In the past few years names such as Burberry, Gucci, Valentino and Escada opened luxury stores in Romania. But all brands have been brought under franchise, by local entrepreneurs. So what are the plans of the Italian who runs a family business with an over 120-year history?
“We had good results both in 2009 and 2010, the first two years of crisis. Then we started to decline as increasingly more luxury brands came to Romania. On top of this came the crisis, which penalized Europe and implicitly Romania,” says the Italian in one of his few press interviews.
The entrepreneur first came to Romania ten years ago together with his son as the luxury market in Western Europe had reached maturity. The Mengotti family then targeted Romania, China and India as countries with a business potential. But ultimately the Mengottis chose Romania.
He recalls that although China had ambitious development plans, luxury brands were not willing to give him products for a multibrand store because they wanted to open their monobrand stores directly.
“We didn’t want to go to Shanghai or Beijing, but to smaller cities, of 4-5 million inhabitants, but even there fashion houses wanted to enter the market directly through their own stores.”
So the Mengotti family chose Bucharest for business. As opposed to Shanghai and Beijing, luxury brands were willing to enter the Romanian market through a multibrand. In 2008, the last year of economic boom, monobrand stores were very few, but now there are quite a few of them, such as Valentino, Escada, Roberto Cavalli and Gucci.
The next to enter will be Dolce&Gabbana. The brand will be brought by the Coman family, who holds the franchise of Valentino and Cavalli in The Grand luxury shopping gallery within JW Marriott hotel. Louis Vuitton, the only luxury brand in Romania that entered the market directly, is also present there.
The Mengotti store includes brands such as Prada, Etro, Moncler, Michael Kors, Giorgio Armani and Fendi. Dsquared will also be brought as of next spring.
“We brought these brands onto the local market from the very start. There were others which we gave up when monobrand stores started opening in Bucharest, but we will not give up Dolce & Gabbana,” Adriano Mengotti explains. He adds that now the leading brand in the store’s portfolio is Prada. A few years ago there was talk of Prada bringing a monobrand to Bucharest, but the plans never went through.
The 700 square-meter multibrand store entailed an investment of EUR1.3 million.
The crisis started to be felt on Calea Victoriei shopping street in 2009, when companies such as Escada, Versace Jeans Couture and Hugo Boss closed down their shops. But after the street seemed to regain some of its glow through new openings, last summer saw new closures.
Belstaff and Pal Zileri closed down, while Victoria 46 and Guess changed their location. But Adriano Mengotti did not think of moving for one second. The entrepreneur has 11 multibrand stores in Italy and one in Romania.
Mengotti used to have plans for a second store and had bought a building in Bucharest’s historic center to set up a second Romanian store. But now the entrepreneur does not say anything about a second store, though he continues to believe in the multibrand format.
“It is a flexible format, which can respond quickly to changes in fashion and in consumer preference.”
“A few years ago our customers used to spend more. Now we have days when we have five customers coming in, other days when we have 30-40 people coming in.”
He does not provide exact figures on the sales, but says there have been declines. According to the website of the Finance Ministry, in 2009, the latest year for which there is information, the turnover of the company which operates the Mengotti store in Bucharest was 11.65 million lei (EUR2.75 million).
(English version by Daniela Stoican)