French luxury giant Hermès has recently opened to great fanfare a new flagship store in Warsaw, Poland. The directly operated store is not only the second largest in Central and Eastern Europe but it also carries all the product lines of the company including saddlery and home decor. The store is housed within the stunningly restored Raffles Europejki luxury hotel in the heart of the city, undoubtedly the most prestigious in the Polish capital.
To add to the importance of the directly operated store Hermes also opened a regional office at the Europejski offices (above the Raffles Hotel) which is apparently overseeing Poland, Eastern Europe and Russia. The ‘French connection’ is obvious not only because of the historical close ties between Poland and France but also economic – in the past 2 decades, France ranks very highly among the top investors in Poland. Additionally, the Raffles Europejski Hotel (historically Europejski Hotel) is owned by Vera Michalski-Hoffmann of the billionaire Hoffmann-La Roche family which controls one of the largest pharmaceutical conglomerates in the world.
Hermès CEO Alexis Dumas has often voiced the pride that the company, which embodies the true essence of luxury, has no marketing department and no marketing manager, thus is not guided by marketing research. The Warsaw store opening seems to hail yet another ”achievement” which is the lack of a business plan and feasibility studies, Poland being known as a traditional ‘Anglo-Saxon’ market, Polish wealthy (similarly to Hungarians, Czechs or most of the Nordic countries) mostly focus their luxury spending on cars and residential real estate (including holiday homes).
This is completely opposite to Romania, Serbia, Ukraine or Bulgaria where the ‘show-off’ factor is of utmost importance for the rich and wealthy. It even goes as far as people owning an ultra luxury car while living in a small apartment but also in some countries people would take up a loan to purchase a handbag or a luxury watch. (Hermes is not present in any of these countries)
While being absent from Ukraine, the country that still produces the highest turnovers for most of the international luxury brands present with mono-brand stores, Hermes’ choice for Warsaw is rather ‘bizarre’ as the French would say, with all the other international luxury brands (Louis Vuitton, Gucci, Bottega Veneta, Saint Laurent etc) operating mono-brand stores half the size of Hermes and in the case of Louis Vuitton with a limited selection of the brand collections and a rather small inventory compared to major capitals in the region.
Italian luxury menswear brand Ermenegildo Zegna has closed and market sources indicate that a third investor (franchisee) may reopen by the end of this year in another location, yet similar in surface. Tod’s and Ralph Lauren (both franchised) have relocated to smaller locations and may be imminently follow in the footsteps of Zegna.
Best performing luxury fashion sector remains the menswear one, with all major international luxury men’s fashion brands present with considerable inventory within large multi-brand stores such as Davide Lifestyle (Kiton, Santoni, Loro Piana). After many years with a presence in wholesale, Corneliani opened a mon0-brand stores downtown. Brunello Cucinelli is reportedly opening a mono-brand franchised store within the proximity of Raffles Europejski Hotel.
Except Rolex and Omega, no other luxury watch brand operates a mono-brand store in Poland which is also the case for luxury jewellery brands. According to CPP research, Louis Vuitton and Gucci post lower turnover not only compared to their stores in Kiev but also Bucharest and Budapest, Prague being the only better performer thanks to 60-70% of sales made to Asian and Middle Eastern foreign travellers.
Hermes store has also been reportedly performing well in Prague (directly operated) having recently even completed an extensive renovation.
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