Luxury in… Russia: The Comeback -...

Luxury Goods

WHY YOU SHOULD READ THIS REPORT

9 DECEMBER 2016 AT 06:22*

Luca Solca Melania Grippo Guido Lucarelli

Contactlab Marco Pozzi

Francesca Borgonovo Teodora Boshnyakova

Russian consumers drove much of the growth in the luxury market during the past two decades. Since then, sanctions, weak oil prices and the rouble’s collapse have derailed Russia's economy and sent luxury spending into the buffers.

Today consumer confidence is picking up, unemployment ticking down and residential construction is in positive territory. A changing diplomatic climate could bring the end of sanctions.

Russia’s revival could power the luxury market in 2017. Closing the digital luxury gap could make Russia a growth driver of the sector for even longer.

As the luxury train pulls back into Moscow, we find several Italian and hard luxury brands in the 1st class seats. Hop aboard our Christmas Special to learn more.

* Date and time (London Time) on which the investment recommendation was finalised. It may differ from the date and time of broad dissemination on the website.See Appendix (on p81) for Analyst Certification, Important Disclosures and Non-US Research Analyst disclosures.

Luxury in… Russia: The Comeback

Exane BNP Paribas Luca Solca (+44) 203 8503 [email protected] Melania Grippo (+39) 02 89 63 1724 [email protected] Guido Lucarelli (+39) 02 89 63 1726 [email protected]

Contactlab Marco Pozzi (+39) 02 28 31 181 [email protected] Francesca Borgonovo (+39) 02 28 31 181 [email protected] Teodora Boshnyakova (+39) 02 28 31 181 [email protected]

mailto:[email protected]




LUXURY GOODS

Luxury in… Russia: The Comeback

9 DECEMBER 2016 Russians’ consumption of luxury has declined sharply in the past three years...

Russian consumers drove much of the growth in the luxury market through the 1990s, finally accounting for >6% of global luxury spend. Since then, weak oil prices, the rouble’s collapse and economic sanctions after the invasion of Crimea, have derailed Russia's macroeconomic development and more than halved luxury spend from the peak (Russia is the next shoe to drop).

…but the worst on Russian luxury spend seems behind us, and 2017 could see a comeback A number of indicators are pointing north again: consumer confidence is off the trough; unemployment is coming down; car sales are rebounding; residential construction growth is already in positive territory. The prospect of a ‘New Yalta’ between Presidents Trump and Putin, and the possible election of François Fillon in France could open the way to the removal of sanctions and further boost a recovery.

A solid comeback of Russian consumers would lift prospects for the luxury sector in 2017 The prospects for global luxury spend still very much depend on China. With close to one-third of the market, low double-digit growth in Chinese spend alone could quickly bring >3% growth for the sector in 2017. A Russian comeback could account for additional growth in global luxury spend in 2017 of between 0.5%, in a base-case scenario, and 1%, in a favourable scenario.

Brunello Cucinelli, Swatch and Prada in the front row to benefit from the Russian comeback Brunello Cucinelli, Swatch and Prada have the largest number of Russian stores as a percentage of their networks. Ulysse Nardin, Breguet, Zenith and Loro Piana are the most exposed to physical retail – among publicly-traded companies. Many private Italian brands also have strong roots in Russia. A Russian comeback would also benefit hard luxury.

Digital luxury has a long way to go in Russia Digital performance in Russia is c.20% behind the USA in ‘strategic reach’ and c.40% in ‘digital customer experience’ when we apply our Digital Competitive Map methodology.

Luca Solca (+44) 203 430 8503 [email protected]

Melania Grippo (+39) 02 89 63 1724 [email protected]

Guido Lucarelli (+39) 02 89 63 1726 [email protected]

Specialist sales

David Tovar (+44) 203 430 8677

Contactlab

Marco Pozzi (+39) 02 28 31 181 [email protected]

Francesca Borgonovo (+39) 02 28 31 181 francesca.borgonovo @contactlab.com Teodora Boshnyakova (+39) 02 28 31 181 teodora.boshnyakova @contactlab.com

https://www.exane.com/Link!docExternal.action?cmd=69723234263d6c3d646139376c316f356f3d393167266734

Exane BNP Paribas Research & Contactlab Luxury Goods 9 December 2016 page 2

Contents

Executive Summary _______________________________________ 3 Russian Luxury Goods Market Overview ___________________________________ 4 Country Macro Overview ______________________________________________ 10 Store network analysis ________________________________________________ 18 Digital Competitive Map Russia _________________________________________ 24

Methodology, detailed tables and figures _____________________ 29 Methodology ________________________________________________________ 29 Strategic Reach in Russia _____________________________________________ 33 Digital Experience for Russian customers _________________________________ 46 Luxury Stores in Russia _______________________________________________ 71

Appendix: ______________________________________________ 80 About the collaboration with Contactlab ___________________________________ 80 Contactlab presentation _______________________________________________ 80


Executive Summary

Luxury in … Russia: The Comeback

Russians’ consumption of luxury has declined sharply in the past three years... Russian consumers drove much of the growth in the luxury market through the 1990s, finally accounting for >6% of global luxury spend. Since then, weak oil prices, the rouble’s collapse and economic sanctions after the invasion of Crimea, have derailed Russia's macroeconomic development and more than halved luxury spend from the peak (Russia is the next shoe to drop).

…but the worst on Russian luxury spend seems behind us, and 2017 could see a comeback A number of macroeconomic indicators are pointing north again: consumer confidence is off the trough; unemployment is coming down; car sales are rebounding; residential construction growth is already in positive territory. The prospect of a ‘New Yalta’ between Presidents Trump and Putin and the possible election of François Fillon in France could open the way to the removal of sanctions and further boost a recovery.

The data we have collected with Contactlab point to Russian luxury spend moving up strongly in the most recent quarter—with the prospect of closing 2016 up by 5–10%.

A solid comeback of Russian consumers would lift prospects for the luxury sector in 2017 The prospects for global luxury spend still very much depend on China. With close to one-third of the market, low double-digit growth in Chinese spend alone—continuing the trend seen in of the last couple of months—could quickly bring >3% growth for the sector in 2017.

A Russian comeback could account for additional growth in global luxury spend in 2017 of between 0.5%, in a base-case scenario, and 1%, in a favourable scenario.

Brunello Cucinelli, Swatch and Prada would be in the front row to benefit from the Russian comeback Brunello Cucinelli has the largest number of Russian stores as a percentage of its total network, followed by Swatch and Prada. Ulysse Nardin, Breguet, Zenith and Loro Piana are the most exposed to physical retail – among publicly-traded companies. Many private Italian brands, such as Ermenegildo Zegna, Valentino and Dolce & Gabbana, have strong roots in Russia. Similarly, Italy is ahead of all other European markets in terms of Russian tourist outbound preference.

A Russian comeback would also benefit hard luxury, especially such brands as Ulysses Nardin, Breguet, Van Cleef & Arpels.


Dolce & Gabbana, Burberry, Balenciaga, Valentino and Armani are in the top 5 on ‘strategic reach’; Ralph Lauren, Michael Kors, Tory Burch, Saint Laurent and Hugo Boss are in the bottom 5. Burberry, Louis Vuitton, Loro Piana, Armani and Cartier are in the top 5 on ‘digital customer experience’; Tory Burch, Michael Kors, Ralph Lauren, Salvatore Ferragamo and Coach are in the bottom 5.



Russian Luxury Goods Market Overview Russians’ consumption of luxury has declined sharply in the past three years... Russian consumers drove much of the growth in the luxury market through the 1990s, finally accounting for >6% of global luxury spend. Since then, weak oil prices, the rouble’s collapse and economic sanctions after the invasion of Crimea, have derailed Russia's macroeconomic development and more than halved luxury spend from the peak (Russia is the next shoe to drop).

Figure 1: Russians’ luxury consumption has declined sharply Russia’s personal luxury goods market since 2010 (EUR, bn)

Source: Altagamma/Bain, Exane BNP Paribas estimates

Figure 2: Oil prices, the rouble’s collapse and economic sanctions have more than halved luxury spend from the peak (1/2) RUB vs major currencies

Source: Datastream

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Figure 3: Oil prices, the rouble’s collapse and economic sanctions have more than halved luxury spend from the peak (2/2) Crude Oil-Brent Cur. Month FOB US$/BBL

Source: Datastream

Figure 4: Russian clients shopping shift from foreign to domestic Russian clients luxury shopping split

Source: Contactlab Analysis

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Figure 5: Luxury shopping in Russia is attractive for Asian customers due to a c.10-20% price differential Price index by region l/l products (Global average = 100%)

Note: The data above includes a comparison of identical products available in all regions. From our brand coverage, this covers: Armani, Balenciaga, Brioni, Brunello Cucinelli, Burberry, Dunhill and Louis Vuitton – which are the brands operating a direct online channel in the full list of markets above – and the sample size is 5,779 unique products available in all markets.

Prices as at 25 October 2016.

Source: BenchMarque by Deloitte

Figure 6: Example online prices on TSUM lower than in Milan, Dubai and London


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Figure 7: Tax-free bill should further promote tourist shopping


Figure 8: Russian luxury clients are very valuable due to yearly spending c.60% higher than worldwide average In-Store Client Yearly Spending (EUR, 2016)



Figure 9: In-store revenues in Russia from clients known by name (registered and digitally contactable) is close to the global average (c.75%) Client Segmentation by Level of Engagement (% Retail Revenues, 2015)

Worldwide Russia


Figure 10: Ecommerce penetration in luxury goods is still trailing in Russia Ecommerce penetration for monobrand in Luxury Goods (% retail sales, Russia, 2014-2015)


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Figure 11: Foreign shopping by Russian luxury clients is recovering after the 2015 slump. Positive exit from 2016 and positive outlook for 2017 Russian Foreign Shopping variation (%, Italy)

Source: Contactlab Analysis, Premier Tax Free


Country Macro Overview

…but the worst on Russian luxury spend seems behind us, and 2017 could see a comeback A number of macroeconomic indicators are pointing north again: consumer confidence is off the trough; unemployment is coming down; car sales are rebounding; residential construction growth is already in positive territory. The prospect of a ‘New Yalta’ between Presidents Trump and Putin and the possible election of François Fillon in France could open the way to the removal of sanctions and further boost a recovery.

The data we have collected with Contactlab point to Russian luxury spend moving up strongly in the most recent quarter—with the prospect of closing 2016 up by 5-10%.

Figure 12: A number of macroeconomic indicators are pointing north again: consumer confidence is off the trough Consumer confidence index

Source: Datastream

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Figure 13: A number of macroeconomic indicators are pointing north again: unemployment is reducing Unemployment rate (as % of total economically active population)

Source: Datastream

Figure 14: A number of macroeconomic indicators are pointing north again: car sales growth is rebounding Car and LCV sales y/y % chg (3MMA)

Source: Datastream

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Figure 15: A number of macroeconomic indicators are pointing north again: residential construction growth is already in positive territory New residential space constructed (y/y % chg)

Source: Datastream

Figure 16: GDP at constant prices (RUBm) – Base year=2011

Source: Datastream

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Figure 21: Household and Government consumption Household consumption (RUB bn) Government consumption (RUB bn)

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A solid comeback of Russian consumers would lift prospects for the luxury sector in 2017 The prospects for global luxury spend still very much depend on the Chinese. With close to one-third of the market, low double-digit growth in Chinese spend alone—continuing the trend seen in the last couple of months—could quickly bring >3% growth for the sector in 2017.

