Budapest still seen as Mecca for international luxury goods retailers

It looks counter-intuitive at first glance. The capital one of the countries worst hit by the economic crisis is the venue for an expanding luxury goods market.

But Budapest’s Andrassy Boulevard is indeed seen by the likes of Gucci and Louis Vuitton as a potential bright spot in an otherwise generally depressed market, business Vilaggazdasag said on Thursday.

Whereas mature luxury goods markets in the US and western Europe have taken a big hit as a result of the crisis, Asia and is seeing healthy growth, and Budapest — which attracts lots of Japanese tourists, for example — is performing reasonably well.

Emporio Armani to open a new 500-square metre store in late July, and the investment can hardly said to be fly-by-night. The company is committing 1.25 million euros to developing the store, and has brought in interior designers from Italy to kit it out to the highest specifications.

Among brands already lining Andrassy Gucci reported 264 million forints (EUR 943,000) in revenues since opening last October. Handbag and shoe magnate Roberto Cavalli also expressed optimism with PR manager Adrienn Kovacs telling the paper that sales have picked up in late spring and early summer after a decline in the first months of the year.

Opening a luxury outlet is not a cheap proposition, and returns on investment usually take 3-5 years. But PPR, Gucci’s owner, told the paper that although sales have been slower than forecasts made before the crisis took hold — when many of the luxury outlets arrived in Budapest — signs so far suggest there is greater scope for expansion, nevertheless.