Escada, Ferragamo, M Missoni, Vivienne Westwood, Gianfranco Ferre or Hugo Boss are just some of the more problematic brands currently active in the fashion segment. Some brands have closed down their stores, other are relocating. The mass media conjured several reasons for this: the fact that Romanian people like to shop abroad, the current state of the economy or high costs for rent. Some have even stated that Romania doesn’t have a market for luxury goods. We can only agree with the high costs for rent, but that changed once the crisis hit.
However, the main reasons for the problems faced by these brands are the brands themselves. Almost no investor who brought these brands to the local market has done a feasibility study on the market itself. We can understand the fact that these brands were “easy to get” (in a franchise system of multibrand) but the reason for taking these high stakes is hard to understand. Few have noticed the fact that lately on the Romanian market only “easy to get” brands have made an appearance. This is because the financial situation for these brands is difficult and they are desperately seeking new markets suitable for expansion.
In our opinion, the crisis will be useful for the industry. Investors won’t be able to access credits so easily and will be forced to think twice and on long term when pondering about representing brands on the local market. This is also about the franchise versus multibrand issue, where the latter is supposed to be either a step further towards a franchise or a business that’s not supposed to last too much on the market. This is the case with multibrand retailers in Romania. Except for Alsa and Distinto, no other retailer has attempted to make the step towards a franchise. We find it impossible to sustain a monobrand retail business indefinitely, since sooner or later each luxury brand will want to have its own business concept and be able to sell in a dedicated location. Another minus for multibrands is the fact that unlike the franchise, making strong customer ties is almost impossible. This is not only due to the price strategy but also about building stock and variety.
You can find out more about the above-mentioned subject during LUXURY DAYS, between the 17th and 18th of March 2009. www.luxurydays.ro
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