A Russian comeback could account for additional growth in global luxury spend in 2017 of between 0.5%, in a base-case scenario, and 1%, in a favourable scenario.

Figure 23: A solid comeback of Russian consumers would lift prospects for the luxury sector in 2017 Russian luxury goods market (EUR bn)

Source: Altagamma/Bain, Contactlab estimates

Figure 24: With close to one-third of the market, low double-digit growth in Chinese spend, as in the most recent months, could alone quickly bring >3% growth for the sector in 2017 (1/2) Luxury goods market growth by nationality (EUR bn)

Source: Bain/Altagamma

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Figure 25: With close to one-third of the market, low double-digit growth in Chinese spend, as in the most recent months, could alone quickly bring >3% growth for the sector in 2017 (2/2) Luxury market growth by nationality (EUR bn)

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Store network analysis

Brunello Cucinelli, Swatch and Prada would be in the front row to benefit from the Russian comeback Brunello Cucinelli has the largest number of Russian stores as a percentage of its total network, followed by Swatch and Prada. Ulysse Nardin, Breguet, Zenith and Loro Piana are the most exposed to physical retail – among publicly-traded companies. Many private Italian brands, such as Ermenegildo Zegna, Valentino and Dolce & Gabbana, have strong roots in Russia. Similarly, Italy stands ahead of all other European markets in terms of Russian tourist outbound preference.

A Russian comeback would also benefit hard luxury, especially such brands as Ulysses Nardin, Breguet, Van Cleef & Arpels.

Figure 26: Prada, LVMH and Kering would be in the front row to benefit from the Russian comeback Group exposure to Russia (% of stores)

NB. Swatch includes Breguet, Blancpain and Omega; Richemont includes Lancel, Vacheron Constantain, Vancleef & Arpels, Piaget Chloé, Cartier, Officine Panerai, IWC Jaeger-Le Coutre, Montblanc; Prada includes Prada and Miu Miu; LVMH includes Zenith, Loro Piana, Celine, Bulgari, Louis Vuitton and Givenchy; Kering includes Ulysse Nardin, Alexander McQueen, Saint Laurent, Gucci and Bottega Veneta; Tod’s includes Tod’s brand only.

Source: Re-Analytics (Data as at 30 September 2016)

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Figure 27: Among publicly-traded groups, Loro Piana, Brioni, Alexander McQueen, Céline, and Saint Laurent are the brands most exposed to physical retail in Russia % Russian stores on total stores

Source: Re-Analytics, Company store locator, Exane BNP Paribas estimates (Data as at 30 September 2016)

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Figure 28: Private Italian brands like Ermenegildo Zegna, Valentino and Dolce & Gabbana have strong roots in Russia Russian stores detail

Source: RE-Analytics, Company store locator, Exane BNP Paribas estimates (Data as at 30 September 2016)

Group Brand Russian stores Total % of tot storesKering Ulysse Nardin 2 17 11.8%Swatch Breguet 3 35 8.6%LVMH Zenith 1 18 5.6%LVMH Loro Piana 7 130 5.4%Brunello Cucinelli Brunello Cucinelli 6 122 4.9%Kering Alexander McQ 2 45 4.4%- Valentino 8 186 4.3%Swatch Swatch 105 2,558 4.1%- Zegna 15 382 3.9%- Louboutin 4 109 3.7%Richemont Lancel 3 83 3.6%Richemont Vacheron Constantin 2 61 3.3%- Dolce & Gabbana 9 292 3.1%LVMH Celine 5 168 3.0%Prada Prada 11 385 2.9%- Giorgio Armani 5 184 2.7%Swatch Blancpain 1 37 2.7%Richemont Van Cleef & Arpels 3 118 2.5%Swatch Harry Winston 1 40 2.5%Prada Miu Miu 4 175 2.3%Richemont Piaget 2 98 2.0%Swatch Omega 5 266 1.9%Kering Saint Laurent 3 164 1.8%Hugo Boss Hugo Boss 20 1,119 1.8%Richemont Chloé 3 168 1.8%Richemont Cartier 5 283 1.8%Kering Gucci 9 510 1.8%- Versace 3 170 1.8%- Michael Kors 13 767 1.7%LVMH Bulgari 4 268 1.5%Richemont Officine Panerai 1 72 1.4%LVMH Louis Vuitton 6 476 1.3%TOD'S Tod's 3 248 1.2%Richemont IWC 1 86 1.2%Ferragamo Ferragamo 6 536 1.1%Richemont Jaeger-Le Coultre 1 91 1.1%Kering Bottega Veneta 3 276 1.1%Richemont Montblanc 6 578 1.0%Burberry Burberry 5 494 1.0%LVMH Givenchy 1 117 0.9%Moncler Moncler 1 147 0.7%Hermès Hermes 2 315 0.6%- Tiffany 1 319 0.3%

Total 301 12,713 2.4%


Figure 29: Italy is ahead of all other European markets in terms of Russian outbound tourist preference % Russian consumers on European Tax Free spend (9m 2016)

Source: GlobalBlue

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Figure 30: A Russian comeback would benefit hard luxury too, especially when we consider brands such as Ulysses Nardin, Breguet, Van Cleef & Arpels (1/2) Exposure to Russia by brand Group – Second-hand watch market

Source: Re-Analytics, Specialist watch websites (Data as at 31 July 2016)

Group / Brand Volume ValueKering 5% 4.9%Ulysse Nardin 8% 5.8%Girard Perregaux 3% 3.0%JeanRichard - 1.1%Boucheron 1% 1.0%Gucci - -Puma - -Pomellato - -Swatch Group 1% 2.6%Harry Winston 10% 7.9%Breguet 7% 4.6%Jaquet-Droz 4% 2.1%Blancpain 2% 1.1%Glashütte Original - 0.8%Balmain 1% 0.6%Rado 1% 0.5%Omega 1% -Longines 1% -Hamilton - -Tissot - -Certina - -Mido - -ck Calvin Klein - -Swatch - -LVMH 1% 1.4%Zenith 5% 5.5%Chaumet 3% 4.2%Louis Vuitton 3% 3.3%Hublot 2% 1.7%Dior 1% 0.9%Bulgari 1% 0.5%TAG Heuer - -Fendi - -Richemont 1% 1.3%Van Cleef & Arpels 12% 27.9%Vacheron Constantin 3% 1.8%Roger Dubuis 3% 1.7%Panerai 1% 1.5%Jaeger-LeCoultre 1% 1.4%A. Lange & Söhne 2% 1.4%IWC 1% 0.9%Piaget 1% 0.7%Cartier 1% 0.5%Alfred Dunhill - -Baume & Mercier - -Montblanc - -


Figure 31: A Russian comeback would benefit hard luxury too, especially when we consider brands such as Ulysses Nardin, Breguet, Van Cleef & Arpels (2/2) Top 10 brands exposed to Russia – second-hand watch market

Source: Re-Analytics, Specialist watch websites (Data as at 31 July 2016)

Figure 32: Yearly Swiss Watch Exports to Russia (CHF m)

Source: FHS, Exane BNP Paribas estimates

Figure 33: Quarterly Swiss watch exports to Russia (CHF m)

Source: FHS, Exane BNP Paribas estimates

0%

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Swiss Watch Exports (LHS) y/y % chg (RHS)

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016

Swiss Watch Exports (LHS) y/y % chg (RHS)


Digital Competitive Map Russia


Dolce & Gabbana, Burberry, Balenciaga, Valentino and Armani are in the top 5 on ‘strategic reach’; Ralph Lauren, Michael Kors, Tory Burch, Saint Laurent and Hugo Boss are in the bottom 5. Burberry, Louis Vuitton, Loro Piana, Armani and Cartier are in the top 5 on ‘digital customer experience’; Tory Burch, Michael Kors, Ralph Lauren, Salvatore Ferragamo and Coach are in the bottom 5.

Figure 34: Digital Competitive Map in Russia overall showing lower criteria exploitation vs. USA (1/2) Digital Competitive Map - Russia vs USA (FW15)

Source: Exane BNP Paribas, Contactlab Analysis

42%

30%33%

53%56% 55%

0%

10%

20%

30%

40%

50%

60%

Strategic Reach Digital Customer Experience Total panel

Russia (November 16) USA (FW15 Score)


Figure 35: Digital Competitive Map in Russia overall showing lower criteria exploitation vs. USA (2/2) Digital Competitive Map Russia (November 2016)


Figure 36: ‘Display Visualization’ and ‘Website Localization’ performing very well, while criteria related to ‘Personal Services’, ‘Cross-Channel’ and ‘Online Delivery’ performing particularly poorly Digital Competitive Map Russia (November 2016)


Digital Competitive Map RussiaAxes Competitive Map Score Score Over Maximum Potential %

Strategic Reach in Russia 796 42%Digital Experience for Russian Customers 1750 30%Total Panel 2,546 33%

Digital Competitive Map RussiaCategories Competitive Map Score Score Over Maximum Potential %

Russia Digital Strategy 388 47%Customer Engagement Strategy for Russian Customers 290 38%Customer Engagement Experience for Russian Customers 355 37%"Made In" on Russia/Intl. Websites 118 36%Website Experience on Russia/Intl. Websites 709 35%Cross-Channel Experience for Russian Customers 446 28%Ecommerce Experience on Russia/Intl. Websites 240 19%Total Panel 2,546 33%

Digital Competitive Map RussiaCriteria Competitive Map Score Score Over Maximum Potential %

Display Visualization on Russia/Intl. Websites 273 83%Russia Website Localization 196 74%Share on Russia/Intl. Websites 99 60%Product Presentation on Russia/Intl. Websites 107 46%Store Finder 418 40%Customer Engagement Strategy for Russian Customer 290 38%Email Proficiency for Russian Customers 216 36%"Made In" on Russia/Intl. Websites 118 36%Product Selection Support on Russia/Intl. Websites 207 35%Ecommerce to Russia 192 34%Online Shopping on Russia/Intl. Websites 221 26%Basic Customer Service on Russia/Intl. Websites 55 21%Apps for Russian Customers 40 20%Personal Services on Russia/Intl. Websites 67 11%Cross-Channel Services In Russia 28 5%Delivery Options in Russia 19 4%Total Panel 2,546 33%


Figure 37: Burberry significantly leading on the Digital Customer Experience axis, Dolce & Gabbana leader on the Strategic Reach axis in Russia Digital Competitive Map Russia (November 2016)



Figure 38: Beyond local players TSUM and Alena Akhmadullina, only six monobrands plus Yoox have at the same time localized URLs, Ecommerce to Russia and Newsletters in Russian


Figure 39: Brands with Ecommerce in Russia via monobrand store or via Department Store TSUM Digital Competitive Map Russia – Ecommerce vs. Russia Website Brands (November 2016)


