Russian Recession Hits Luxury Brands

Last year, the rouble depreciated almost 50% against the US dollar, which made a great impact on the purchasing power of Russians, forcing them to cut spending and postpone expensive holiday plans.

Data from the United Nations World Tourism Organization show that in 2014, Russian outbound travel expenditure fell by 6%, which has increased by more than 20% over the past few years.

Russian tourists are big buyers of luxury goods, especially European cities such as Milan. They often buy brands such as Ferragamo, Moncler and Bourriau Ni (Brioni), such as Kering.

Rinascente menswear clerk of Milan luxury department store said Russian customers almost disappeared.

Data from Global Blue, a rebate company, showed that expenditure on Russian tourists fell by 17% last year, down 51% in January and 44% in December last year.

Despite the unexpected increase in sales of some commodities in December last year, many brands were not optimistic about 2015.

Italy fashion group Roberto Craveri (Roberto Cavalli) expects Russian sales to fall by 20% this year.

Sources said that since January, LVMH's luxury watch brand.

Sales have fallen by 20%.

How to deal with it?

In order to retain customers, some brands sacrifice profit margins to keep Russian prices unchanged.

Jerome Biard exported Swiss watches through his company LPI.

It also acts as a proxy for Burberry (Burberry), Michael Kors, Armani (Armani) and Raymond Weil.

The rise of the Swiss Franc has made an additional impact on him, but he did not pass the cost on to the customer.

"My strategy is to protect my distributors so that they can come out at the end of the year and at the beginning of the year.

So we agreed to sacrifice profit margins, "Biard said.

LVMH's high-end Swiss brand, Tag Heuer, said prices remained relatively unchanged in Russia last year, but plans to raise about 20% this month.

Underwear manufacturers such as Lise Charmel are also trying to maintain the price burden in Russia.

But some businesses have to cut spending.

French underwear manufacturer Maison LeJaby has laid off 27% or 50 people this month.

30% of the company's revenue comes from Russia.

The Ulysse Nardin, which was recently acquired by Gucci (Gucci) parent company Kai Yun group, left some employees temporarily unemployed because of a sharp decline in Russian business last month.

Tourism enterprises are under attack

Airlines, travel agencies and hotels that have more Russian business have also suffered the same impact.

Some hotels in Turkey sharply reduced prices, because the number of Russian tourists fell by more than 21% in 2014 and 22% in January.

30% of Egypt's tourism business came from Russia, and the number of Russian tourists declined by 50% in December last year, down 20% in January.

Egypt exempted Russians from 25 dollars in tourist visa fees until the end of April, and plans to launch a large-scale publicity campaign in Russia in the coming months.

Airways such as the United Arab Emirates have responded to reduced Russian travel, reducing flights or seats.

Courchevel, the ski resort, expects its number of Russian tourists to drop by 20-30% this year, and the number of tourists who come there will be reduced.

"Customers in Russia used to buy 6000 euros of wine, and now they only buy hundreds of euros," said Adeline Roux, director of tourism in Gaucher.