Drawn by tourism and growing local clientele, high-end brands flock to the ritzy streets of the capital
With retail space on Pařížská, the most expensive street in the entire CEE region, watch store Carollinum rubs shoulders with other successful luxury brands despite the recession.
Amid the doom and gloom, one sector of the economy is turning out record profits around the globe, including in the Czech Republic.
The luxury market has seen 10 percent growth year on year since 2010 and shows no sign of slowing down, according to market analyst KPMG.
In fact, Verdict Research, a UK-based retail industry research company, predicts that by 2015 “the European luxury market will reach some $175 billion in profits.”
It’s not just the large fashion capitals in Italy and France that have profited from this growth. Much has changed in Prague since the likes of Louis Vuitton, Hermès and Alfred Dunhill became the first “real luxury businesses [on Pařížská street],” explains Tomáš Janeba, the managing director of Carollinum, a high-end watch store located on Pařížská.
Now the most expensive street in the Central and East European region, Pařížská is the city’s go-to location for mono-brand stores looking to make their entrance into the Czech market. “Not only has [the entrance of mono-brands] brought new clientele, but Pařížská looks very prestigious, and Prague deserves to have such a beautiful street with so many mono-brand stores,” says Silvia Patrová, managing director of Bvlgari.
One needs only to look at the recently opened Chopard, Omega, Rolex and Tiffany & Company – all within mere meters from each other – to understand that the Czech Republic is a growing attraction for high-end retailers.
“During the past five years, we have been growing steadily. There has been double-digit growth of approximately 20 percent in watches and 20 percent in our Simple Concept Store,” Janeba says.
Patrová also concluded that her sales had steadily increased since their opening of the Bvlgari store on the corner of Široká and Pařížská in October 2011.
So who is buying luxury goods in the Czech Republic? According to Marie Konečná, partner at KPMG Prague, the vast majority of buyers are “tourists, especially visitors from the former Soviet Union, China and Japan.”
While some 50 percent of Bvlgari’s clients are from Russia and China, another 50 percent of sales are from local clients. In Simple Concept store, Janeba says the ratio of foreign and local clients is equal.
In Carollinum, the change shifts. Almost 75 percent of all sales are from local customers, and they are not buying small-ticket items. Patek Philippe and Rolex, two top-end watch brands, are also two of the best-selling brands Janeba carries in Carollinum. In Simple Concept, Christian Louboutin shoes and Yves Saint Laurent handbags are hot-ticket items with the local clientele.
While demand for high-priced items continues to grow along with lower-ticket luxury goods, certain price categories, especially those in the middle tier, are struggling as consumers decide where they want to spend their money. When considering brands like Yves Saint Laurent or Patek Philippe, clients may look at higher-priced items as an investment, Janeba says.
Big-ticket items are also bought by a local, tech-savvy clientele in the 30-plus age group, with above-average disposable incomes and a high degree of brand familiarity. “[Czechs] pay a lot of attention to detail,” Janeba says. “We want to know everything about the watch and ask questions no one else has asked before. They want to know what they are actually spending their money on.”
With a positive growth outlook for the future of the industry, a new luxury shopping center scheduled to open in the last quarter of 2013 on Na Příkopě street, as well as talks of other luxury brands moving into the side streets around Pařížská, expect 2013 to be a retail year for Prague.
* This article first appeared in the Prague Post on December 5, 2012