Website URL Localization Brand Ship to Russia Brand Email language

Armani Premium RU Armani YES Armani RUBalenciaga Runner-Up RU Balenciaga YES Balenciaga RUBottega Veneta High-End WW Bottega Veneta NO Bottega Veneta ENBrunello Cucinelli High-End RU Brunello Cucinelli YES Brunello Cucinelli RUBulgari Jeweller RU-IT / RU-US … Bulgari NO Bulgari RUBurberry Mega-Brand RU Burberry YES Burberry RUCartier Jeweller RU Cartier NO Cartier RUCéline High-End WW Céline NO Céline ENChanel High-End RU Chanel NO Chanel RUCoach Premium WW Coach NO Coach ENDior High-End RU Dior NO Dior RUDolce&Gabbana Runner-Up RU Dolce&Gabbana YES Dolce&Gabbana ENFendi Runner-Up RU Fendi NO Fendi RUFerragamo Runner-Up No WW Ferragamo NO Ferragamo ENGivenchy Runner-Up WW Givenchy YES (IOS APP) Givenchy ENGucci Mega-Brand WW Gucci NO Gucci ENHermès High-End RU (Editorial focus, only scarf products) Hermès NO Hermès RUHugo Boss Premium WW Hugo Boss NO Hugo Boss no NL for Russia Loro Piana High-End WW Loro Piana YES Loro Piana ENLouis Vuitton Mega-Brand RU Louis Vuitton Only phone orders Louis Vuitton RUMichael Kors Premium USA Michael Kors NO Michael Kors ENMoncler Premium RU Moncler YES Moncler RUPrada Mega-Brand WW Prada NO Prada ENRalph Lauren Premium USA (RU only Magazine) Ralph Lauren NO Ralph Lauren ENRay-Ban Mega-Brand RU Ray-Ban NO Ray-Ban no email received Saint Laurent High-End WW Saint Laurent NO Saint Laurent no NL for Russia Swatch Premium RU Swatch NO Swatch RUTiffany Jeweller RU Tiffany NO Tiffany no NL for Russia Tod's Runner-Up RU Tod's NO Tod's RUTory Burch Premium USA Tory Burch NO Tory Burch ENValentino High-End RU Valentino YES Valentino RUZegna Mega-Brand RU Zegna NO Zegna RUAlena Akhmadullina Runner-Up (Local) RU Alena Akhmadullina YES Alena Akhmadullina RU

TSUM Department Store RU TSUM YES TSUM RUNet-A-Porter Full-Price E-Tailer WW Net-A-Porter YES Net-A-Porter ENLuisaviaRoma Full-Price E-Tailer WW LuisaviaRoma YES LuisaviaRoma RUMytheresa Full-Price E-Tailer WW Mytheresa YES Mytheresa ENYOOX End-of-Season E-Tailer RU YOOX YES YOOX RU

RU (Russian URL) Yes RussianWW English

No (No website / Other countries URL) No No NL for Russia

WEBSITE URL LOCALIZATION ECOMMERCE TO RUSSIA RUSSIA COUNTRY SELECTION FOR NEWSLETTER

Brand

ECOMMERCE MONOBRAND & ONLINE DEPT. STORE TSUM

ECOMMERCE MONOBRAND ONLY

ECOMMERCE ONLINE DEPT. STORE TSUM ONLY


Figure 40: Apart Balenciaga, LVMH Brands better positioned than Kering Brands on the ‘Digital Competitive Map Russia’ Digital Competitive Map Russia – LVMH vs. Kering Brands (November 2016)


LVMH

Kering


Methodology, detailed tables and figures

Methodology

Figure 41: Methodology

Source: Contactlab


Figure 42: Exane Panel of 32 monobrands, plus local luxury player Alena Akhmadullina, TSUM Dept. Store and 4 International E-Tailers PANEL

Brand Category Bulgari Jeweller Cartier Jeweller Tiffany Jeweller Bottega Veneta High-End Brunello Cucinelli High-End Céline High-End Chanel High-End Dior High-End Hermès High-End Loro Piana High-End Saint Laurent High-End Valentino High-End Balenciaga Runner-Up Dolce & Gabbana Runner-Up Fendi Runner-Up Ferragamo Runner-Up Givenchy Runner-Up Tod's Runner-Up Alena Akhmadullina Runner-Up Burberry Mega-Brand Gucci Mega-Brand Louis Vuitton Mega-Brand Prada Mega-Brand Ray-Ban Mega-Brand Zegna Mega-Brand Armani Premium Coach Premium Hugo Boss Premium Michael Kors Premium Moncler Premium Ralph Lauren Premium Swatch Premium Tory Burch Premium TSUM Department Store Net-A-Porter Full-Price E-Tailer LuisaviaRoma Full-Price E-Tailer Mytheresa Full-Price E-Tailer YOOX End-of-Season E-Tailer

Source: Exane BNP Paribas

Figure 43: Local player: Alena Akhmadullina

Source: Contactlab


Figure 44: Alena Akhmadullina website

Source: Contactlab

Figure 45: TSUM (local luxury department store) website

Source: Contactlab


Figure 46: DCM in Russia criteria – Main differences vs DCM Jan-16

Source: Contactlab


Strategic Reach in Russia

Figure 47: Dolce & Gabbana is leader on the Strategic Reach axis in Russia, followed by Burberry and Balenciaga Strategic Reach in Russia – Overall Brand Ranking (Russia, November 2016)


Brands Score Ranking RUSSIAN WEBSITE LOCALIZATION

ECOMMERCE TO RUSSIA MADE IN ON RUSSIAN WEBSITES CUSTOMER ENGAGEMENT STRATEGY FOR

RUSSIAN CUSTOMERS

Dolce&Gabbana 53 1 1 6 1 1Burberry 50 2 1 1 12 2Balenciaga 49 3 1 1 1 7Valentino 45 4 1 1 1 14Armani 44 5 1 1 12 8Moncler 42 6 1 1 14 4Alena Akhmadullina 41 7 1 6 14 2Fendi 34 8 1 11 1 8Brunello Cucinelli 32 9 1 6 14 14Zegna 32 9 1 11 10 8Loro Piana 31 11 21 6 1 24Louis Vuitton 31 11 1 28 10 5Tod's 29 13 1 11 1 18Givenchy 27 14 21 10 1 24Cartier 24 15 1 23 14 5Gucci 23 16 21 11 1 19Dior 22 17 1 11 14 13Chanel 21 18 1 28 14 8Swatch 21 18 1 28 14 8Bottega Veneta 19 20 21 11 1 27Hermès 17 21 1 28 14 17Bulgari 16 22 20 28 14 14Ray Ban 16 22 1 11 14 22Tiffany 14 24 1 23 14 22Prada 11 25 21 23 14 19Céline 7 26 21 28 14 24Coach 7 26 21 23 14 27Ferragamo 7 26 31 23 14 19Hugo Boss 7 26 21 11 14 32Saint Laurent 7 26 21 11 14 32Tory Burch 7 26 30 11 14 27Michael Kors 5 32 31 11 14 27Ralph Lauren 5 32 31 11 14 27

STRATEGIC REACH AXIS IN RUSSIA - RANKINGS


Figure 48: Russia Website Localization: 19 Monobrands, including new panel entries Ray-Ban/Swatch and local players Alena Akhmadullina, plus TSUM and YOOX offering Russia websites Strategic Reach – Russian Website Localization (Russia, November 2016)


Brand Ranking Desktop Website URL Localization (RU) Mobile Website URL Localization (RU)Armani 1 RU RUBalenciaga 1 RU RUBrunello Cucinelli 1 RU RUBurberry 1 RU RUCartier 1 RU RUChanel 1 RU RUDior 1 RU RUDolce&Gabbana 1 RU RUFendi 1 RU RULouis Vuitton 1 RU RUMoncler 1 RU RURay-Ban 1 RU RUSwatch 1 RU RUTiffany 1 RU RUTod's 1 RU RUValentino 1 RU RUZegna 1 RU RUAlena Akhmadullina 1 RU RUHermès 1 RU (Editorial focus, only scarf products) RU (Editorial focus, only scarf products)Bulgari 20 RU-IT / RU-US … RU-IT / RU-US …Bottega Veneta 21 WW WWCéline 21 WW WWCoach 21 WW WWGivenchy 21 WW WWGucci 21 WW WWHugo Boss 21 WW WWLoro Piana 21 WW WWPrada 21 WW WWSaint Laurent 21 WW WWTory Burch 30 No WW No WWFerragamo 31 No WW No WWMichael Kors 31 No WW No WWRalph Lauren 31 No WW (RU only Magazine) No WW (RU only Magazine)

TSUM RU RUNet-A-Porter WW WWLuisaviaRoma WW WWMytheresa WW WWYOOX RU RU

RU (Russian URL) RU (Russian URL)WW WW

No (No website / Other countries URL) No (No mobile website / Other countries URL)

RUSSIA WEBSITE LOCALIZATION


Figure 49: Fendi just launched its website in Russian

Source: Contactlab

Figure 50: Tiffany is the only US brand with a localized website

Source: Contactlab


Figure 51: A customized homepage for Russia: the Louis Vuitton example

Source: Contactlab


Figure 52: Ten monobrands, most powered by YNAP, and Burberry / Dolce & Gabbana / Loro Piana / Alena Akhmadullina, and all major international E-Tailers sell online to Russia. More than half of the panel have a significant online offer on TSUM Department Store Strategic Reach – Ecommerce to Russia (Russia, November 2016)


Brand Ranking Powered By Ship to Russia % E-Commerce Categories Online sales via TSUM dept. Store

Armani 1 YNAP YES 93% Good offerBalenciaga 1 YNAP YES 100% Good offerBurberry 1 YES 100% Good offerMoncler 1 YNAP YES 100% Good offerValentino 1 YNAP YES 85% Good offerBrunello Cucinelli 6 YNAP YES 100% NODolce&Gabbana 6 The Level Group YES 62% Good offerLoro Piana 6 YES 100% NOAlena Akhmadullina 6 YES 100% NOGivenchy 10 YNAP YES (IOS APP) 73% Good offerBottega Veneta 11 YNAP NO no RU ecommerce Good offerDior 11 NO no RU ecommerce Good offerFendi 11 NO no RU ecommerce Good offerGucci 11 NO no RU ecommerce Good offerHugo Boss 11 NO no RU ecommerce Good offerMichael Kors 11 NO no RU ecommerce Good offerRalph Lauren 11 NO no RU ecommerce Good offerRay-Ban 11 NO no RU ecommerce Good offerSaint Laurent 11 YNAP NO no RU ecommerce Good offerTod's 11 Italian Touch NO no RU ecommerce Good offerTory Burch 11 NO no RU ecommerce Good offerZegna 11 NO no RU ecommerce Good offerCartier 23 NO no RU ecommerce Limited (30 cosmetics)Coach 23 NO no RU ecommerce Limited (below 10 items)Ferragamo 23 NO no RU ecommerce Limited (30 shoes)Prada 23 NO no RU ecommerce Limited (50 eyewear)Tiffany 23 NO no RU ecommerce Limited (10 eyewear)Bulgari 28 NO no RU ecommerce NOCéline 28 NO no ecommerce NOChanel 28 NO no RU ecommerce NOHermès 28 NO no RU ecommerce 5 Apple iWatch bandsLouis Vuitton 28 Only phone orders no RU ecommerce NOSwatch 28 NO no RU ecommerce NO

TSUM YES n.a. n.a.Net-A-Porter YNAP YES n.a. n.a.LuisaviaRoma YES n.a. n.a.Mytheresa YES n.a. n.a.

