KIEV, Ukraine — Ukraine was in the headlines once again this month as world leaders gathered for the G7 Summit. Predictably, most of the world’s media focused on Russia’s conspicuous absence at the club of powerful nations and a few seemed to revel in reminding us that the event would have been called the G8 Summit if the conflict in Ukraine had never happened.
But what they neglected to tell us was that there are actually a number of more nuanced narratives in this story, which they tend to present as one big monolithic struggle. Seeing this story through a fashion lens, for example, can be as unexpected as it is peculiar.
Ukraine’s upmarket fashion scene has undergone some serious changes since revolution turned to war and made the business landscape in Kiev anything but predictable. The instability in the Donbass region of Eastern Ukraine, which started in the middle of last year, forced many of its inhabitants to move. Some went to Russia but many others went to Ukrainian cities like Dnepropetrovsk, Odessa and Kiev. Interestingly, part of the exodus to Ukraine’s capital has meant an influx of wealthy elites fleeing the war from Donbass.
Certainly there has been a lot of bad news along the way. By the beginning of this year, the consensus among local retailers was that most fashion consumers had significantly slashed their budgets, causing the market to fall by 30 to 50 percent. Local fashion magazines have suffered from lost advertising and designers say that at least some of their VIP clients have disappeared.
But although some fashion businesses do continue to suffer — especially those whose stores were located near Maidan where the revolution was anchored — there are also signs of opportunity, activity and growth for others operating in Kiev’s high-end fashion market.
One thing driving this is the fact that the conflict has pushed the local market towards a much needed correction. In the past, Ukraine was a klondike of “old style” retailers who made their money by charging exorbitant margins to a narrow clique of the uber-wealthy elite. After the collapse of the old business system, luxury retailers have been forced to revise their margins, open stores in other cities and become more open to younger clients, who are more active online.
Nowhere was this more apparent than for Cult Fashion Group in Donetsk, the largest city of the Donbass region. With 11 stores employing 200 people selling 100 brands in the city — ranging from Balmain and Balenciaga to Alexander McQueen and Stella McCartney — the company was forced to leave Donetsk last May when the military conflict began in earnest.
The founder of the group Elena Izmailova says that after some hasty research, she decided to focus instead on developing their business in Kiev and Dnepropetrovsk, where she recently opened multi-brand designer stores Fashion Passion and bolero.
As part of this major consolidation and geographic shuffle, Cult Fashion Group will also be among 50 tenants who have confirmed their presence at the giant Tsum Kyiv luxury department store, which is scheduled to open in central Kiev in the middle of next year. Incidentally, the $100 million retail landmark is being redeveloped by Esta Holding, a unit of System Capital Management, owned by Ukraine’s richest businessman, Rinat Akhmetov, who is also a native of Donetsk.
Unlike Tsum in Moscow where Mercury Group is the dominant operator, squeezing out retailers from rival groups, Tsum Kyiv is renting space to a diverse mix of tenants on a commission-based revenue model.
According to Andrey Mazhara, Tsum Kyiv’s leasing director, the department store’s new positioning has been carefully considered.
“We’re targeting a broad audience of Kiev’s citizens and visitors. Of course, you’ll be able to find luxury shoes, accessories and beauty products, but what’s crucially important for us is the highest level of shopping experience, no matter how much money you have in your pocket,” he says.
Tsum Kyiv is not the only sign that despite the dark clouds of war in other parts of the country, Kiev’s fashion scene is expanding. Later this year, Katia Verber, the daughter of Mercury Group’s vice president Alla Verber, will re-introduce Saint Laurent to Kiev. With the store opening soon in Mandarin Plaza, Katia believes that, in fact, the current challenges make this the best time to present the brand. “Kiev is one of the biggest luxury capitals in Eastern Europe and it’s time to re-introduce Saint Laurent here, as it has been re-introduced all over the world [after being rebranded from Yves Saint Laurent]. We still have ambitious retail plans for Kiev, as people here love fashion and luxury — and [no matter what] you can’t take that away from them.”
The retailers who suffered the most during the revolution in Kiev were those whose stores were situated at the very centre of the city, not far from where Saint Laurent will bow. Some stores were used for the first-aid posts, others were burned, like luxury childrenswear store Daniel.
Fortunately, Globus, the shopping mall located right under Maidan, the main square where the revolution took place, was not destroyed. But it did lose a significant number of its core retailers including Adidas, Nike, Reebok, Umbro, River Island, Lacoste, Calvin Klein Jeans, Miss Sixty, Esprit, New Look and Mexx. The last two left not only Globus, but the Ukrainian market entirely.
War, politics, social instability and the falling value of Ukraine’s hryvnia currency has meant that the import of fashion and luxury goods has been incredibly challenging for most businesses at one time or another. But the flip side is that upmarket fashion exports have been thriving.
Ukraine’s local designers have significantly increased their points of sales abroad, buoyed by the fact that they are able to produce their garments at competitive rates in several Ukrainian factories all over the country.
Most of the Ukrainian designers with a decent number of stockists are sold through More Dash, a showroom founded by myself and Natalia Modenova, which presents collections quarterly in both Milan and Paris. From June 2014 to June 2015, More Dash has shipped 5,000 units of clothing to 50 stores in 19 countries from eight Ukrainian designers including Anna K, Anna October, Anton Belinskiy, DMDV, Ksenia Schnaider, Omelya, Yasya Minochkina and Yulia Yefimtchuk.
Despite all the tumultuousness that Ukraine has suffered in that same period, Kiev can still be considered one of Eastern Europe’s most important fashion capitals. Few would argue that point considering the rise of our local fashion designers and the many new ambitious retail projects in cities like Kiev, Odessa and Dnepropetrovsk.
There is no doubt that we face serious challenges ahead, especially from the point of view of our more impoverished corners of society. And as a collective too, there will be a degree of uncertainty that will continue to test us at every corner. If the past year has taught us anything, it is that even a brutal war can’t keep our creative spirits and dynamic entrepreneurs down for too long.
Daria Shapovalova is the co-founder of LMG group, which owns Mercedes-Benz Kiev Fashion Days and More Dash.
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