Russian luxury market bouncing back, but some brands are lagging behind

This article is brought to you by Retail Technology Review: Russian luxury market bouncing back, but some brands are lagging behind.

Despite a difficult trading year in 2015, luxury brands are staging a comeback in the Russian marketplace according to Luxury in Russia: the comeback, a new report released by customer engagement specialists Contactlab and investment company Exane BNP Paribas.

However, some brands appear to be better than others when it comes to adapting their offering to Russian consumers – for example only 4 brands are offering Russian language customer service.

The luxury market in Russia is now valued at €3.5 billion following a 5 per cent growth in sales compared to the previous year, representing 1.4 per cent of luxury sales worldwide. Given the fact that Russian luxury consumers spend on average 60 per cent more than their global counterparts, Contactlab has found surprisingly lax attempts to reach Russian consumers amongst leading luxury brands.

Contactlab's team of specialists carried out analysis of 32 brands and ranked them across different metrics. The study highlighted the strength of Burberry, Louis Vuitton and Loro Piana in the key area of digital customer experience. These brands perform well when it comes to localised Russian websites, product selection and Russian language mobile apps, amongst other criteria. The report shows how, surprisingly, Dolce & Gabbana, Burberry and Swatch are the only international brands who engage Russian customers on social media platforms such as Twitter and VK.

Perhaps the largest area of potential growth for luxury brands in Russia is ecommerce. Ecommerce penetration in Russia (as a percentage of total retail sales) lags behind other international marketplaces – worldwide penetration in 2015 was 7 per cent whilst in Russia it was only 2.5 per cent. 19 brands offer Russian websites, but some brands such as Valentino, Hermés, Chanel, Prada and Zegna still rely on worldwide websites and neglect to tailor content for local consumers.

Massimo Fubini, CEO of Contactlab comments: "The Russian market represents huge growth potential for global luxury brands. Some luxury brands are well behind the curve in the Russian marketplace and in engaging with Russian customers. It is surprising how few international brands are on the Russian social media landscape as this is a key area to reach people in a personal way and build a relationship with the brand."

The report highlights a gulf between luxury brands in terms of customer care. Only 4 brands currently offer phone and email assistance in Russian with rivals Chanel, Gucci, Hermes and Prada conspicuous in their lack of localised service.

Massimo continues: "As we have seen, ecommerce in the luxury sector remains an untapped market for many brands, with a great number of Russian consumers unreached at the current time. 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."

"Some brands are clear leaders in giving a rounded service to Russian consumers, that means phone and email assistance, personal services such as style advisory and in-store appointments. Building a footprint in this market requires brands to be fully committed in offering a full array of services and making their customers feel valued and secure in their purchases."