We cannot help but notice the constant media coverage in the Romanian market indicating the international crisis as the main and only reason for the decline of the local luxury fashion and accessories market.
Before the crisis, most of the retailers with modest performances blamed the high real estate costs for their problems. The same retailers now blame the international crisis as the cause of their declining sales.
As for the approach taken by the media, we are not surprized by their negative and sensational approach, over exposing all crisis related problems. The best way to understand the current status of the local luxury retail market is to take each business case by case and brand by brand.
RAFAR, the fashion and accessories division of RTC Holding now blames the crisis for the closure of its BALLY monobrand store, which they had only acquired a year before. They would not admit that BALLY had been a brand with a previous franchisee bankruptcy in 2005 and also the fact that it is a brand with poor international performance in the past decade due to its ambiguous positioning and tired designs. That is why, we can only conclude that Rafar/RTC imagined anything can sell in Romania. Reality proved them differently.
ALSA Group, one of the pioneers of the local luxury fashion and accessories market also fails to admit its difficulties recently come not only from the crisis but also from the unfortunate strategic decisions taken before the crisis, especially the franchising of Marella, Mariella Burani, brands with limited awareness and appeal on the Romanian market. Another mistake was to neglect the development of MAX MARA which has remained with one small store location on Calea Victoriei in spite of the potential of the brand. It might also be the fact that financially Alsa could note cope to develop 2 major brands at the same time, so they had to chose one, which was Zegna. We wonder how the Alsa Group would perform these days, should it have decided to franchise at that time Armani instead of Marella and Mariella Burani.
PLUS IT is yet another local retailer which seems to have taken the Romanian market for granted, without any prior feasibility analysis and a strategic planning. Plus IT did not take into account the fact that the Romanian luxury consumer would evolve and brands such as Versace, Ferre or Cavalli would lose their attractiveness, as it happenned all over the world. We counted in Bucharest and Sofia almost 30 locations in each city carrying outlet and counterfeit collections of Just Cavally, GF Ferre, Versace Jeans Couture and D&G.
These brands have been showing declining performances in the past five years at least and the international crisis has only deepned the Ittierre IT Group which was recently forced to file for bankruptcy. The only brand that would have saved the IT portfolio was D&G, yet, the Dolce Gabbana group acted smart in terminating the licence agreement and bringing the line within their own business.
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