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Market Report, "Russia Retail Report Q2 2013", Published

Recently published research from Business Monitor International, "Russia Retail Report Q2 2013", is now available at Fast Market Research


Boston, MA -- (SBWIRE) -- 05/09/2013 -- The Russian Retail Report examines the long-term potential of the local consumer market but flags shortterm concerns about the impact on Russia's economic outlook of the stark shift by the central bank towards monetary policy tightening. The report examines how best to maximise returns in the Russian retail market while minimising investment risk, and also explores the impact of the risk of a more precipitous fall in global energy prices (prompted by persistent weakness in the global economy) on the Russian consumer and on the ability of producers and exporters to realise returns in the short term. The report also analyses the growth and risk management strategies being employed by the leading players in the Russian retail sector as they seek to maximise the growth opportunities offered by the local market.

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Russian per capita consumer spending is forecast to increase by 59% between 2013 and 2017, compared with a regional growth average of 42%. The country comes second in BMI's Central and Eastern Europe (CEE) Retail Risk/Reward Ratings, although it underperforms significantly for Risk.

Among all retail categories, mass grocery retail (MGR) will be the outperformer through to 2017 in growth terms, with sales forecast to grow much faster than overall food sales throughout the forecast period, by 201% to US$305.51bn by 2017. This would take MGR's share of the overall food market from 42.0% in 2013 to 81.2% by 2017.

In the competitive arena, BMI sees upside potential in the fact that the Russian government has committed to spending billions on infrastructure over the next 10 years, particularly railroads and highways, which should translate to better logistics for expanding retailers.

Over the last quarter, BMI has revised the following forecasts/views:

BMI expects the central bank's monetary policy tightening bias to have an adverse effect on Russia's economic growth in 2013, and we have revised down our real GDP growth forecast from 3.6% to 3.4%, down from an estimated 3.6% in 2012. This puts us below Bloomberg consensus of 3.6% in 2013.

BMI's expectation for private consumption to weaken going into 2013 underpins our view for weaker headline growth. Private consumption has been a key driver of economic growth in Russia over the past two years. Falling unemployment and rising disposable incomes have seen household consumption growth average 7.0% year-on-year (y-o-y) in H112, up from 6.1% in the same period of 2011. However, going forward, tighter access to credit, via higher interest rates and the likelihood of more prudent lending practices by banks, will translate to weaker household consumption.

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