Dec 16, 2016
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Luxury brands must upgrade their offerings in Russia, says report

Dec 16, 2016

The Russian luxury market is bouncing back, but many luxury brands are still struggling to make a strong impact, according to a new report released by customer engagement specialists ContactLab and investment company Exane BNP Paribas.



Following a difficult trading year in 2015, luxury sales in the country have grown 5% compared to the previous year and the market is now valued at €3.5 billion. With Russian luxury consumers spending on average 60% more than their global counterparts, the country now represents 1.4% of luxury sales worldwide, based on ContactLab/Exane BNP Paribas's definition of luxury.

Despite the big growth potential, many luxury brands are failing to adapt their offering to the local needs. In fact out of 32 brands analysed, only 4 are currently offering customer service in Russian.

And while some brands offer Russian websites, many others such as Valentino, Hermés, Chanel, Prada and Zegna still rely on their worldwide websites, says the study.

 “The Russian market represents huge growth potential for global luxury brands,” says ContacLab CEO Massimo Fubini. The e-commerce market is of particular importance, but is lagging behind other international marketplaces with a penetration of only 2.5% versus 7% for worldwide penetration.

Some brands, such as Dolce & Gabbana, Burberry and Swatch, are tapping into this opportunity by engaging Russian customers on social media platforms like Twitter and VK. The study also highlights Burberry, Louis Vuitton and Loro Piana’s strength in the area of digital customer experience. But for many brands, e-commerce and social media interactions are a missed opportunity.

“As we have seen, e-commerce in the luxury sector remains an untapped market for many brands, with a great number of Russian consumers unreached at the current time,” continues Massimo Fubini.

“We were surprised at how some companies have not put together complementary newsletters, local content and URLs. Armani is the exception in this case, leading the way with localised content that really speaks to the local market.”

Global brands wanting to attract Russia’s luxury-loving elite need to give a rounded service to Russian consumers, including a full array of services in Russian language and making their customers feel valued and secure in their purchases, finds the report.

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