In contrast with the early 90’s, when price played the most important role in the general public’s purchasing decision-making process, nowadays, more and more Romanians are influenced in their purchasing decisions by the quality and the notoriety of the brands.
It is certain that, in Romania, the next few years will further increase brand fidelity amongst the public, especially in the upper class market of goods and services, says the study. Regardless of the country’s overall economic shape, which is rather pour compared to European Union standards, a number of “nouveau-riches” already emerged from the economic and political transition, pressuring the local retail market in their quest for expensive luxury goods and services. According to statistics, this demand for luxury goods already reached a critical weight and is now generating a response from the emerging local market. This luxury goods and services trade does not involve massive number of customers, but targets a limited number of persons with access to massive financial resources. Aside from the hundred multi-millionaires living in Romania, analysts say there is tens of thousands of people whose incomes qualify them as luxury retail consumers. According to market studies, only in Bucharest, the capital city, live some three thousand people earning monthly more than 8,000 Euro; another 13 thousand have monthly incomes of over 2,500 Euro, while several tens of thousands gain every month over 1,000 Euro. However, as many as they may be, only 40% of them are spending their incomes in Romania on luxury goods and services. Sixty percent of these upper scale customers are traveling abroad for luxury shopping. The main reason for this overseas shopping campaign - aside the acute snobbism of being able to show off amongst your peers with a pair of shorts bought in Milan or Paris – is the limited luxury retail offer of the local market. According to a CPP Management Consultants estimate, this year, the local luxury market, (including products and services such as clothing, jewellery, automobiles, watches, etc) could reach a total of eight million Euros, while – for instance –Ukraine will total approximate 150 million Euros, almost 20 times more than Romania. (In understanding this comparison, should we take into account Ukraine’s population – only 2.2 times larger than Romania’s, or rather Ukraine’s mafia financial power – incomparably more important than Romania’s?) According to analysts, worldwide, the luxury retail market’s annual growth rate is estimated at 10%. In countries such as Brazil, China and Ukraine, this market is growing four times faster, reaching 40% growth rate annually. In Romania, the market’s annual evolution is estimate at five percent; the growth is mainly due to increase sales in the car, jewellery and expensive watches industries. Until not long ago, Romania did not count for much on the luxury car market. Only in a few years, sales increased from virtually zero to four thousand units per year. If the number seems low, compared to the sales the luxury car brands are making in the Western Europe, where they sell over 600 thousand units yearly, the trend is Romania is optimistically growing, as the economy is trying to find its path and the country prepares for the January 1st EU accession. Showing its confidence in the future, the local luxury industry is organizing this month a “Luxury Show 2006”, an exhibit featuring over-expensive goods and services. For four days, at the Romexpo Exhibition Hall, starting December 7, you will be able to touch, try and purchase from top-of-the-line limousines and roadsters, yachts, jewelleries to expensive furniture, high tech equipment and interior decoration, branded clothing and fur. A real “indecent exposure” show, reminding us that optimism sometimes can be a very powerful drug.
