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Middle class, rich, ultrarich: consumers' overview, profile and spending patterns (also distinguishing 1990s, 2000s, 2010s).

During the last decades the luxury market in Russia has undergone significant changes.

1. Consumers' overview

1990s: after the collapse of the Soviet Union in the 1990s a new generation of wealthy Russians (Russian millionaires and nouveaus riches, so called “new Russians”) was born. The main charcteristics in terms of luxury for that period are represented by the lack of knowledge of luxury, great spending ability, association of luxury with logos and price. Luxury is reserved for a small minority of people.

2000s: the boom years for Russian economy, creation of a new social class: the middle and upper-middle class seeking for knowledge and experiences. Nearly all global consumers say they save at least some of their money. Only 7% say they never save. In Russia those who claim to never save reach for 18%. That is why it is much easier for the luxury brands to convince Russian consumers to spend. The potential buyers of luxury are no more only rich and ultrarich but also the upper-middle class.

2010s: For the Russians the three most appraised attributes in luxury remain : aesthetics, premium quality and personal history. Though an increasing number of occasional customers are claiming “a right for luxury”, they are a lot but they buy less. A real luxury in Russia is still associated to a limited access, private and exclusive shopping. An economic slump due to the Ukrainian conflict, sanctions and a collapse in oil prices again deepened the disruption between the rich and the poor with a middle and upper-middle class drastically decreasing. While the middle market is shrinking slightly, premium brands are holding up.

Consumers' profile and spending patterns

Middle class:
The middle class in Russia is represented by people who after the Soviet Union adapted to the conditions of the modern market economy and their consumption level and lifestyle are charcaterized by:
-       living in an apartment (rented, acquired by using mortgage lending or inherited)
-       ownership of at least one car
-       significant expenses for services and lifestyle activities: education, entertainment, insurance, vacations abroad 1-2 times per year.

Russian middle class are people with higher education who earn above the average and don’t do manual labor. Doubled to 40% of the 146 million-person population under Putin. The middle-class accounted for 86% of household consumption by 2010. The net income per family member is 17,000 - 25,000 euros annually (Moscow and Saint-Petersburg).

The post-Soviet Russian middle class has become object of wide interest and international research work due to its sudden and emerging purchasing power, ambitious travel schemes and passion for luxury brands.
It is expected to shrink to 30% in the next years or two. Some researches are even more pessimistic claiming that the Russian middle-class could halve to 20% (back to the 1998 level). About half of the middle-class is represented by state employees and people working in public companies. De facto, only about 15% of the population constitutes the core of the middle-class, while other 25% is on the margins and vulnerable.

Rich & Ultrarich:
According to Credit Suisse report in 2013, just 110 individuals were holding 35% of the country’s riches. This is the highest level of inequality in the world (exception: some small Carribbean nations). Globally the ultrarich hold only 1-2% of the national wealth.
This category is represented by Russia’s elite politicians, oligarchs, celebrities. These are people who own houses worth several millions of euros, luxury cars, private jets, who have real estate abroad and may even spend most of the time abroad.

The recession in Russian economy has effected the ultra-rich spending for luxury in a lateral way: the 43% natonwide drop in car sales has not effected luxury models though now they are being sold at steep discounts (reduction from $410,000 to $317, 000); the wealthy no longer accept paying three times the price for Tiffany’s ring just for buying it in Russia; there have been some reductions in the housekeeping staff; the ultra-rich continue selling their assets and investing them abroad.
One of the most popular destinations for investment for ultra-rich Russians is London. To avoid economic crisis in homeland multimillionaire Russians are using “investor” visas to transfer there their residency and obtain the British citizenship in just 6 years (sometimes even quicker). The number of fast-track visas issued to Russians in 2014 increased by 69% in comparison with the previous year (nearly 95% of applicants are wives and children while husbands continue managing business abroad).

2. Market overview: market size & key trends by product type & by retail format (clothes, jewellery, yachts, personal care, dining, etc.)

Due to the slowdown in the consumer sector in the developed nations, luxury brands are turning their gaze to BRIC countries. According to “Doing business 2015” report by the World Bank Group, Russia was ranked 62nd for favourable business environment and, in general, demonstrates high potential for luxury consumption.

Forbes report showed that the number of billionaires in Russia has grown from 8 to 110 since 2000. This huge gap is the result of the elite, extractive society in Russia. Russia is ranked as the 15th largest economy by nominal GDP and as the 6th largest economy by purchasing power.
The Russian luxury market today represents about 4% of total global luxury sales and at least 8% of the high-end of the market. However, it is driven by a relatively small number of people with very high spending power, typically shopping the top end of the spectrum.

