Russian retail market

Russian Retail Sales Slow To 18-Month Low As Inflation Bites

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Russian retail sales grew in July at the weakest pace in 18 months after faster inflation curbed consumer purchasing power, threatening to undercut a mainstay of the country’s economic growth this year.

Receipts at merchants rose 5.1 percent from a year earlier, slowing from June’s 6.9 percent to the weakest pace since January 2011, the Federal Statistics Service in Moscow said in an e-mailed statement today. That missed all 15 estimates in a Bloomberg survey, which forecast 6.2 percent growth.

Russian real wages grew 10.2 percent in July from a year earlier, the service said. That matched the downwardly revised figure for a month earlier and missed economist forecast for 11.2 percent growth. Retail sales from a month earlier advanced 1.6 percent, also missing the median estimate of 2.6 percent.

“The softening in retail sales was to a large extent concentrated in food sales, likely a consequence of rising food inflation,” Vladimir Kolychev, head of research at Societe Generale SA’s OAO Rosbank (ROSB) unit in Moscow, said by e-mail. The expansion in non-food categories was “still robust” at 8.6 percent, he said.

Unemployment remained at 5.4 percent for a third month, the lowest level since at least 1999. Economists had forecast an increase to 5.5 percent, according to the median of 11 estimates in a Bloomberg survey.

“The steady unemployment rate is the only bright spot in the data, generally suggesting that domestic demand is clearly losing steam,” Dmitry Polevoy, chief economist at ING Groep NV in Moscow, said in a note. “With food inflation clearly accelerating, real wage growth easing and retail lending also losing steam, both food and non-food retail sales are set to weaken further in the second half.”

Source: www.bloomberg.com

12th Annual Russian Retail Forum

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18 – 21 March 2013,

Moscow, Russia

 

The Russian Retail Forum is a strategic meeting place for the retail industry elite.

90% of our speakers were retailers. The Forum was designed by the industry, for the industry. In 2012 we gave the floor to as many leading and dynamic retailers as possible. CEOs and senior executives of the 20 top retailers in Russia including Auchan, Euroset, Media Saturn, MTS Retail, M.Video, Svyaznoy and Leroy Merlin were among 70+ speakers.

View Russian Retail Forum’s agenda here.

You can find more information here: www.adamsmithconferences.com 

Wal-Mart on the Russian market

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The world’s largest retailer, Walmart hired ex-employee of X5 Retail Group, Russian biggest retailer; on Monday, Catherine Ishevskaya was appointed a vice-president of the company, before that she was in charge of X5 purchasing department. Ms. Ishevskaya and Lev Khasis, former head of X5 who has been working for Walmart for a year, now are responsible for integrating retail business models into developing markets – among them there may be the Russian market as well.

In February 2012, during the interview with TV channel Russia Today, Mr. Khasis said that the possible return of Walmart on the Russian market would be in 2 years. The first attempt of the retailer to conquer the Russian market failed: the Moscow office was closed in February 2011 – Walmart did not purchase local retail networks – hypermarkets “Lenta” and discounters “Kopeika” (the latter was sold to X5 Retail Group in 2011).

Walmart managers went to Moscow on a business trip 3 weeks ago – Lev Khasis with five other Walmart vice-presidents came to Moscow. Walmart talked with “Lenta” managers during the visit to Russia, according to some sources. But so far, “Lenta” does not have enough supermarkets, though it is going to develop and open 46 hypermarkets in Omsk, Novosibirsk, Moscow and other cities.

Source: www.retailer.ru

Retail chains will make a profit on Russia’s accession to the WTO

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Big retailer chains such as X5 Retail Group, “Azbuka Vkusa”,”Okay” and others will have made a profit on Russia’s accession to the World Trade Organization (WTO) by the end of 2013 according to the international rating agency Moody’s. Import duties reduction will increase the demand, and, consequently, that will increase revenues and profits of retail chains.

One of conditions of Russia’s accession to the WTO is a reduction of the import duties and tariffs from 10% to 7.8%, according to the report made by Moody’s experts. In their opinion, this should stimulate consumer demand and, therefore, benefits of importers and retailers.

As Moody’s reports, imported products have a significant share in retailers’ turnover; at the same time retailers will reduce retail prices less than the duties and tariffs will be reduced. As a result, the revenue will grow up.

Source:  www.fruitnews.ru

US retailers missing out on huge market potential

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Walmart is very cautious about entry to Russia, but is potentially missing out on vast profits in a country that is home to a population of 140 million.

Walmart has possibly missed on 30% worth of growth that is currently being enjoyed by Russian retailers.

Consumers in Russian cities have basically embraced the western model or retail nowadays, but this is not yet the case in more remote areas.

This is not likely to change quickly as infrastructure is not in place for such an expansion. This is leading to intensified competition in the urban areas, which means that the longer companies like WalMart leave it to make their entry, the harder it will be to make an impact.