YOOX YNAP YES n.a. n.a.

Yes Above 85% Good offer (more than 50 items, multi

category)

Yes (only App) Between 50% and 85%Limited offer (below 50 items, mono

category)

No Below 50% No

ECOMMERCE TO RUSSIA


Figure 53: Alena Akhmadullina’s online offer meets Russian customers’ taste and with significant price points (the example of fur coats, priced between €6,000 and €20,000)

Source: Contactlab


Figure 54: Presence on TSUM online store: the example of Gucci

Source: Contactlab


Figure 55: 11 Brands fully disclosing ‘Made in…’ on web. Strangely Brunello Cucinelli, Saint Laurent and Dior do not disclose ‘Made in’, but do so on US websites Strategic Reach – ‘Made in’ on Russian / international websites (Russia, November 2016)


Brand Ranking "Made In" Disclosure on Web Product Pages Produced in Heritage Countries once DeclaredBalenciaga 1 Systematically Very highBottega Veneta 1 Systematically Very highDolce&Gabbana 1 Systematically Very highFendi 1 Systematically Very highGivenchy 1 Systematically Very highGucci 1 Systematically Very highLoro Piana 1 Systematically Very highTod's 1 Systematically Very highValentino 1 Systematically Very highLouis Vuitton 10 Partial (RTW, Watches) Very highZegna 10 Partial (Shoes, Bags, Coats) Very highArmani 12 Systematically PartialBurberry 12 Systematically PartialBrunello Cucinelli 14 NO ( vs Yes in US) n.a.Bulgari 14 NO n.a.Cartier 14 NO n.a.Céline 14 NO n.a.Chanel 14 NO n.a.Coach 14 NO n.a.Dior 14 NO (vs partially in US) n.a.Hermès 14 NO n.a.Hugo Boss 14 NO n.a.Moncler 14 NO n.a.Prada 14 NO n.a.Ray Ban 14 NO n.a.Saint Laurent 14 NO ( vs Yes in US) n.a.Swatch 14 Rarely n.a. (Very high)Tiffany 14 Rarely (only watches) n.a. (Very high)Alena Akhmadullina 14 NO n.a.Ferragamo 14 no RU/ int website n.a.Michael Kors 14 no RU/ int website n.a.Ralph Lauren 14 no RU/ int website n.a.Tory Burch 14 no RU/ int website n.a.

TSUM Systematically n.a.Net-A-Porter n.a. n.a.LuisaviaRoma n.a. n.a.Mytheresa n.a. n.a.YOOX n.a. n.a.

Systematically mentioned (above 80% of Web Product Pages)

Very high: above 85% production declared in Heritage country on Web Product Page

Partial (mentioned only on same relevant product categories)

Partial: between 35% and 85% production declared in Heritage country on Web Product Page

Never / Rarely mentioned: below 20% of Web Product Pages

Marginal: below 35% production declared in Heritage country on Web Product Page. Or n.a.

"MADE IN" ON RUSSIA/INTL. WEBSITES


Figure 56: ‘Made in’ disclosure on Product pages is particularly relevant for Russian customers Fashion & Luxury Customers declaring relevance of ‘made in’ disclosure (%)

Source: Contactlab European (+) Digital Behaviour Study 2016

Figure 57: Noticeably TSUM has a strict policy about ‘Made in’ disclosure The example of Moncler


39%

47%

73%

80%

0%

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20%

30%

40%

50%

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70%

80%

90%

WW Customers Russian CustomersExtremely + Very Important Extremely + Very + Quite Important


Figure 58: Dolce & Gabbana lead, followed by Burberry, Alena Akhmadullina and Moncler Strategic Reach – Russian Customer Engagement Strategy (Russia, November 2016)


Figure 59: Fendi has only recently introduced emails in Russian

Source: Contactlab

Brand Rank Currency Web Language Social media in Russian (FB, Twitter, Instagram)

Russian Social media

Email LanguageEmail Weekly Frequency

(Russia)Sep - Nov 2016

Dolce&Gabbana 1 RUB RU RU (Twitter/FB) VK EN 0,7Burberry 2 RUB RU RU (Twitter) NO RU 1.0Alena Akhmadullina 2 RUB RU RU (Twitter/FB) NO RU 0.5Moncler 4 RUB RU NO NO RU 1.0Cartier 5 RUB RU NO NO RU 0.5Louis Vuitton 5 RUB RU NO NO RU 0.6Balenciaga 7 EUR RU NO NO RU 0,7Armani 8 RUB RU NO NO RU 2,2Chanel 8 No prices RU NO NO RU 0.8Fendi 8 No prices RU NO NO RU 0.8Swatch 8 No prices RU NO VK RU 0.6Zegna 8 No prices RU NO NO RU 0.8Dior 13 No prices RU NO NO RU 0.4Brunello Cucinelli 14 EUR RU NO NO RU 0.1Bulgari 14 EUR RU NO NO RU 0.2Valentino 14 EUR RU NO NO RU 0.1Hermès 17 No prices RU NO NO RU Welcome email onlyTod's 18 No prices EN/(RU) NO NO RU 1.1Ferragamo 19 no RU/ int website no RU/ int website NO NO EN 1.0Gucci 19 No prices EN NO NO EN 0.9Prada 19 No prices EN NO NO EN 0,7Ray-Ban 22 No prices RU NO NO no email received no email received Tiffany 22 No prices RU NO NO no NL for Russia n.a. Céline 24 EUR EN NO NO EN Welcome email onlyGivenchy 24 GBP EN NO NO EN 0.1Loro Piana 24 EUR EN NO NO EN Welcome email onlyBottega Veneta 27 No prices EN NO NO EN Welcome email onlyCoach 27 No prices EN NO NO EN Welcome email onlyMichael Kors 27 no RU/Intl. web no RU/Intl. web NO NO EN 6.0Ralph Lauren 27 no RU/Intl. web no RU/Intl. web NO NO EN 2.7Tory Burch 27 no RU/Intl. web no RU/Intl. web NO NO EN 2.7Hugo Boss 32 No prices EN NO NO no NL for Russia n.a. Saint Laurent 32 No prices EN NO NO no NL for Russia n.a.

TSUM RUB RU RU (Twitter/FB/Instagram) NO RU 3.1Net-A-Porter GBP EN NO NO EN 6.0LuisaviaRoma RUB RU NO NO RU 6.5Mytheresa EUR EN NO NO EN 7.5YOOX RUB RU NO NO RU 4.0

RUB(Russian currency)

RussianAt least 2 social media in

RussianYes Russian

Between 0.7 and 1.3 emails per week

EUR / USD / GBPMixed

Russian-EnglishOne social media in Russian English

Between 0.3 and 0.7 or between 1.3 and 2.0 emails per week

No prices English No NoNo Russia country

option for newsletter

Less than 0.3 emails per week or more than 2.0 emails per week

CUSTOMER ENGAGEMENT STRATEGY FOR RUSSIAN CUSTOMERS


Figure 60: Burberry Russian account on Twitter

Source: Contactlab

Figure 61: TSUM Russian account on Instagram

Source: Contactlab


Figure 62: Dolce & Gabbana social media localization on VK

Source: Contactlab

Figure 63: Dolce & Gabbana official page on VK

Source: Contactlab


Figure 64: Swatch social media localization on VK

Source: Contactlab

Figure 65: Swatch official page on VK

Source: Contactlab


Digital Experience for Russian customers

Figure 66: Burberry has a significant lead on the Digital Customer Experience axis, in particular for Personal and Cross-Channel Services, followed by Louis Vuitton and Loro Piana Digital Experience Axis – Overall Brand Ranking (Russia, November 2016)


Brand Score Ranking

DISPLAY VISUALIZATION

ON RUSSIA/INTL.

WEBSITES

PRODUCT PRESENTATION

PRODUCT SELECTION SUPPORT

BASIC CUSTOMER SERVICE ON RUSSIA/INTL.

WEBSITES

PERSONAL SERVICES ON RUSSIA/INTL.

WEBSITES

ONLINE SHOPPING ON RUSSIA/INTL.

WEBSITES

DELIVERY OPTIONS IN RUSSIA

STORE FINDER (RUSSIAN OR

INTERNATIONAL WEBSITES)

CROSS-CHANNEL

SERVICES IN RUSSIA

EMAIL PROFICIENCY FOR

RUSSIAN CUSTOMERS

SHARE ON RUSSIA/WW WEBSITES

APPS FOR RUSSIAN

CUSTOMERS

Burberry 106 1 1 1 6 1 1 4 1 10 1 14 14 21Louis Vuitton 86 2 1 16 1 1 4 15 8 1 11 9 1 1Loro Piana 84 3 19 1 2 6 6 2 4 5 3 25 14 16Armani 81 4 28 9 11 9 3 9 8 14 3 1 14 9Cartier 81 4 19 16 2 1 1 11 8 4 11 9 25 4Fendi 80 6 1 9 2 6 9 11 8 1 2 2 1 4Moncler 79 7 1 16 2 20 15 6 8 16 3 6 11 3Dolce&Gabbana 73 8 1 9 6 9 9 3 4 27 3 19 1 21Valentino 69 9 1 5 28 9 9 6 8 5 11 19 14 1Brunello Cucinelli 64 10 19 9 6 20 15 9 4 18 3 24 1 21Givenchy 63 11 1 9 11 16 15 8 2 24 3 21 27 8Alena Akhmadullina 59 12 1 16 17 20 15 1 2 28 3 22 14 21Balenciaga 59 13 19 1 14 20 15 4 4 31 3 6 14 16Swatch 57 14 1 1 14 9 15 23 8 9 11 9 11 9Tiffany 56 15 19 5 10 1 7 15 8 14 11 25 1 9Dior 54 16 28 5 17 6 5 23 8 10 11 9 27 9Bulgari 54 17 1 9 6 9 9 11 8 13 11 23 14 16Gucci 52 18 1 9 24 20 15 15 8 10 11 4 14 4Chanel 51 19 26 16 11 20 15 11 8 16 11 6 11 9Zegna 50 20 1 5 28 9 7 23 8 1 11 16 27 21Tod's 46 21 1 16 14 9 9 23 8 18 11 14 25 21Hugo Boss 43 22 1 16 17 16 15 15 8 5 11 25 1 21Prada 40 23 26 16 24 20 15 15 8 18 11 9 14 21Hermès 37 24 19 29 23 20 15 23 8 5 11 25 1 9Bottega Veneta 36 25 1 16 24 5 9 23 8 18 11 25 14 21Saint Laurent 35 26 1 16 17 20 15 15 8 22 11 25 1 21Ray-Ban 31 27 19 27 17 20 15 23 8 24 11 25 14 4Céline 29 28 1 27 24 16 15 15 8 28 11 25 1 21Coach 26 29 1 16 17 16 15 15 8 31 11 25 1 16Ferragamo 24 30 30 29 28 20 15 30 8 22 11 2 27 21Ralph Lauren 23 31 30 29 28 20 15 30 8 24 11 4 27 16Michael Kors 16 32 30 29 28 20 15 30 8 28 11 16 27 21Tory Burch 9 33 30 29 28 20 15 30 8 31 11 16 27 9

