Optimism the watchword as St. Petersburg event closes

John Rimmer

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Bright future ahead for Russia and eastern Europe, say conference speakers

The second Baltic and East European Conference, organised by Raven Fox, ended on an upbeat note in St. Petersburg today (November 25). As on day one, speakers were hugely optimistic about the prospects for travel-retail across the region, highlighting strong travel forecasts and the growing numbers of increasingly sophisticated consumers with high levels of disposable income.

In a session entitled Trends in Travel and Tourism, Travel Business Partnership research director Nancy Cockerell explored the potential for growth in eastern Europe, where traffic increases in markets such as Poland is forecast to surpass that even of China. She pinpointed outbound Russian travel as a key factor in tourism for the rest of the region.

European Travel Retail Council (ETRC) director-general Keith Spinks highlighted some of the issues facing retailers in aspiring EU member states. He said EU law would form the basis of legislation across the region in future, but the challenge would be to limit the impact of that legislation on the trade. He urged companies to contact the ETRC for advice on how to overcome the challenge of impending abolition and regulatory change.

The session Today's Challenge, Tomorrow's Opportunity focused on the emerging markets of Ukraine and Bulgaria. Kyiv Duty Free sales have risen 154% in the last three years, said general manager Garrett Coogan, with average spend up 18% since the new shop opened in December 2003. The keys to growth in future, said Coogan, would be in better targeting frequent flyers, encouraging more impulse purchasing and creating more space in the Kiev Boryspil airport for shopping. Transimpex director duty-free Vlad Gitsoaika delivered a fascinating insight into the $100m a year Bulgarian market, of which his company controls almost 40%. Over 80% of the country's duty-free business is in border shops, and half of that is conducted on the Serbian border, he said. He said growth opportunities for Transimpex would lie in developing local distribution of luxury goods and seeking new business at the country's ports and in the cruise business.

In the final session, TMI Consultancy Moscow director Helene Lloyd provided an analysis of the Russian consumer. She split the target luxury goods consumer into five segments – Emerging Middle Class, Funky Young Professionals, Upper Income, Golden Youth and Filthy Rich – and characterised each by their spending power for retailers. She said it was not yet too late for brands to enter the lucrative Russian market, but warned of the challenges of understanding the culture, labour market limitations, changing laws and tax terrorism from government.

A full report on the conference will appear in DFNI.