Russians Prefer Italian To Other European Fashion Brands

Russia seems to be recovering from the recession that it entered (we should perhaps say slipped into) in 2014. This is great news for Italian companies, in particular in the fashion industry, which since 2010 have lost tens of millions of euros in exports to a country that had become one of their main markets.

The first positive signs came in 2016: in January-September, Italian clothing exports to Russia grew 5%, while exports from the 14 other major EU countries fell, and especially from the biggest ones: Germany (-12%), Spain (-4%) & France (-3%).

The data was presented in February at the CPM fair in Moscow and confirms what had already been observed at the Pitti Uomo fair, held in January, and at the Milan fashion weeks, marked by a return of Russian buyers. The Russian clothing market had grown continuously from 2003 to 2008, rising from €3 billion to €38.2 billion, and later came to a standstill until 2010, in the wake of the global financial crisis triggered by the Lehman Brothers collapse.

After a recovery from 2010 to 2013 - with Italian companies in the textile-clothing-fashion industry benefiting greatly and the market recovering from the €27.4 billion low hit in 2009 to €35 billion - another collapse followed, due to the international sanctions after Russia's military intervention in Crimea in 2014 and the subsequent collapse of the ruble and of oil prices.

For 2016, estimates point to a 14% drop from 2015, for a total market turnover of €21.5 billion. However, as we said, Italy is bucking the trend and, with respect to the apparel industry, from January to September it was the only country to grow and remains firmly in first place with 45.9% of the total, followed by Germany, Spain and France.

Furthermore, the market share increased by more than 4 percentage points from 40.4% in the same period of 2015, mainly at the expense of Germany, whose market share fell from 26.3% to 24.9%. Another sign of the economic recovery and of a pickup in consumption is tourism: according to data from Global Blue, from October to December 2016 tax-free purchases by Russian tourists increased by 9%, with an average outlay of €755, up from a 19% drop in the first nine months of the year. It is Russia's domestic market, however, that is of particular interest for Italian companies. The case of the 70,000-square-metre luxury department store Tsum, in Moscow, is emblematic. Tsum celebrates its 110th anniversary this year, and "buys 90% of the Italian fashion brands," said Alla Verber and Alexander Pavlov, respectively fashion director and general manager at Tsum at Milan's fashion week.

"It is true that in the past two years Russians have traveled less, but they did more shopping at home," said Pavlov. "Or at least they shopped at our department store. In 2016, sales increased by 40%, because we decided to align our prices with European prices, slashing them by 20-25% for almost all Italian and French brands. What's more, since the Russians' love for Italy is reciprocated, we have good news for those who will come to Moscow. Tsum is about to launch a pilot project on tax free purchases, which will allow a 13% VAT deduction."