DIGITAL CUSTOMER EXPERIENCE AXIS FOR RUSSIAN CUSTOMERS - RANKINGS


Figure 67: Half the panel achieving full score, finally all brands have a mobile adapted website Digital Experience Axis – Display Visualization on Russia/Intl. Websites (Russia, November 2016)


Brands RankFlash Plug-In Required for

Videos Minimum Desktop Width Mobile adapted website

Bottega Veneta 1 NO 768px YESBulgari 1 NO 768px YESBurberry 1 NO 768px YESCéline 1 NO 768px YESCoach 1 NO 768px YESDolce&Gabbana 1 NO 768px YESFendi 1 NO 768px YESGivenchy 1 NO 768px YESGucci 1 NO 768px YESHugo Boss 1 NO 768px YESLouis Vuitton 1 NO 768px YES (iOS and Android App)Moncler 1 NO 768px YESSaint Laurent 1 NO 768px YESSwatch 1 NO 768px YESTod's 1 NO 768px YESValentino 1 NO 768px YESZegna 1 NO 768px YESAlena Akhmadullina 1 NO 768px YESBalenciaga 19 NO 1024px YESBrunello Cucinelli 19 NO 1024px YESCartier 19 NO 980px YESHermès 19 NO 1030px YESLoro Piana 19 NO 840px YESRay-Ban 19 NO 980px YESTiffany 19 NO 1024px YESChanel 26 Optional (video) 768px YESPrada 26 Optional (video) 768px YESArmani 28 Optional (video) 970px YESDior 28 Optional (video) 980px YESFerragamo 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteMichael Kors 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteRalph Lauren 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website

Tory Burch 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website

Not required Visible also on old Netbooks Yes adapted

Required for videos Visible on most devicesPartially adapted (some horizontal scrolling, only

some pages)

Required for website visualization

Not visible on old Notebook ≤ 15" without horizontal scrolling

Not adapted

DISPLAY VISUALIZATION ON RUSSIA/INTL. WEBSITES


Figure 68: Cartier desktop and mobile adapted websites

Source: Contactlab

Figure 69: Alena Akhmadullina desktop and mobile adapted websites

Source: Contactlab


Figure 70: Only seven brands integrate product pages with videos Digital Experience Axis – Product Presentation on Russia/Intl. Websites (Russia, November 2016)


Brands Rank Video with worn products

Pictures from different angles Zoom on Details Model measures

Balenciaga 1 YES (selected products) YES YES YESBurberry 1 YES (selected products) YES YES YESLoro Piana 1 YES (selected products) YES YES (mouseover) NOSwatch 1 YES (selected products) YES (selected products) YES (selected products) n.a (no RTW)Dior 5 YES (selected products) YES YES NOTiffany 5 YES (selected products) YES YES n.a (no RTW)Valentino 5 NO YES YES (mouseover) YESZegna 5 NO YES YES (mouseover) YESArmani 9 NO YES YES YESBrunello Cucinelli 9 NO YES YES YESBulgari 9 YES (selected products) NO YES (mouseover) n.a (no RTW)Dolce&Gabbana 9 NO YES YES YESFendi 9 NO YES YES YESGivenchy 9 NO YES YES YESGucci 9 NO YES YES YESBottega Veneta 16 NO YES YES NOCartier 16 NO YES YES n.a (no RTW)Chanel 16 NO YES YES NOCoach 16 NO YES YES NOHugo Boss 16 NO YES NO YESLouis Vuitton 16 NO YES YES NOMoncler 16 NO YES YES NOPrada 16 NO YES YES n.a (no RTW on Web)Saint Laurent 16 NO YES YES n.a (RTW not worn)Tod's 16 NO YES YES NOAlena Akhmadullina 16 NO YES YES NOCéline 27 NO NO YES NORay-Ban 27 NO NO YES n.a (no RTW)Hermès 29 NO NO NO NOFerragamo 29 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteMichael Kors 29 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteRalph Lauren 29 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteTory Burch 29 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website

Offered Offered Offered with mouseover Offered Offered with click Not offered Not offered Not offered Not offered

PRODUCT PRESENTATION ON RUSSIA/INTL. WEBSITES


Figure 71: Louis Vuitton is in the overall lead, followed closely by Cartier, Fendi, Loro Piana and Moncler. Shop by occasion exploited by jewellers only Digital Experience Axis – Product Selection Support on Russia/Intl. Websites (Russia, November 2016)


Brands Rank Wishlist Recently viewed You might also like(same product category)

Match with,Complete the Look Shop by Look Shop by Occasion Size guide

Louis Vuitton 1 YES YES YES YES YES NO YESCartier 2 YES NO YES YES n.a. YES (e.g. bridal, engagement) YESFendi 2 YES YES YES YES NO NO YESLoro Piana 2 YES NO YES YES YES NO YESMoncler 2 YES NO YES YES YES NO YESBrunello Cucinelli 6 YES NO NO YES YES NO YESBulgari 6 YES NO YES YES n.a. YES (e.g. bridal) NOBurberry 6 YES NO YES YES NO NO YESDolce&Gabbana 6 YES YES NO YES NO NO YESTiffany 10 YES YES YES NO n.a. YES (e.g. engagement, wedding) NOArmani 11 YES NO NO NO YES NO YESChanel 11 YES NO YES NO YES NO NOGivenchy 11 NO NO NO YES Discover the look NO YESBalenciaga 14 YES NO NO NO NO NO YESSwatch 14 YES NO YES n.a. n.a. NO NOTod's 14 YES NO NO NO NO NO YESCoach 17 NO YES NO NO NO NO YESDior 17 NO YES YES NO NO NO NOHugo Boss 17 NO YES NO NO NO NO YESRay-Ban 17 NO YES YES n.a. n.a. NO NOSaint Laurent 17 NO YES NO NO NO NO YESAlena Akhmadullina 17 NO NO NO YES NO NO NOHermès 23 YES (scarves) NO YES (scarves) NO NO NO NOBottega Veneta 24 NO NO NO NO YES NO NOCéline 24 NO NO NO NO YES NO NOGucci 24 NO YES NO NO NO NO NOPrada 24 NO NO NO NO NO NO YESValentino 28 NO NO NO NO NO NO NOZegna 28 NO NO NO NO NO NO NOFerragamo 28 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteMichael Kors 28 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteRalph Lauren 28 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteTory Burch 28 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website

Offered Offered Offered Offered Offered Offered Offered PartialNot offered Not offered Not offered Not offered Not offered Not offered Not offered

PRODUCT SELECTION SUPPORT ON RUSSIA/INTL. WEBSITES


Figure 72: Dolce & Gabbana has introduced ‘Match with’ in its new redesigned website

Source: Contactlab


Figure 73: Burberry, Cartier, LV and Tiffany offer phone and email assistance in Russian. Major mega-brands like Chanel, Gucci, Hermès, Prada do not offer any specific customer service to Russian clients Digital Experience Axis – Basic Customer Service on Russia/Intl. Websites (Russia, November 2016)


Figure 74: Louis Vuitton’s complete customer service: phone, email and chat (not yet active) in Russian

Source: Contactlab

Brands Rank Online Chat Phone Assistance E-mail Assistance

Burberry 1 Not active RU RUCartier 1 NO RU RULouis Vuitton 1 Not active RU RUTiffany 1 NO RU RUBottega Veneta 5 EN EN (IT number) RUDior 6 EN EN (FR number) ENFendi 6 NO EN (IT number) RULoro Piana 6 EN EN (IT number) ENArmani 9 NO NO RUBulgari 9 NO NO RUDolce&Gabbana 9 NO NO RUSwatch 9 NO EN (CH number) ENTod's 9 NO NO RUValentino 9 NO NO RUZegna 9 NO NO RUCéline 16 NO NO ENCoach 16 NO NO ENGivenchy 16 NO NO ENHugo Boss 16 NO NO ENBalenciaga 20 NO NO Not activeBrunello Cucinelli 20 NO NO Not activeMoncler 20 NO NO Not activeChanel 20 NO NO NOGucci 20 NO NO NOHermès 20 NO NO NOPrada 20 NO NO NORay-Ban 20 NO NO NOSaint Laurent 20 NO NO NOAlena Akhmadullina 20 NO NO NOFerragamo 20 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteMichael Kors 20 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteRalph Lauren 20 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteTory Burch 20 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website

Offered in Russian Offered in Russian Offered in Russian

Offered in English Offered in English Offered in English

Not OfferedNot Active

Not OfferedNot OfferedNot Active

BASIC CUSTOMER SERVICE ON RUSSIAN/INTL. WEBSITES*

*Product availability, delivery, payment


Figure 75: Cartier offering phone and email assistance in Russian. Specific stores selected as competence centre (generic and diamonds specific)

Source: Contactlab

Figure 76: Burberry also offers a ‘Call me back’ service

Source: Contactlab


Figure 77: Cartier, Burberry, Louis Vuitton, Tiffany and Zegna offer an effective Style Advisory in Russian. Cartier, Armani and Dior offer ‘Book an Appointment in store’ Digital Experience Axis – Personal Services on Russia/Intl. Websites (Russia, November 2016)


Brands Rank Style Advisor: Online Chat*

Style Advisor: Phone Assistance*

Style Advisor:E-mail Assistance*

Book an Appointmentin Russian Stores Make to Order

Burberry 1 Not active RU RU extra effort NO Bespoke RTW, Accessories (online); monogramming scarves & perfumes (online)Cartier 1 NO RU NO YES After Service - jewellery engraving/polishing/resizing/restoration/pairing (offline)Armani 3 NO NO Refer to store YES (made to measure) Made-to-measure (offline)Louis Vuitton 4 Not active RU NO NO Initials on leather goods by stamping or printing (online); make-to-order shoes (offline)Dior 5 No reply EN (refer to store for RU) EN YES NOLoro Piana 6 EN NO NO NO Made To Measure Services: suits/Jackets, Shirts, Men's Knitwear, TiesTiffany 7 NO RU NO NO NOZegna 7 NO NO RU extra effort NO NOBottega Veneta 9 EN NO No reply NO NOBulgari 9 NO NO Refer to store NO NODolce & Gabbana 9 NO NO Refer to store NO NOFendi 9 NO EN (refer to store for RU) No reply NO NOTod's 9 NO NO Refer to store NO NOValentino 9 NO NO Refer to store NO NOBalenciaga 15 NO NO Not active No stores in Russia NOBrunello Cucinelli 15 NO NO Not active NO NOCéline 15 NO NO NO NO NOChanel 15 NO NO NO NO NOCoach 15 NO NO NO No stores in Russia NOGivenchy 15 NO NO No reply NO NOGucci 15 NO NO NO NO NOHermès 15 NO NO NO NO NOHugo Boss 15 NO NO NO NO NOMoncler 15 NO NO Not active NO NOPrada 15 NO NO NO NO NORayBan 15 NO NO NO No monobrand stores NOSaint Laurent 15 NO NO NO NO NOSwatch 15 NO NO NO NO NOAlena Akhmadullina 15 NO NO NO NO NOFerragamo 15 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteMichael Kors 15 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteRalph Lauren 15 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteTory Burch 15 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website