During last two years the situation in Russia, likewise the luxury market, has been impacted by various geopolitical and macroeconomic events. Significant government expenditure on Olympic Games, economic sanctions imposed by the US and EU, decrease of oil prices led to an economic slowdown and significant rouble devaluation. Russian tourist demand in 2014 decreased by 30 % compared to the same period in 2013. The low level of Russian currency had impact also on the luxury products market: luxury brands and distributors were forced to increase prices, while consumers were reasonable in their spending.

All this led to Russian luxury consumers bringing forward their domestic luxury spending. Sales of high-end cars rose strongly by the end of 2014. Richemont Group also evidenced that domestic demand was offsetting the impact of a significant withdrawal by Russians from the foreign markets where they were used to go and spend their money.
In general, the trend in the Russian luxury market is that attention is paid to absolute luxury goods as investment pieces. The wealth try to protect their assets, i.e. invested in art, cars, jewellery, watches and real estate. The most sought after products were those “ones of a kind” or as parts of limited collections, manufactured by worldwide known craftsmen and made of precious and unique materials. That is why the demand for vintage luxury products was activated in Russia.
Also, the economic slowdown pushed many brands to switch their attention from regions to the extension of their presence in Moscow and St. Petersburg, the cities with the biggest concentration of high net worth individuals in Russia (70%).

2014 was also characterized by reduced traffic in the leading shopping centres as a result of the growth of the number of shopping centres and outlets which led to less concentration of consumers per one centre. The main means of consumer attraction for big luxury retailers are discounts and entertainment.

As for trends in internet retailing in Russia: the number of Internet users in Russia is constantly growing. Online shops provide consumers with the possibility to shop luxury products which are not present in traditional retail channels or, in general, in Russia. However, the sale of alcohol and of goods made of precious metals and stones was banned in Russia in the second half of 2014 and made it impossible to buy cheaper products from these categories from foreign internet sites.

Russian luxury market size.

Main data:

Global luxury market size: $339,370.9 million USD
Russian luxury market size: $10,409.2 million USD
3,1% of global market volume, with growth above average.

Current situation: Russian purchases are down by 3 percent, due to a slowdown of tourism flows, but show a positive trend of the very high-end segment, reflecting the resilience of top spender consumers.
According to the World Luxury Index, a ranking of the top 50 most-searched brands in Russia, presented by Luxury Society, Yandex & Digital Luxury Group, the Russian Luxury breakdown by segment is as follows:

The cost on luxury in Russia is elevated, the prices are 20-30% higher than in London and 35-40% higher than in Paris.

By retail format:

Cars: The premium car segment usually proves most resistant to the market crisis. Against the background of a significant decline in sales of cars of the mass segment in Russia, premium car sales increased by 3.2% over the first ten months of 2014, the luxury segment – by 26.9%. The leaders of sales in the premium segment were the “German Three”, in the luxury segment the TOP-3 were Bentley, Rolls-Royce and Maserati. The absolute leader in the luxury segment is Bentley. SUVs of various types accounted for more than half of the market of premium and luxury cars over the first ten months of 2014.

Watches and jewelry: It’s a common belief that to succeed in the Russian jewelry and watch market the brand has to offer “bling” to meet the Russian taste. It is not only a stereotype. Data shows that there is large interest in flashy materials and brands focusing on shine (gold, diamonds). Swarovski is the most searched jewelry brand in Russia, as it fits the Russian taste for “bling” and still remains accessible luxury. Top three jewelry brands by search: Swarovski, Tiffany & Co., Bvlgari. Top three watch brands by search: Rado, Omega, Rolex.

Fashion luxury sector in Russia stands for nearly 1,8 billion euros that counts for nearly 25% of the general revenues from fashion market. Moscow is the leader on the luxury market in Russia.

Beauty: The first three luxury brands in beauty segment in Russia are Chanel, Lancôme and Guerlain. Guerlain does quite well in Russia and further strengthened its ties with the country when the company became an official sponsor of the famous Bolshoi theatre in 2011.

3. Key players on the market, “independent” players (foreign brands who decided to work independently), emerging Russian brands.

Key players

Since the beginning of the 90’s the “Big Five” was dominating the fashion market in Russia. These are: “Mercury Group”, “Bosco di Ciliegi”, “JamilCo”, “Crocus Group” and “Podium”. They control nearly 80% of the fashion market, followed by other secondary companies, like “Caesar”, “Russian Gold”, “Seventh Element” and “Caligula”. Nowadays they occupy the principal shopping areas with boutiques: Tretyakovski Proyezd, Stoleshnikov Pereulok, Kuznetski Most, Petrovka, Kutozovski Prospect, Bolshaja Nikitskaya. At the same time, different boutiques are abandoning Tverskaia Ulitsa area because of small areas for rent and problems with parking.
For nowadays 4 fashion distributors out of the “Big Five” have exclusive rights for sale for more than 50 fashion brands (except “Podium”).

