Monday, June 27, 2005

How to shop like a Russian billionaire
By SABRA AYRES Cox News Service

MOSCOW — The glossy pages of the De Lux Alliance's "Catalogue of Very Expensive Things" advertises the latest necessities for the growing ranks of Russia's ultra-rich.

Place an order for one of the multimillion-dollar jets, yachts or collection cars, and the alliance's consultants all but guarantee you entrée to the circles of Russia's super-elite. "Nothing we offer sells for less than a million dollars," said Natalia Sherstobitova, general director of the alliance, which she described as "an exclusive shopping club" with membership by invitation only.

This capital once prided itself on being the center of the communist dream. Today, 20 billionaires call Moscow home, second only to New York's 34, according to Forbes magazine's latest poll of the world's wealthiest people. Besides those in Moscow, Forbes lists 16 other Russian billionaires; together, the 36 are worth about $110 billion, according to a survey the magazine released this spring.

To hear Sherstobitova tell it, it hasn't been easy being rich in a country still struggling to shake off it's communist-era hang-ups. The average monthly salary in Moscow hovers around $230. An opinion poll taken shortly after the Forbes list was published showed almost 40 percent of those surveyed saying they were ashamed of living in a country with so many billionaires. Only 7 percent said they were proud.

Most of Russia's biggest bucks were made in the privatization sales of the 1990s, when well-connected businessmen got rich buying up the former Soviet Union's state assets at cheap prices. The public resented the way the "New Russians" flaunted their new money in much the way the Russian czars were despised for their lavish palaces before the Russian Revolution and the Bolsheviks took it all away.

Besides the unfavorable reputation, there is the problem of where, and what, to buy if you have so much to spend, Sherstobitova said.
They've already remodeled their old Soviet apartments, built lavish country homes and bought Hummers to take them to Moscow's most elite suburb, Rublyovka, a former village turned tony burro whose residents include Russian President Vladimir Putin.

These aristocrats of capitalism have to leave their homeland to get any serious shopping done. Many keep homes in London or Paris. Oil magnate Roman Abramovich, 38, who with an estimated worth of $13.3 billion is No. 21 on the Forbes list, made headlines last year when he purchased the English soccer club Chelsea for a reported $450 million. Londoners have relabeled the team "Chelski." Several years ago, Moscow began seeing a different class of millionaire, including executives and upper level managers of large firms and investment bankers.

This new class of wealthy shoppers kept a lower profile and preferred to stay in Russia rather than live abroad. They sought to avoid the negative attention brought on by the original oligarchs, and adopted a new sense of modesty about their wealth.

"Russian clients in the luxury goods market today are those who are part of that growing 'middle class,' who made their fortunes after the crisis of 1998," when Russia's economy virtually collapsed, said Jerome Dumetz, a professor of cross-cultural management at the Plekhanov Russian Academy of Economics. The academy recently started an MBA program with an emphasis on luxury brand management.

In the past two to three years, Moscow has become one of Europe's fastest-growing luxury markets, Dumetz said. This new tier of Russian millionaires buys original Prada, Dolce & Gabbana and Chanel straight from the Moscow branch instead of having to fly to Paris or New York. Their drivers take them home in new Bentleys, bought just a block from the Kremlin's walls in the famous carmaker's new dealership.

"When brands like Chanel open a local branch in Moscow, it's something, considering they only have a few hundred around the world," Dumetz said.

Still, when it came to investing in big-ticket items like yachts, planes and vacation villas in the South of France, many of Russia's rich wanted to keep the permanent homes in Russia, but didn't know how to empty their bucketloads of cash here.

Enter De Lux Alliance, a one-stop, all-inclusive shopping consultant agency where those with the cash can purchase what the alliance calls the "whole oligarch package." They advise clients on what the best-selling yachts are — and who's buying them — and offer words of wisdom on where the most elite Moscow dachas are being built and with what kind of security system. "We started one day after one of our real estate clients was purchasing a dacha. ... It was for several million dollars. He asked where it was possible to buy a yacht to dock in a Moscow club. Our partners thought Aha! Maybe this is where we need to be going with our business," Sherstobitova said.

De Lux has a "don't call us, we'll call you" philosophy of finding customers. They don't need to advertise in golfing or yachting magazines; their customers are usually well-known VIPs who socialize in the same circles, they said. Customers are at least multimillionaires, 99 percent of them are Russian, and the number of those wanting to get in keeps growing.

"Our slogan is, millionaires aren't allowed in — if you've only got one million, you can't afford it," Sherstobitova said. "We haven't even begun to tap into the full list of potential customers here.