Moscow Money
Rich Russians are spending as if there's no tomorrow--which many say there won't be
MOSCOW--This may not seem like a place where upscale shops would hold popular end-of-season sales. The average income in the city--by far the highest in Russia--is about $400 a month. Still, Muscovites lined up to buy a $300 pair of shoes for $150.
In fact, though, Moscow shops are always crowded. More than a dozen shopping centers have opened this year--large and small, in the center of town and on the outskirts, expensive and even more expensive. Every new mall generates instant crowds and traffic jams that are themselves spectacular. Muscovites are buying ever more costly cars, with the very rich rushing to trade their Mercedes-Benzes and BMWs for truly prestigious cars. The day after the first Bentley dealership opened in February, all the new Continental GTs that were earmarked for Moscow had been spoken for--though the cars will not arrive for months. Prices start at 200,000 euros, or about $234,000.
The last time consumption was this conspicuous in Moscow was five years ago, just before the country's economy came crashing down, turning successful professionals into well-dressed paupers overnight. For all the obvious differences--Russia is living through an era of political and economic stability very different from the volatile mid- and late 1990s--the way some Russians are throwing their money around and, more important, the way they feel about it seem strikingly similar to 1998.
Storm clouds. The expectation of disaster is once again in the air. "I sense a terrible tension about to turn into thunder," says Yegor Lavrov, a 22-year-old millionaire entrepreneur. "I don't know exactly what's going to happen, but it's going to be bad." Lavrov, who made his fortune on Internet-related projects and political PR, is a virtual poster boy for the new generation of Russian money. He runs an online community called ru_luxury: Members try to outdo one another in finding particularly expensive and rare objects and posting photographs and descriptions of them.
Lavrov and his 21-year-old wife both write Web logs that focus primarily on their acquisitions, their lifestyle, and their disdain for the poverty in which most Russians live. Lavrov has a $2.5 million custom-designed house outside Moscow, believes that a car should cost no less than $150,000--though a watch can be a little less expensive--and claims that Moscow is the world capital for what he calls "luxury entertainment."
"We are way ahead of Paris, London, and New York in terms of elite nightclubs," says Lavrov. "New clubs are opening up in Moscow at the rate of two a month, and they are all filled with people who pull up to the door in their $500,000 Maybachs with a [private] police escort driving Porsche SUVs with flashing lights. There are restaurants of every cuisine, every sort of design, and every price range, and luxury shopping is just fantastic."
Vasily Pogromov, a spokesman for Mercury, a company that represents most of the world's luxury retailers in Moscow, says his firm's revenues totaled $150 million last year and are expected to double this year. The company recently opened an outdoor mall in Moscow, turning a street a block away from Red Square into a showcase for Brioni suits, Armani Casa furniture, Graff jewelry, Tod's shoes, and other top-price items.
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