“Now there is more risk, but more return,” said Alexei Krivoshapko, director at Prosperity Capital Management, one of the biggest investors in Russian stocks with $4 billion under management. “Later there will be lower returns, more cash for entry, but less risk because it will be about buying a mature business.”

WalMart could also see competition from other foreign retailers if it tries to buy a local player in Russia, with accession to the World Trade Organization in 2012 making Russia’s import-heavy retail sector even more appealing for international players by simplifying the import process.

Source: Freshplaza

Moscow 3rd Most Attractive for Retailers in Europe

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The Russian capital ranked third in top 10 most attractive cross-border retail destinations in Europe, the Jones Lang LaSalle consulting company said on Wednesday.

The company’s experts analyzed the presence of 150 leading international retailers within 55 European markets and created an index. It reveals that Moscow attracts the third greatest number of international retailers after London and Paris.

“The sustainable growth of the disposable incomes of Moscow’s 15 million inhabitants has steadily boosted retail sales for the past three years. Moscow, still under development, now accounts for the third largest retail market in Europe and is the gate to a market of 140 million consumers,” Maxim Karbasnikoff, head of retail with Jones Lang LaSalle in Russia & the CIS, was quoted in a statement as saying.

Source: en.rian.ru

Rewe Group on expansion course in Russia

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With approval from the Russian competition authority, the Rewe Group is acquiring 12  “Citystores” of ENKA Group based in Istanbul. In so doing, the Rewe Group is driving forward its expansion strategy in foreign markets. “The acquisition in Russia underscores the strategic significance of foreign business for Rewe. In the meantime we are generating around one third of our turnover outside Germany’s borders. Eastern Europe is developing into a big attraction when it comes to foreign growth”, Alain Caparros, CEO of the Rewe Group, said.

The acquired locations in the greater metropolitan area of Moscow will be converted to the BILLA supermarket format in the coming months and be integrated into the existing distribution network. The company also plans to open around ten new BILLA stores by the end of the year, while continued investment will be made in the quality and modernization offensive.

“The Russian market is one of the growth markets for us, where we see great potential. Particularly as the greater metropolitan area of Moscow has high purchasing power”, explained Frank Hensel, CEO of Rewe International AG.

Source: www.freshplaza.com

Magnit eyes small competitors

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Fast-growing Russian food retailer Magnit is interested in acquiring smaller rivals as growing competition is set to leave less room for organic expansion, its CEO said on Friday.

“Competition is growing every day but we still have opportunities for more or less comfortable growth. What we see is the trend of replacement of second-tier chains and probably we all – (rivals) X5, Dixy and ourselves – are showing interest,” Sergei Galitskiy said.

Magnit has grown into Russia’s top food retailer by store count via organic expansion and also ranks second to X5 Retail Group in revenue terms.

Last year, it paid $32 million for a chain of some 14 stores in the Tambov region in central Russia, and plans to buy the remaining interest for $3.6 million this year, it said in audited full-year financial report on Friday.

Magnit and X5 control between them under 10% of the Russian food retail market which is widely expected to consolidate mainly at the expense of small regional chains and unorganized retail.

Source: www.freshplaza.com

Wal-Mart sees promise in Russia, X5 denies deal

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U.S. retail giant Wal-Mart, which has flirted with entering Russia for years, still sees promise in the vast country, and will continue to look for the right opportunity, it said in a statement on Wednesday.

Its comment followed a report in St Petersburg-based Russian magazine “Delovoi Peterburg” that it is in talks to buy the Karusel hypermarket chain from X5, Russia’s top food retailer by sales. The report said that a deal may be announced in around two weeks.

Analysts estimated such a deal could be worth $2 billion. An X5 spokeswoman said: “We deny these reports categorically.”

Wal-Mart has looked at Russia for years but appeared to have given up in December 2010 when it closed its Moscow office due to a lack of acquisition opportunities.

It reawakened speculation it was still interested in Russia when it hired Lev Khasis, the former head of X5, as a senior vice president in September 2011.

A research report by analysts at Uralsib said X5 could ask around $2 billion for the hypermarkets which “would provide quick entry to Russia for Walmart.”

Source: www.reuters.com

7-Eleven to enter Russian retail market

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One of the world’s largest franchise chains 7-eleven is entering the Russian market. As per experts’ opinion, the company is likely to find a partner among local retail operators or sell their master-license. Among the candidates for development on the Russian market – X5 Retail group and Metro.

7-Eleven Inc. belongs to Seven-Eleven Japan Co., Ltd which is part of Seven & I Holdings Co., Ltd. The first shops were opened in 1927 in the USA, and in 1950-s there were already 100 shops. Today the company is operating 40,000 shops, the majority is concentrated in Japan.

Source: www.retail.ru