Bulgari, the elite Italian luxury jewellery and watch brand, is opening its first store in Russia in November amid growing signs that the country's richest citizens are spending more of their wealth at home.
The company will open its first mono-branded store in November in GUM, the prestigious shopping emporium located on Red Square, a Bulgari insider told bne IntelliNews ahead of the launch. Plans are in the works to add another Moscow store in January and a couple more each year.
Bulgari is understood to have secured a five-year lease at GUM just as sky-high rents in Moscow are beginning to decline for elite retail space amid falling numbers of shoppers at the city's malls.
The company had up until now been partnering solely with Mercury, the biggest luxury brands group in Russia that sells everything from Gucci and Prada handbags to Maserati and Bentley cars and Chopard jewellery. It is understood that Mercury will continue to offer Bulgari products in its stores.
Bulgari, for which singer and ex-French first lady Carla Bruni Sarkozy is brand ambassador, is the world's third-largest watch and jewellery brand behind Richemont's Cartier and Tiffany, with estimated sales of around 2bn euros.
This year has seen more foreign retailers open new stores in Russia than 2014, despite the devaluation of the ruble and falling incomes, according to real estate consultancy Knight Frank. Since the start of January, 32 foreign brands launched their first stores in Russia, with two thirds targeting the middle classes. In the three months from July to September, 14 new foreign retailers set up shop in Russia - two more than the number of newcomers in the same period last year, according to the report.
Bulgari follows in the footsteps of a number of other luxury brands, such as Prada and Gucci, who have decided to go down the route of self-development in Russia. Tiffany, which also partnered with Mercury, opened its first premises in 2013 in GUM. British designer Sir Paul Smith opened his first ever monobrand store in GUM in Moscow's chic Petrovsky Passage in September.
Lower sales of luxury goods have been partly offset by much lower costs. Rental prices are down 20-40% as a record volume of high-end shopping space came on the market this year, as projects started in the relatively benign economic years, 2011 and 2012, came online. And Russia's cost of labour is now less than China's.
Russia's first recession since 2009 has led to a decline in foreign travel. Spending by Russian tourists abroad slumped 17% last year and continued to slide this year, Global Blue, an international tax refund group, told the Financial Times.
Foreign travel has been among the first luxuries to go. Spending by Russian tourists abroad fell 17% in 2014 and continued to decline in the early months of this year, says Global Blue, an international tax refund group.
Jean-Christophe Babin, chief executive of Bulgari, told Milano Finanza newspaper in March that Russia and Mexico are the company's key markets this year.