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ROMANIA

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Title: ROMANIA


1
  • ROMANIA
  • Luxury Market
  • MARKET REVIEW
  • 2009

2
  • 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

3
  • 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.

4
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.
5
  • 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.

6
  • 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.

7
  • 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.

8
  • 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.

9
  • 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

10
  • 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.

11
  • 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.

12
  • 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

13
  • 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.

14
  • 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.

15
  • 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.

16
  • 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.

17
  • 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.

18
  • 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.

20
  • 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.

21
  • 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.

22
  • 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.

23
  • 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)
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