Offered in Russian Offered in Russian Offered in Russian Offered at Russian stores Products on Russian website / stores

Offered in EnglishOffered in English/

Refer to store for RUOffered in English/

Refer to storeInitials on Russian website / stores

Not Offered/No Reply/Not Active

Not OfferedNot Offered/

No Reply/Not Active

Not Offered at Russian stores Not Offered at Russian stores

PERSONAL SERVICES ON RUSSIAN/INTL. WEBSITES


Figure 78: Burberry extra effort in Style Advisory via email Digital Experience Axis – Personal Services on Russia/Intl. Websites (Russia, November 2016)

Source: Contactlab

Figure 79: Zegna extra effort in Style Advisory via email Digital Experience Axis – Personal Services on Russia/Intl. Websites (Russia, November 2016)

Source: Contactlab


Figure 80: Dior offers Book an Appointment Digital Experience Axis – Personal Services on Russia/Intl. Websites (Russia, November 2016)

Source: Contactlab


Figure 81: As expected, Russian brand Alena Akhmadullina is leading Digital Experience Axis – Online Shopping on Russian / International websites (Russia, November 2016)


Brands RankingVideo in homepage

without slowing downPurchasing Process

Shop evidenceon Russian Homepage

Minimum clicksto shopping bag E-commerce mobile Price Evidence Cash on delivery Bank transfer Wallet payment

Alena Akhmadullina 1 NO HIGH 3 YES YES YES YES NO Loro Piana 2 YES (animation) HIGH 3 YES YES NO YES NODolce&Gabbana 3 NO HIGH 3 YES YES NO NO QiwiBalenciaga 4 NO HIGH 3 YES YES (mouseover) NO NO NOBurberry 4 YES HIGH 3 YES YES NO NO NOMoncler 6 NO HIGH 3 YES YES NO NO NOValentino 6 NO HIGH 3 YES YES NO NO NO Givenchy 8 YES HIGH 3 YES (IOS APP) YES (only app) NO NO PayPalArmani 9 NO HIGH 4.00 YES YES NO NO NOBrunello Cucinelli 9 NO HIGH 4.00 YES YES NO NO NOBulgari 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce YES (mouseover) no Russia ecommerce no Russia ecommerce no Russia ecommerceCartier 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce YES (mouseover) no Russia ecommerce no Russia ecommerce no Russia ecommerceChanel 11 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce YES no Russia ecommerce no Russia ecommerce no Russia ecommerceFendi 11 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce YES no Russia ecommerce no Russia ecommerce no Russia ecommerceCéline 15 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce YES no Russia ecommerce no Russia ecommerce no Russia ecommerceCoach 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceGucci 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceHugo Boss 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceLouis Vuitton 15 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce YES no Russia ecommerce no Russia ecommerce no Russia ecommercePrada 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceSaint Laurent 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceTiffany 15 YES no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceBottega Veneta 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceDior 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceHermès 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceRay-Ban 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceSwatch 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceTod's 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceZegna 23 NO no Russia ecommerce no Russia ecommerce no Russia ecommerce NO no Russia ecommerce no Russia ecommerce no Russia ecommerceFerragamo 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteMichael Kors 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteRalph Lauren 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteTory Burch 30 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website

Partial screen video, not interfering on Homepage

Shop button or E-store button

2-3 click Via WebYes displayed on product

page and on category page with mouseover

Offered Offered Offered

No video on Homepage Shopping bag 4-5 clicks Only via AppYes displayed on product page and/or on category page without mouseover

Full screen video and always interfering (skip) on Homepage

No E-commerce evidence

More than 5 clicks Not feasible Not displayed Not offered Not offered Not offered

ONLINE SHOPPING ON RUSSIAN/INTL. WEBSITES


Figure 82: Cash on Delivery widely adopted in the Russian online market

Source: Payvision Global Card Processing

Figure 83: Alena Akhmadullina player offering Cash on Delivery and Bank Transfer options


Cash69%

Credit Card10%

Offline/Prepaid 10%

E-Money5%

Card on Delivery4%

Other 2%


Figure 84: Loro Piana only international brand offering Bank Transfer option

Source: Contactlab

Figure 85: Dolce & Gabbana adopting Russian paying system Qiwi wallet

Source: Contactlab


Figure 86: Burberry standing out offering both Free Shipping and Express Delivery Digital Experience Axis – Delivery options on Russian / International websites (Russia, November 2016)


Figure 87: Uncertainty in custom clearance timing affects delivery performance to Russia The example of Loro Piana


Brands Rank Free shipping (Standard) Express Delivery Same/Next Day Delivery Saturday Delivery

Burberry 1 YES 3-5 DAYS NO NOGivenchy 2 NO (20 GBP) 2-3 DAYS NO NOAlena Akhmadullina 2 NO (350 RUB) 1-2 DAYS NO NOBalenciaga 4 YES NO (Standard 2/3 weeks) NO NOBrunello Cucinelli 4 YES NO (Standard 2/3 weeks) NO NODolce&Gabbana 4 NO (1800 RUB) 6-9 DAYS NO NOLoro Piana 4 NO 3-5 days + customs NO NOArmani 8 NO (1000 RUB) NO (Standard 2/3 weeks) NO NOMoncler 8 NO (1000 RUB) NO (Standard 2/3 weeks) NO NOValentino 8 NO (20 EUR) NO (Standard 2/3 weeks) NO NOBottega Veneta 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceBulgari 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceCartier 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceCéline 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceChanel 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceCoach 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceDior 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceFendi 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceFerragamo 8 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteGucci 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceHermès 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceHugo Boss 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceLouis Vuitton 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceMichael Kors 8 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websitePrada 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceRalph Lauren 8 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteRay-Ban 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceSaint Laurent 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceSwatch 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceTiffany 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceTod's 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerceTory Burch 8 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteZegna 8 no Russia ecommerce no Russia ecommerce no Russia ecommerce no Russia ecommerce

Free with no Ticket limits Offered Min 3 days Same day OfferedFree above Ticket threshold Offered other Next day

Always paid Not offered Not offering Not offered

DELIVERY OPTIONS IN RUSSIA


Figure 88: Russian customers consider Saturday delivery important Fashion & Luxury Customers declaring Relevance of Saturday Delivery (%)

Source: Contactlab European (+) Digital Behaviour Study 2016

42%

50%

71%76%

0%

10%

20%

30%

40%

50%

60%

70%

80%

WW Customers Russian Customers

Extremely + Very Important Extremely + Very + Quite Important


Figure 89: Store Finder – Fendi, Louis Vuitton and Zegna leading, closely followed by Cartier Digital Experience Axis – Store Finder (Russia, November 2016)


Brands Rank Identification on Homepage Visibility Store SearchAsk for Client

Localization on Desktop

Ask for Client Localization on Mobile Store Segmentation Details Map Print Photo boutique Phone number Opening

day/hours Email to Store Referral in store

Fendi 1 Store locator MEDIUM Automatic YES YES Products / Gender YES NO NO YES YES YES NOLouis Vuitton 1 Stores HIGH Manually prompted YES YES Products / Gender YES NO Specific photo YES YES NO NOZegna 1 Store locator HIGH Manually prompted NO YES NO YES NO NO YES YES YES Store ManagerCartier 4 Find a boutique MEDIUM Manually prompted YES YES Service / Products YES NO Generic photo YES YES YES NOHermès 5 Our boutique HIGH Manually prompted YES YES NO YES NO Generic drawing YES YES NO NOHugo Boss 5 Store Locator MEDIUM Manually prompted YES YES Brand / Gender / Made to measure YES NO Generic photo YES YES YES NOLoro Piana 5 Stores HIGH Manually prompted NO NO Products / Gender YES NO Specific drawing YES YES NO Store ManagerValentino 5 Nearest Boutique HIGH Automatic NO NO Products / Gender YES NO Specific photo YES YES NO NOSwatch 9 Where to buy HIGH Automatic NO NO NO YES YES NO YES YES YES NOBurberry 10 Store locator HIGH Automatic NO YES NO YES NO NO YES YES NO NODior 10 Stores LOW Manually prompted NO YES Products / Gender YES YES NO YES YES YES NOGucci 10 Store locator MEDIUM Manually prompted YES YES Products / Gender YES NO Generic photo YES YES NO NOBulgari 13 Store locator MEDIUM Manually prompted YES YES Products YES NO NO YES YES NO NOArmani 14 Stores MEDIUM Manually prompted YES YES Brand / Gender YES NO NO YES NO NO NOTiffany 14 Stores HIGH Manually prompted NO NO NO YES YES NO YES YES YES NOChanel 16 Store locator LOW Manually prompted YES NO Products YES YES NO YES YES YES NOMoncler 16 Boutiques HIGH Manually prompted NO NO Gender YES NO NO YES NO YES NOBottega Veneta 18 Store locator LOW Automatic YES YES NO YES NO NO YES NO NO NOBrunello Cucinelli 18 Boutique locator LOW Manually prompted NO NO NO YES YES Specific photo YES YES NO NOPrada 18 Store locator MEDIUM Manually prompted YES NO Products / Gender YES NO NO YES YES NO NOTod's 18 Stores HIGH Manually prompted NO NO NO YES NO NO YES YES YES NOFerragamo 22 Store locator HIGH Manually prompted NO NO Gender YES YES NO YES NO NO NOSaint Laurent 22 Store locator MEDIUM Manually prompted NO YES Gender NO NO NO YES YES NO NOGivenchy 24 Stores HIGH Manually prompted NO NO Products / Gender YES YES NO NO NO NO NORalph Lauren 24 Store locator MEDIUM Manually prompted NO NO Products / Gender YES NO NO YES YES NO NORay-Ban* 24 Store locator MEDIUM Manually prompted YES NO NO YES NO NO YES NO NO NODolce&Gabbana 27 Store locator LOW Manually prompted NO YES NO YES NO Moscow (Stand alone YES oursuare, Google NO NOCéline 28 Stores MEDIUM Manually prompted NO NO NO YES NO NO YES YES NO NOMichael Kors 28 Store locator MEDIUM Manually prompted NO NO NO YES NO NO YES YES NO NOAlena Akhmadullina 28 Boutique MEDIUM Full list 25 shops n.a. n.a. NO NO NO NO YES YES YES NOBalenciaga 31 no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia stores in Rus tores in Runo stores in Russiao stores in Russio stores in Russiano stores in Russi no stores in RussiaCoach 31 no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia stores in Rus tores in Runo stores in Russiao stores in Russio stores in Russiano stores in Russi no stores in RussiaTory Burch 31 no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia no stores in Russia stores in Rus tores in Runo stores in Russiao stores in Russio stores in Russiano stores in Russi no stores in Russia*for Ray-Ban considered multibrand stores signaled in Store Locator

"Luxury Goods" namingHigh: no scrolling, large font, specific

bannerAutomatic Requested Requested Two criteria

Shows Map

Allow map

printing

Specific Store picture

Phone Number available

Opening Hours available

(excluding SIS locations)

