Globally, the retail sector’s strategic focus is moving toward the emerging economies
and expanding consumer markets of Asia, Central & Eastern Europe, Russia
and other CIS countries. The development of modern retailing in these markets
and growing local disposable income offer new opportunities for growth as well
as the possibility of global sourcing and offshoring. The Russian retail sector has
experienced enormous growth in recent years, driven by the growing purchasing
power of Russian consumers, a trend that is expected to continue in the near term.
According to PricewaterhouseCoopers’ report “The World in 2050”, Russia will lead
in projected relative income per capita among the seven largest countries with fast
developing economies.
In Russia, growth has been experienced in every segment from discount to luxury.
Consumers’ increasing maturity and sophistication has stimulated the luxury sector
in particular; Russia is currently the fastest growing market for luxury goods. While
there is still room for further penetration through modern retail formats and brands
and huge potential for growth, companies in Russia face a number of challenges.
The retail sector is very dynamic, and companies need effective strategies to deal
with developing private labels, changing consumer shopping habits, developing
products and services to attract and retain increasingly discerning customers,
regional (and potentially overseas) expansion, and expanding consumer credit.
Challenges include attaining operational effectiveness and cost reduction, shortage
of good retail space, warehousing, logistics and supply chain management (and
availability of specialists), as well as potential accession to the WTO. With a largely
unconsolidated retail market, further M&A activity is inevitable. This will lead to fewer
retail players with greater competition for market share and downward pressure on
margins (which will affect both the retailer and the producer). The trend for IPOs
is also likely to continue. Thus, a clearly defined strategy for further growth in this
promising sector has now become crucial for success. Retail companies’ ongoing
competitiveness can be ensured only via cost and operational effectiveness, access
to capital and other growth resources and, last but not least, effective mobilisation of
human capital.
The Russian retail market demonstrated solid growth rates over the last several
years, making the sector one of the most actively developing markets in the
economy. This has been fuelled by growth in the overall economy, growing
consumption and an increasingly organised marketplace.
Organised retail is booming due to improving living standards and Russians’
desire for more convenient stores with better prices and service. This boom
has led to dramatically increased competition in the retail sector and
introduced new issues for retail chains to address.
The main objective of this report is to provide a business
perspective on significant issues and challenges faced by retail
market players.
Chris Skirrow
Retail & Consumer Leader
Publications Search Page
