY SEGMENTS (cont.)
• TRAVEL
• There are no specialized travel agencies in the
  luxury industry. This sector is full of
  opportunity, especially when there are already
  two companies specialized in private flights.
  There is a growing number of people in Romania
  who opt for first class travel, be it business or
  vacation. Business Class tickets bought in
  Bucharest represent 7 of all sales made by the
  air companies.
• SELECTIVE RETAIL
• Sephora and Marionnaud are leaders on the
  selective retail market, with many locations in
  Bucharest and 5 other major cities. However, the
  first place goes to Sephora, with more than six
  locations in Romania.
• INTERIOR DECORATIONS/FURNITURE
• At the moment there are some international
  brands on the Romanian market, brought through
  mono brand stores Armani Casa, Ligne Rosset,
  Casina and Natuzzi. Many other Italian luxury
  brands like Versace Home, Fendi Casa, Moroni are
  present in multibrand stores. The main local
  operator is Class Living, with the biggest spaces
  dedicated to luxury furniture and inside
  decorations. The franchised Natuzzi store is also
  operated by Class Mob. This segment of the luxury
  industry has great opportunity due to the growth
  in luxury real estate in Romania. In 2008 we have
  also seen the official entry of Frette, being
  distributed by Kartel, a local company with many
  international brands under distribution.

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• 8. ORGANIC CONCEPTS/ CHOCOLATERIE
• There are no stores for organic products, and
  some of them can be found in the traditional
  markets.
• The gourmet market is also at the beginning.
  There are only two companies that operate three
  specialized stores who deal with a large range of
  gourmet products. Among these, caviar and foi
  gras can be found.
• The first brands that entered the Romanian
  market were Leonidas, Jeff de Bruges and
  Laederach. Because of the financial crisis, Jeff
  de Bruges closed down its store in Calea Mosilor.
  They still have one location in Iasi. Laederach
  are also the owners of the Heidi Brand, with only
  one location in Plaza Romania Mall. In 2008 the
  company launched the first online shopping site
  for pralines.
• In 2008 the first luxury tea place was opened.
  Triangle DOr is situated on Mihalache Boulevard
  and it is the distributor for the French brand
  Marriage Freres. The same company owns the
  chocolaterie Reine Astrid, in a nearby location.
• At the end of 2008 weve witnessed the opening
  of the first integrated organic concept. We are
  talking about the franchise OliviersCo, with a
  store situated in Piata Dorobanti. The store
  sells exclusively organic products made out of
  olives cosmetics, sweets, spices, and so on.

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• 9. DATA ON THE LUXURY INDUSTRY IN ROMANIA
• CPP estimates that the value of the local luxury
  industry is above 190 million Euros. Segments
  included are fashion, accessories, jewelries,
  watches, auto and inside decorations/furniture.
  Figures do not include segments like hospitality
  and cosmetics. The luxury industry has grown with
  23 percent during the first 9 months of 2008, in
  comparison to last year. However, by the end of
  the year it dropped by 14 percent on all of the
  luxury industry segments. This trend will be
  maintained throughout 2009 as well, but it will
  not exceed losses greater than 20 percent. CPP
  sees a slight comeback for the industry starting
  with November 2009.
• The analysis made by CPP is based of estimative
  sales, as official figures havent been released
  by the operators and owners of the luxury brands
  present on the market.

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• 10. OPPORTUNITIES
• Fashion
• Women
• - Wedding dresses
• - Business suits and formal clothing for women
• - Accessories
• Men
• - Shoes, bags and leather accessories
• Hospitality
• - Boutique type hotels
• - Designer branded hotels
• - SPA Hotels (especially day SPA)