E-mail to Store possible

Contact provided

Minimum personalization namining

Medium: no scrolling, no drop

down menu, small font

One criteriaSpecifict Store

picture for selected locations

Selected stores (excluding SIS

locations)

"Mass Market" namingLow: scrolling, drop down menu, footer

Manually prompted Not requested Not requested No criteria No mapNo map printing

No picture or generic photo

No Phone Number not

available

Opening Hours not mentioned (excluding SIS

locations)

E-mail to Store not possible

No contact

STORE FINDER FOR RUSSIA


Figure 90: Best practice Store finder visibility in Valentino homepage (‘Find the nearest boutique’)

Source: Contactlab

Figure 91: Very clear store segmentation in Dior (gender/product category)

Source: Contactlab

Figure 92: Specific boutique picture for Dolce & Gabbana and Brunello Cucinelli

Source: Contactlab


Figure 93: Social integration with Google Places and Foursquare in Dolce & Gabbana store details

Source: Contactlab

Figure 94: Zegna introducing store manager referral

Source: Contactlab


Figure 95: Cross-channel services seem much neglected by most brands. Only Burberry and Fendi show In-Store availability Digital Experience Axis – Cross Channel Services in Russia, November 2016


Figure 96: Burberry offers both in-store availability and exchange in store

Source: Contactlab

Brands Rank In Store Availability Collect in Store Return in Store Product exchangeBurberry 1 YES NO NO YES (only in-store)Fendi 2 YES no Russia ecommerce no Russia ecommerce no Russia ecommerceArmani 3 NO NO NO Yes (online)Brunello Cucinelli 3 NO NO NO YES (online)Dolce&Gabbana 3 NO NO NO YES (online)Givenchy 3 NO NO NO YES (online)Loro Piana 3 NO NO NO YES (online) No size color exchangeMoncler 3 NO NO NO YES (online)Alena Akhmadullina 3 NO NO NO YES (online)Balenciaga 3 No stores in Russia No stores in Russia No stores in Russia Yes (online)Valentino 11 NO NO NO NOBottega Veneta 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceBulgari 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceCartier 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceCéline 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceChanel 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceDior 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceGucci 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceHermès 11 Check via phone no Russia ecommerce no Russia ecommerce no Russia ecommerceHugo Boss 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceLouis Vuitton 11 Check via phone no Russia ecommerce no Russia ecommerce no Russia ecommercePrada 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceRalph Lauren 11 NO no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteRay-Ban 11 No monobrand stores no Russia ecommerce no Russia ecommerce no Russia ecommerceSaint Laurent 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceSwatch 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceTiffany 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceTod's 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceZegna 11 NO no Russia ecommerce no Russia ecommerce no Russia ecommerceCoach 11 No stores in Russia No stores in Russia No stores in Russia no Russia ecommerceFerragamo 11 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteMichael Kors 11 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteTory Burch 11 No stores in Russia No stores in Russia No stores in Russia no Russia/Intl. website

Broadly offered Broadly offered Broadly offeredOffered online & in-store, or only in-

store

Offered in selected stores onlyOffered in selected stores

onlyOffered in selected stores

onlyOffered only online

Not offered Not offered Not offered Not offered

CROSS CHANNEL SERVICES IN RUSSIA


Figure 97: Fendi has just introduced in-store availability

Source: Contactlab

Figure 98: Armani leads in Email Proficiency with Russian customers, followed by Fendi, Ferragamo Digital Experience Axis – Email Proficiency for Russian Customers (Russia, November 2016)


Brands Rank Mobile Responsive Video or Gif Male / Female

Segmentation Navigation Bar Link between Product on Email and Web Landing Page

Number of Social Bookmarks on E-mail

Armani 1 YES Sometimes Sometimes Always Mixed Product/Category 7Fendi 2 YES Sometimes Never Always Mixed Product/Category 10Ferragamo 2 YES Sometimes Never Always Mixed Product/Category 6Gucci 4 NO Sometimes Frequent Always Product Page 5Ralph Lauren 4 YES Never Never Always Product Page 7Balenciaga 6 YES Never Sometimes Always Category Page 3Chanel 6 YES Frequent Never Never Product Page 5Moncler 6 NO Never Frequent Always Mixed Product/Category 5Cartier 9 YES Sometimes Sometimes Never Category Page 5Dior 9 YES Sometimes Never Never Mixed Product/Category 5Louis Vuitton 9 YES Never Never Always Category Page 7Prada 9 YES Sometimes Sometimes Never Category Page 4Swatch 9 YES Never Never Never Product Page 6Burberry 14 YES Sometimes Never Never Category Page 6Tod's 14 NO Sporadic Frequent Always Category Page 5Michael Kors 16 NO Sometimes Never Always Mixed Product/Category 5Tory Burch 16 NO Frequent Never Always Category Page 7Zegna 16 YES Sometimes Never Never Category Page 3Dolce&Gabbana 19 NO Sometimes Never Frequent Category Page 5Valentino 19 NO Never Sometimes Never Category Page 8Givenchy 21 YES Never Never Never No products on emails received 4Alena Akhmadullina 22 NO Never Never Sometimes Category Page 5Bulgari 23 NO Never Never Never Category Page 4Brunello Cucinelli 24 NO Never Never Never Category Page 0Bottega Veneta 25Céline 25Coach 25Loro Piana 25Hermès 25Ray-Ban 25Hugo Boss 25Saint Laurent 25Tiffany 25

ResponsiveFrequent (above 20% of

emails)Frequent (above 35% of

emails)Always / Frequent (above 80%)

Landing on Web specific Product Page or Mixed Product-

Category Page6 or more bookmarks

Sometimes (between 5% and 20% of emails)

Sometimes (below 35% of emails)

Sometimes (below 80%) Landing on Category Page 1 to 5 bookmarks

Not responsiveNever / Sporadic (below

5% of emails)Never Never Landing on Home Page No bookmarks

E-MAIL PROFICIENCY FOR RUSSIAN CUSTOMERS

n.a. (welcome email only)n.a. (welcome email only)

No NL Russia optionNo NL Russia option

n.a. (welcome email only)n.a. (welcome email only)n.a. (welcome email only)

No email received No NL Russia option


Figure 99: Armani, Ferragamo, Zegna now embracing the mobile responsive layout for emails The Example of Armani

Source: Contactlab

Figure 100: Fendi now includes 10 social bookmarks in emails

Source: Contactlab


Figure 101: Louis Vuitton’s local content on email

Source: Contactlab

Figure 102: Swatch’s local content on email

Source: Contactlab


Figure 103: 10 brands achieve full score for Sharing on Product Page Digital Experience Axis – Share on Russia/Intl. Websites (Russia, November 2016)


Figure 104: Ray-Ban Product Page ‘share’ on Facebook, Twitter, Google + and Pinterest

Source: Contactlab

Brands Rank Facebook Pinterest Twitter ForwardE-mail

Brunello Cucinelli 1 YES YES YES YESCéline 1 YES YES YES YESCoach 1 YES YES YES YESDolce&Gabbana 1 YES YES YES YESFendi 1 YES YES YES YESHermès 1 YES YES YES YESHugo Boss 1 YES YES YES YESLouis Vuitton 1 YES YES YES YESSaint Laurent 1 YES YES YES YESTiffany 1 YES YES YES YESChanel 11 YES NO YES YESMoncler 11 YES NO YES YESSwatch 11 YES NO YES YESArmani 14 YES YES YES NOBalenciaga 14 YES YES YES NOBottega Veneta 14 YES YES YES NOBulgari 14 YES YES YES NOBurberry 14 YES YES YES NOGucci 14 YES YES YES NOLoro Piana 14 YES NO NO YESPrada 14 YES YES YES NORay-Ban 14 YES YES YES NOValentino 14 YES YES YES NOAlena Akhmadullina 14 YES YES YES NOTod's 25 YES YES NO NOCartier 25 YES NO YES NODior 27 NO NO NO NOGivenchy 27 NO NO NO NOZegna 27 NO NO NO NOFerragamo 27 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteMichael Kors 27 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteRalph Lauren 27 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. websiteTory Burch 27 no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website no Russia/Intl. website

Yes Yes Yes Yes

No No No No

PRODUCT PAGE SHARE ON RUSSIA/INTL. WEBSITES


Figure 105: Louis Vuitton, Valentino and Moncler alone offer apps in Russian language Digital Customer Experience Proficiency – Apps for Russian Customers (Russia, November 2016)


Figure 106: Valentino app in Russian, signalled on website

Source: Contactlab

Brands Rank iOS Apps Android Apps Apps signaled on Russia/Intl. websites

Louis Vuitton 1 RU RU YESValentino 1 RU RU YESMoncler 3 RU RU NOCartier 4 EN EN YESFendi 4 EN EN YESGucci 4 EN EN YESRay-Ban 4 EN EN YESGivenchy 8 EN (commerce) NO YESArmani 9 EN EN NOChanel 9 EN EN NODior 9 EN EN NOHermès 9 EN EN NOSwatch 9 EN EN NOTiffany 9 EN EN NOTory Burch 9 EN EN no Russia/Intl. websiteBalenciaga 15 EN NO NOBulgari 15 EN NO NOCoach 15 EN NO NOLoro Piana 15 EN (commerce) NO NORalph Lauren 15 EN NO no Russia/Intl. websiteBottega Veneta 20 NO NO n.a.Brunello Cucinelli 20 NO NO n.a.Burberry 20 NO NO n.a.Céline 20 NO NO n.a.Dolce&Gabbana 20 NO NO n.a.Ferragamo 20 NO NO no Russia/Intl. websiteHugo Boss 20 NO NO n.a.Michael Kors 20 NO NO no Russia/Intl. websitePrada 20 NO NO n.a.Saint Laurent 20 NO NO n.a.Tod's 20 NO NO n.a.Zegna 20 NO NO n.a.

Alena Akhmadullina 20 NO NO n.a.

Positive Offered in Russian Offered in RussianSignaled on local

website

Plus Offered in English Offered in EnglishSignaled on

international website

Negative Not offered Not offered Not signaled

APPS FOR RUSSIAN CUSTOMERS


Luxury Stores in Russia

Figure 107: There are 16 cities with monobrand stand-alone stores and 24 minor cities with monobrand stores inside Shopping Centres Cities with at least one monobrand stand-alone store

NB. Store analysis regarding the 33 Monobrand stores in our Panel.



