Gucci celebrated the opening of its two new units in central Moscow – which together cover almost 21,600 square feet – with a lavish party, the unveiling of a new women’s collection and a special exhibition. The events included a cocktail reception in the Petrovka shop and a dinner for executives and Russian celebrities who were serenaded by American singer and songwriter John Legend.
“You have to cope with difficulties and we have rainy days as well as sunny days,” said Gucci president and chief executive officer Patrizio di Marco. “In the long term, you make bigger opportunities but in the short term higher risks and difficulties.”
The opening of the stores comes amid rising tension between Moscow and the U.S. and Europe, and a series of announcements from Western retail companies that they are pulling out of Russia for the foreseeable future.
Gucci entered Russia 17 years ago and now has seven stores in the country, with a presence in St. Petersburg, Sochi and Ekaterinburg, as well as Moscow.
In April, Gucci took direct control of its outlets in Moscow as part of a push to have a greater say in how the operations are run, and to maximize profits. Other luxury brands have taken similar steps.
“To make the brand stronger in the future, it’s necessary that you intervene yourself,” di Marco said.
One of the two new Gucci shops is located in Soviet department-store-turned-luxury-mall GUM, overlooking Red Square and the Kremlin. It offers men’s and women’s ready-to-wear, luggage, handbags, small leather goods, shoes and silks.
The second, and bigger of the two, is on the central Petrovka Street, just behind the Bolshoi Theatre. Comprising three floors linked by staircases lined with ribbed glass and polished gold, it is one of the biggest Gucci stores in the world. The flagship showcases men’s and women’s rtw, a children’s collection, handbags, small leather goods, shoes, silks, watches, jewelry, fragrances and cosmetics. Customers can make use of personalized tailoring and can visit a private lounge.
Creative director Frida Giannini designed a special women’s collection for the Petrovka store. Prominent materials include crocodile skin and fox fur, and one of the collection’s signatures is lavishly decorated collars.
“It’s a very rich collection,” said Giannini, who was on her first visit to Moscow for the opening. Asked what inspired her, she said: “I was thinking about the opulence.”
The Russian ruble has plunged more than 30 percent against the dollar since January, but the rapidity of its decline in the last month has meant many price increases on imported goods have not yet been passed on to shoppers.
In dollar terms, some of Gucci’s products are cheaper in Moscow than they are in Milan. But this is not expected to last, and prices in rubles are forecast to rise. With Russia’s economy facing only about zero percent growth this year amid Western sanctions on Moscow for its role in the Ukraine crisis, and oil prices slipping to five-year lows, the spending power of Russian consumers is also likely to be curbed.
“Gucci is not stopping its expansion plans, even though they surely understand the period of investment return may be longer than they planned,” said Anna Lebsak-Kleimans, ceo of Fashion Consulting Group in Moscow.
The deteriorating situation in Ukraine has also raised the specter of new Western sanctions on Moscow. A Kremlin aide suggested earlier this year that Russia’s response to further restrictions could be to ban clothing imports.