Royal Copenhagen: Planting Flora Danica in Russia
Starting with OMIR in 2006, Royal Copenhagen is today in retail in all of Russia’s largest cities. Successfully the company in Russia sells both its upper-middle and high-end collections such as the famous Flora Danica. Even though the market shrunk in the first half of 2009, Royal Copenhagen already witnesses steady improvement.
Royal Copenhagen managed to increase awareness of their products among the Russian consumers – and with great success! Client servicing was intensified and made more effective as the company increased its insight into the Russian consumer’s preferences and behavior.
Today, Royal Copenhagen porcelain is in stock in almost 100 stores covering Moscow, St. Petersburg, and the largest regional cities. The geography expanded and the volume of sales increased considerably after the beginning of 2006, when Royal Copenhagen went into cooperation with DIBD Moscow Office.
Royal Copenhagen’s road to Russia with OMIR
A few months’ focused research in 2006 was what it took, before Royal Copenhagen made the decision to be established in Moscow using the Own Man In Russia concept, an entry mode offered by DIBD.
The decision to enter bore immediate fruit: already in the first year the turnover increased as much as six times and grew by 20%-30% annually in the following years.
Royal Copenhagen’s “Own Man in Russia” Alexander Chelnokov has strong competences within the field. He has a university degree from both France and Russia with a solid industry insight from the time he worked in St. Petersburg for a leading French porcelain producer.
Coordination between distributors and OMIR
All market activities took place with close coordination and supervision by the Danish headquarters where the export manager Anne Mette Müller-Krogstrup is responsible for sales in Russia and provides the necessary support to the local office and its extensive consumer circle.
For the local OMIR there is plenty of diversity in work-related tasks, such as promotion, PR, training of local retailers and wholesalers, market monitoring, certification, etc.
“Theoretically speaking, these tasks can be handled by an export manager located in Denmark”, says Alexander Chelnokov. – “But a market as large as the Russian one would consume most of his time and imply frequent trips to Russia. It can thus be easily calculated which solution is of more use and profit for the company”.
“Local presence is essential for the key markets such as the Russian one, and I believe the idea of OMIR is fairly reasonable”, continues Alexander. – “Domestic retailers do not always have enough knowledge and skills to sell expensive porcelain, they need training and supervision. Sometimes I have to explain that Royal Copenhagen should not be exhibited in the store side by side with some cheap Italian plastic”.
According to Anne Mette Müller-Krogstrup, one of the crucial reasons for Royal Copenhagen’s success in Russia is the ability to ensure strong local distribution to a selective customer group. ”It is of great value to Royal Copenhagen to have an industry expert like Alexander, who can also supervise the activities of boutiques, and ensure top level understanding for both owners and ground-level staff”, she says.
Slowdown which is already starting to level out
The economical crisis that reached Russia in IVQ of 2008 has influenced the porcelain market as well. “Sales are slowing down both in the upper-middle and top-price segments”, says Alexander Chelnokov. “The average purchase bill in a Moscow top porcelain store decreased from 3,000 Euros in the beginning of 2008 to around 1,000 Euros. An increasing number of potential clients well aware of the brand and willing to buy Royal Copenhagen choose to postpone the purchase until a more stable time”.
The same trend dominates the luxury market as a whole. “We hear that Russia’s richest people stick to their lifestyle and buy even more than they used to before the crisis. My vision of the picture is not that bright. We can clearly observe a shift from top-segment to the upper-middle one meaning quality products at lower prices”.
It is hard to make forecasts; however, Alexander Chelnokov believes the situation is slowly leveling out. “While in the beginning of 2009 there was a real panic in the market and the sales dropped sharply, at the moment people are more confident about their future and we can see steady improvement. Of course, no one can make precise forecasts now, but I expect the situation to be gradually improving in the second half of 2009 and in 2010. The Russian market is among the key export markets for Royal Copenhagen, and we are strong enough to survive bad times”.