Independent players

During the last year, however, there have been diverse interruptions of those contracts that granted exclusive rights to sell certain fashion luxury brands. Such brands as Chanel, Valentino, Hermés, Christian Dior, Gucci and Russian distributors have interrupted their relative contracts on exclusive rights for brand distribution on the territory of Russia. This trend may be caught up by other brands in the near future. This situation is explained by the maturity of the market, thus brands see the market schemes as more transparent and clear.

Russian luxury brands

As for the Russian luxury brands, there’s something inherently “Russian” about them but as players of a modern luxury world, many of them have chosen Paris, London and New York as headquarters for their business but continue to evoke the old-world opulence of the Tsars period by their style and communications.


Alena Akhmadullina
Created by the designer Alena Akhmadullina in 2001, this brand became a unique phenomenon in the history of Russian design and fashion world.

Alexander Terekhov
Trained at Yves Saint Laurent’s in Paris, known for his partnerships with the Walt Disney Company for the film “Oz: The Great and Powerful” and with the Italian handbag Coccinelle, Alexander Terekhov’s popularity has grown exponentially in the last years. He was awarded the Designer of the Year by GQ Magazine Russia in 2011.

Ulyana Sergeenko
Distinguished by a stunning mix of elements – Russian traditional styles but yet modern curvaceous hourglass forms - this brand, established only in 2011 has received many praise from respected fashion critics and magazines. It is very loved by Russian celebrities and IT-girls.

Named designer of the year by GQ Magazine in 2007, Dmitry Logvinov is one of the most popular designers among Moscow’s fashion mavens. His sought-after scarves, minimal yet sexy designs for both men and women are among the favourites.

Yasya Minochkina
Born in Ukraine and graduated in Central Saint Martins and Royal Academy of Fine Art in London, Yasya Minochkina moved to Moscow where she founded a namesake fashion brand. She was featured by Vogue Italia as a promising designer in magazine’s special edition Vogue Talents. The brand is constantly featured in the most respected editorials and online platforms. Among her clients: models Alla Kostromicheva and Irina Shayk and others.

Vika Gazinskaya
Adored by bloggers, her playful designs can be found on such famous online retailers as: Net-A-Porter and Browns. The recent collaboration with the H&M-owned label “& Other Stories” has brought her designs also to the mass-market.

Igor Chapurin
Igor Chapurin debuted his first collection “From Russia with Love” in 1995 and founded his first boutique in Moscow in 1999. He is a member of the Russian Association of Haute Couture and he twice won its coveted prize. He developed his collection not only in fashion but also in jewellery and furniture.


Alena Gorchakova
Alena Gorchakova started her career in New York where she designed window displays for Bergdorf Goodman, Henri Bendel and Hermès. When she returned to Russia, she became the local distributor for such brands as: Chopard, S.T. Dupont, JLC, Breguet. She launched her fine jewellery brand in 2010. Her creations reflect Russian culture and resplend with diamonds, rubies, sapphires and pearls, crafted by artisans in Geneva.

Ilya Cluev produces his one-of-a-kind jewelry pieces in Swiss and Italian workshops. The brand produces sterling silver signature collections, interior pieces and sophisticated crystal objects with precious stones and materials.

The most iconic of all Russian luxury brands. It dates back to the 1800’s when Peter Carl Fabergé, a Russian jeweller, became famous for his Fabergé Easter eggs. He then launched his jewellery house in St. Petersburg. In 2012 the brand was acquired by London based mining company Gemfields for $140 million.


This Russian electronics manufacturer is best known for its million-dolalr feature phones, flash drives and smartphone cases in titanium and gold. Its Avantgarde mobile phone launched in 2007 almost instantaneously ranked among the top 10 most expensive mobile phones in the world (Forbes list).


Helen Yarmak
Helen Yarmak is known for her luxurious collections of fur, jewellery and crocodile accessories with stores in Moscow, Milan, Zurich, Odessa and Kiev. Her newest signature boutique is located within the famous Plaza Hotel in New York City.


Imperia Vodka is the luxury offering from Russian Standard. It is described as an exceptionally clear, velvety-smooth, luxurious spirit made in Russia.

This vodka is blended from grains in the plains of Siberia with silver purified water. The brand produces five distinct vodka’s: Polo, Transatlantic, Racing, Art, Charity and Gastronomy.


Marussia Motors
It is first Russia’s high-performance car company, founded in 2007. Marussia became the first Russian car brand to enter the 2010 FIA Formula One World Championship in partnership with Virgin Racing F1 which consequently acquired a majority stake in the team, now called Marussia Virgin F1.


Sukhoi SuperJet International
SuperJet is a JV between Russian aviation company Sukhoi holdings and Alenia Aermacchi, a member of Italian aviation group Finmeccanica. The jet is designed to compete internationally with An-148 (Embraer and Bombardier) and has a purchase price of nearly $35 million.


Timmerman Yachts
It is a joint project by leading contemporary Russian and Dutch yacht builders.
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