Figure 108: In Russia there are 272 Monobrand physical stores in 111 locations Russia, November 2016

Note: Store analysis regarding the 33 Brands in the Exane BNP Paribas Panel Source: Exane BNP Paribas, Contactlab Analysis

SIS

Department StoreMoscow Downtown TSUM Bravikha Luxury Village Sheremetyevo Intl. Airport

New Abat Ave GUM Gallery Vremena Goda Vnukovo Intl. AirportKutuzovsky Prospect Crocus City Mall

Leninsky AveBolshaya Sadovaya st.

total locations 5 2 3 17 2DLT

Petrovskiy Passazh

total locations 2 7 5 1Pokrovsky Passage Mall

Limerance Mall

total locations 1 2 3 1Astor Plaza Mall

Intermodatotal locations 1 2 2

total locations 1 2 1


total locations 1 3

total locations 1

total locations 1

total locations 1 1Krasnodar Airport


total locations 1 1

total locations 1 1

total locations 1

total locations 1 2

total locations 1Tolmachevo Novosibirsk

total locations 25 1

TOTAL Locations 21 14 3 66 7 111272

% Stores 35% 18% 13% 31% 4%

0%

Other Cities (24)

Tula Paradiz Shopping center Voronezh Galeria shopping Center

Alimpik AstrakhanOrange BalakovoCity Mall Negorod

Shopping Mall Amurskaya Yarmarka Blagoveshensk

Talisman IzhevskLapland, Promenade Mall, Spring

Street (3 in Kemerovo)Lipetsk Europe Mall

Shopping center Red square Novorossiysk

Orel Shopping center GrinnPenza Passage Mall

Shopping MAll PyatigorskShopping center Junona SmolenskPark House Shopping center Tolyatti

Shopping center, Shopping Mall Passage (2 in Tomsk)

Tjumen Shopping center (2 stores)Tver Shopping center Rubin

Ulyanovsk Shopping center AkvamollVladikavkaz Shopping Mall

Shopping Mall Voroshilovsky VologradMEGA Novosibirsk

Caramel Irkutsk

26 29 11%

Omsk Downtown 1 1

0%

Saratov DowntownShopping center Forum SaratovShopping mall Aurora Saratov

3 3 1%

Bryansk Downtown 1 1

1%

Krasnoiarsk Downtown Krasnoyarsk Planet Mall 2 3 1%

Perm Downtown Almaz Shopping Mall 2 3

3 4 1%

Samara Downtown MEGA 2 6 2%

1%Chelyabinsk Downtown 1 2

1 3 1%

7 3%

Kazan DowntownKoltso Shopping mall,

MEGA,VIP Gallery

4 6 2%

Nizhny Novgorod Downtown Podium Luxury StorePlaza Mall,

Sedmoe Nebo,L.P. Fashion Gallery

5

4 6 2%

6%

Rostov-on-Don DowntownHorizont Shopping Mall,

MEGA Rostov 5 8 3%

Shopping Mall Pokrovsky Passage,MEGA,

Greenwich Shopping centre

Airport Koltsovo7 16

TOTAL Stores 94 50 34 84 10

Sochi Downtown Moremoll,Morvokzal Shopping mall

Airport Sochi

Ufa Downtown

Krasnodar Downtown City Center

14%Babochka galleryGrand Palace Mall

Nevsky 125Galeria Shopping Mall

AU PONT ROUGE

EkaterinburgDowntown

TOTALStore % Stores

Moscow

Kapitoly shopping centreMetropolis

Evropeysky Shopping MallAtrium Mall

Kuntsevo PlazaOlympic Village

Vegas MallHimeney

Lotte Plaza Shopping MallBelaya Dacha

Valday shopping mallTroyka shopping centre Veska Shopping centre

MEGA KhimkiColor Universal Store

Druzhba shopping MallSemyanov shopping mall

29 136 50.0%

City Stand-Alone Monobrand Luxury Mall Shopping Centers Airport TOTALLocations

St. Petersburg

Downtown North River NevaDowntown South River Neva

Lev Tolostoi Shopping MallRaduga Shopping Mall

EvropolisShopping center Academ park

City Mall

St. Petersburg Intl. Airport 15 38


Figure 109: Most brands have stores in Moscow and St. Petersburg. Only Premium brands Swatch/Armani/Hugo Boss and Zegna in second tier cities. Swatch present also in minor cities Number of Monobrand Stores by City (Russia, November 2016)


Figure 110: Most stand-alone stores and TSUM and GUM luxury department stores are located in downtown Moscow Moscow, November 2016


Brands Moscow St. Petersburg Ekaterinburg Rostov-on-Don Nizhny Novogorod Sochi Kazan Samara Krasnodar Ufa Perm Krasnoiarsk Saratov Chelyabinsk Bryansk Omsk Other Cities Total Brand Stores

Swatch Premium 18 6 2 1 1 2 2 1 1 1 1 1 2 26 65Armani Premium 19 11 1 1 1 2 2 2 2 1 1 1 1 2 47Hugo Boss Premium 4 2 1 1 1 1 1 1 1 1 1 1 1 17Zegna Mega-Brand 5 1 1 1 1 1 1 1 1 13Michael Kors Premium 8 1 1 10Dolce&Gabbana Runner-Up 5 1 2 1 9Gucci Mega-Brand 5 1 1 1 1 9Valentino High-End 5 2 1 1 9Loro Piana High-End 5 1 1 1 8Louis Vuitton Mega-Brand 4 1 1 1 7Prada Mega-Brand 6 1 7Brunello Cucinelli High-End 4 1 1 6Bulgari Jeweller 5 1 6Chanel High-End 5 1 6Ferragamo Runner-Up 3 1 1 1 6Ralph Lauren Premium 4 1 1 6Burberry Mega-Brand 5 5Cartier Jeweller 3 1 1 5Céline High-End 3 1 1 5Bottega Veneta High-End 3 1 4Dior High-End 2 1 1 4Alena Akhmadullina Runner-Up 2 1 1 4Fendi Runner-Up 2 1 3Saint Laurent High-End 3 3Tod's Runner-Up 3 3Hermès High-End 2 2Givenchy Runner-Up 1 1Moncler Premium 1 1Tiffany Jeweller 1 1Balenciaga Runner-Up

Coach Premium

Ray Ban Mega-Brand

Tory Burch Premium

Total Stores 136 38 16 8 7 6 6 6 4 3 3 3 3 2 1 1 29 272


Figure 111: Flagship stores on Tretyakovskiy Proyezd in Moscow Moscow, November 2016


Figure 112: Hermès and Louis Vuitton Flagship Stores on Stoleshnikov Lane in Moscow. Both brands have made a ‘local’ effort by writing the brand name in Russian Moscow, November 2016



Figure 113: TSUM and GUM luxury department stores in Moscow Moscow, November 2016



Figure 114: Most Panel brands with presence in TSUM and GUM luxury department stores in Moscow and St. Petersburg DLT Russia, November 2016


Brand TSUM (Moscow) GUM (Moscow) DLT (St. Petersburg)Armani ✓ ✓ ✓Balenciaga ✓ NO ✓Bottega Veneta ✓ NO ✓Brunello Cucinelli NO ✓ NOBulgari ✓ ✓ NOBurberry ✓ ✓ ✓Cartier NO ✓ NOCéline ✓ NO ✓Chanel ✓ NO ✓Coach ✓ NO NODior ✓ ✓ ✓Dolce&Gabbana ✓ NO ✓Fendi ✓ NO ✓Ferragamo NO ✓ NOGivenchy ✓ NO ✓Gucci ✓ ✓ ✓Hermès ✓ ✓ ✓Hugo Boss ✓ ✓ ✓Loro Piana ✓ NO NOLouis Vuitton ✓ ✓ NOMichael Kors ✓ NO ✓Moncler ✓ NO ✓Prada ✓ NO ✓Ralph Lauren ✓ NO ✓Ray Ban ✓ ✓ NOSaint Laurent ✓ NO ✓Swatch NO ✓ NOTiffany NO ✓ ✓Tod's ✓ NO ✓Tory Burch ✓ NO ✓Valentino ✓ NO ✓Zegna ✓ NO ✓Alena Akhmadullina NO NO NO

Total Brands presence 27 14 23


Figure 115: Salvatore Ferragamo store inside GUM Moscow Moscow, November 2016

Source: Contactlab

Figure 116: DLT luxury department store in St. Petersburg

Source: Contactlab


Figure 117: Three major luxury malls located in the west Moscow area Moscow, November 2016

Source: Contactlab

Figure 118: Panel presence in the three major luxury malls located around Moscow Moscow, November 2016


Brand Bravikha Luxury Village Vremena Goda Crocus City MallArmani ✓ NO ✓

Balenciaga NO NO NOBottega Veneta ✓ NO NOBrunello Cucinelli NO ✓ ✓

Bulgari ✓ NO NOBurberry ✓ ✓ NOCartier NO ✓ NOCéline ✓ NO NOChanel NO ✓ ✓

Coach NO NO NODior NO NO NODolce&Gabbana ✓ NO NOFendi NO NO NOFerragamo NO ✓ NOGivenchy ✓ NO NOGucci ✓ NO NOHermès NO NO NOHugo Boss NO NO NOLoro Piana ✓ NO NOLouis Vuitton NO NO NOMichael Kors NO NO NOMoncler NO NO NOPrada ✓ NO ✓

Ralph Lauren ✓ NO NORay Ban NO NO NOSaint Laurent ✓ NO NOSwatch NO NO ✓

Tiffany ✓ NO NOTod's ✓ NO NOTory Burch NO NO NOValentino ✓ ✓ NOZegna ✓ NO NOAlena Akhmadullina NO NO NO

Total Brands Presence 16 6 5


Figure 119: Gucci Store inside Bravikha Luxury Village



Appendix: About the collaboration with Contactlab Exane has worked in collaboration with Contactlab on this report and the sections provided by Contactlab are clearly highlighted. The contributors from Contactlab are Marco Pozzi, Francesca Borgonovo and Teodora Boshnyakova. Contributors from Contactlab are not Research analysts and are not FCA or AMF registered. They have only shared their expertise on clearly delineated sections of the report and did not have access to the full report or its conclusions prior to publication.

Contactlab presentation Contactlab provides the leading engagement marketing platform for commerce-focused companies and fashion & luxury brands to develop successfully digital communication programs that enable personalized marketing to unlock demand and build lasting customer preferences. Founded in 1998, Contactlab is led by its founder Massimo Fubini, an internet industry veteran and opinion leader in the marketing field since 1995. Thanks to our own enabling PaaS technology and to the experience of our navigated professionals, we enable brands to achieve a deeper understanding of customers, to deliver uniquely relevant messages at every touchpoint of the customer journey and to measure performances with real-time dashboards that display all the relevant data. Our enterprise-grade platform is built with the highest security level, reliability, management, scalability. Our solutions enable brands to gain insights into the context of each customer and deepen the retail experience by delivering highly individualized digital contact plans across channels based on events, preferences and product lifecycle. Today, we work with more than 1000 clients in different industries across the world and serve most of the world-class brands in the Luxury and Fashion sectors

Disclosures All stock-specific commentary and recommendations in this report are solely based on Exane Research.

Contactlab Contactlab does not make investment recommendations, in this report or otherwise, and nothing in this report should be interpreted as an opinion by Contactlab either on market forecasts or on the prospects of specific companies. This report and all of its content are strictly confidential. It may not be circulated or otherwise reproduced in whole or in part. The analyses set out in the Report are the result of the aggregation of public materials and data coming from a sample of industry players. Use of this report by any person for whatever purpose should not, and does not, absolve such third party from using due diligence and care in verifying the report’s contents. Any use which a person makes of this document, or any reliance on it, or decisions to be made based on it, are the responsibility of such person. Contactlab, its affiliates and representatives accept no duty of care or liability of any kind whatsoever to any person, and no responsibility for damages, if any, suffered by any person as the result of decision made, or not made, or actions taken, or not taken, based on this document..


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