Hungary‘s worsening economy and its political isolation from the rest of Europe has been impacting all sector, luxury not being spared. Despite new direct flights between Budapest and three cities in China and continued direct connections to Dubai and Kuwait, the incoming travellers are not of a wealthy profile who would stay in luxury hotels or shop at luxury stores. CPP estimates that luxury sales will be down 30% to 40% compared to 2024. Wealthy Hungarians only make up for a third of luxury sales (luxury retail) and most of them prefer to make luxury purchases abroad. There are no plans for any new store openings and there may be closures unless there are improvements.
Despite Poland‘s relative economic performance, the country’s luxury market is expected to be stagnant in 2025. Less than half of luxury sales are made by Polish nationals with the rest dependant on foreign travellers – Warsaw is still one of the cheapest capital cities in Europe with very low luxury hotel rates. Wealthy Polish match the Anglo-Saxon client profile who prefer to invest in luxury cars, housing (including vacation residences), home collections and travel, to the detriment of luxury fashion. The influx of wealthy Ukrainians does not seem to have had a significant impact on luxury sales. Warsaw boasts the highest number of luxury mono-brand stores after Prague, including Hermes, Gucci, Bottega Veneta, Jil Sander, Armani, Canali etc.
Romania‘s luxury market, one of the most promising in the region, will be negatively impacted by the very harsh recent austerity measures recently imposed by the Romanian Government, as the country had reached the highest deficit among all countries in the E.U.. Political instability and cancelled Presidential elections have also produced negative impacts. It remains to be seen whether Hermes remains on track to open, as initially estimated, late 2026. Chanel, Prada and Ralph Lauren are among the major internatioal luxury brands which are absent from the Romanian market.
In the meantime, the mono-brand franchised boutiques of Dolce&Gabbana and Valentino in Bucharest are shutting down this Fall to relocate in a multi-brand format at Palatul Ştirbei (Stirbei Palace), a development by Terminal of Fashion on Calea Victoriei which will also house brands such as Dior, Moncler, Celine, Jimmy Choo, Moncler, Santoni – all brands will be featured in a multi-brand retail concept which provides more flexibility and a smaller investment than mono-brand franchising. This is the third market entry for Dior into Romania having closed two previous mono-brand franchised boutiques in Bucharest over the past 8 years. Terminal of Fashion will continue to operate Zegna as a stand alone store.
Bulgaria, Serbia and Croatia remain the least developed luxury markets in the region, with no major luxury brands operating mono-brand stores. Nevertheless, Bulgaria is the first Eastern European market to adopt the EURO from 2026.
E-commerce and shopping abroad, especially in major E.U. capitals as well as Dubai remain the biggest challenge for the local luxury retail markets across all Eastern European markets. The potential lies with luxury retailers who strive for razor sharp buying, impeccable customer service and an increased targeting for foreign travellers.
DIOR boutique Warsaw
More from ANALYSIS
China shows no signs of a imminent recovery
Disappointing data on Chinese consumption is coming in for the Mid-Autumn Festival, which is held annually in China on the …
LOUIS VUITTON secures $586 million damages in battle over counterfeits
Louis Vuitton has secured record damages award in its ongoing battle against counterfeits. In an order last week, a U.S. …
Why luxury brands should be more worried about influencers (ANALYSIS)
Luxury brands from the most diverse luxury sectors have been recognising the growing importance of social media but, post pandemic, …
