Recently published research from Business Monitor International, "Russia Retail Report Q1 2014", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 12/25/2013 -- The retail market has achieved dynamic growth over the past few years as disposable incomes have increased, the expanding middle class emulates Western patterns of consumption and the level of consumer credit penetration rises. The market is expected to continue expanding rapidly, boosted by one of the world's fastest growing car markets and accelerating foreign direct investment (FDI). The attraction of Russia's retail market to potential investors centres on the continuing rise in disposable incomes, the growing desire for a wider choice of products and price points, easier access to credit and an increase in car ownership. Recent or upcoming EU membership and significant foreign direct investment should also lead to an expansion of retail markets.
Moreover, the availability of consumer credit also allows an increasing number of Russians to make 'luxury' purchases. However, consumer credit is of relevance only to the wealthy and the emerging middle class; there are huge regional inequalities in the buying power of Russians, with millions of poorer citizens -particularly the elderly - living on fixed incomes. Most players already in the market are now moving aggressively to Russia's regional customer bases, where the market for modern retail outlets is still poorly developed. Some large regional cities are getting crowded, if not saturated, and local chains are being bought up. Western hypermarket chains have recently begun to expand beyond Moscow and St Petersburg, while Russian chains have moved more quickly to capture urban markets throughout Russia. Activity in the capital has shifted towards the outskirts, with several projects under construction beyond the Third Transport Ring including recently completed developments in Krasnodar and Volgograd.
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At the same time non-essential status purchases, whether of food, clothes or household appliances are on the rise. We expect to continue to see Russian retailers adopting familiar Western retail strategies, like the growing use of private-label brands and linking inventory management technology to key suppliers. As in Western markets, retailers see big name labels as a way to increase profit.
- The most recent data available show that Russian retail sales rose by 3.5% y-o-y in June (in line with analysts' expectations), following a 2.9% increase the previous month.
- Auchan, which manages 52 outlets in Russia and has plans to triple its number of stores within five years, is unveiling its first Russian Auchan Drive outlet in Moscow in 2013; customers will be able to order groceries online and pick up the goods at a store without leaving their car.
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