In 2005 Russia was second best after India among developing countries in terms of retail sales volume. These data were published by A.T. Kearney company in Global Development Index document. Over the last 5 years the retail business has become one of the most fast+growth branches of the Russian economy, and experts anticipate its further growth. However, in contrast to the USA this development will follow the line of enlarged trade formats.

Primary Trends of Retail Business Development in 2002-2005

1. Outrunning growth of retail turnover with regard to the GDP.

2. Reduction of shares of Moscow, Saint_Petersburg, Northwest Federal. District and Central Federal District in Russian retail turnover.

3. Growth of the share of up-to-date formats of retail sales (supermarkets, hypermarkets, discounters) in retail sales of food products up to 18% in 2004 and up to 22-25% in 2005.

4. Increase of the share of the biggest retail trade networks on nonfood item sales up to 7% in 2003 and to 9.1% in 2005.

Note.

a) The most important shortcoming of Russian retail sales is high cost of the real estate in combination with low share of average rate of profit, which leads to the increase of the payback period.

b) The entrance of Russia to WTO in 2006 may affect the retail business development in two ways: on the one hand, it will adversely affect Russian manufacturers due to the increased competition, on the other hand, it will facilitate the increase of investment in the Russian economy.

Prospects of Retail Sales Growth in 2006-2008

1. Active development of the biggest retail networks in regions, including the use of franchising for hypermarket and supermarket formats.

2. Increase in the share of retail trade networks in produce trade from 5% in 2004 to 13-15% by 2006 and 25% by 2008.

3. Increase in the share of private label by 2007 in food retailing from 1% in 2004 to 5%, and in the trade network turnover from 4-5% in 2004 to 15-20%.

4. Faster growth of trade networks with foreign participation (Metro, Auchan, Billa) as compared to Russian retailers.

5. Entrance of the biggest international trade networks to the Russian market (in particular, by merger of Russian retailers).

6. Establishment of multiformat retail networks in Russia (simultaneous development in the format of discounters, supermarkets and hypermarkets is the most perspective).

Note.

Nowadays only 6 biggest retailing world companies are presented in the RF (13 in Poland, 12 in China). Therefore, the entrance of such companies as WalMart, Carrefour, Tesco to the Russian market in the nearest time seems most probable.

In Russia the Big Format is in Fashion

As opposed to the USA where the big format of shopping centers tired and palled on local public, in Russia it keeps on gaining popularity. Now in Moscow there is about the same number of shopping complexes per capita as in any other European capital. In 2004 the total area of sales premises in Moscow was 976 thou. sq.m., and in 2005 about 330 thou. sq.m. more were added. The most prominent projects in 2005 were shopping centers "RIO" (92 thou. sq.m.), "Euro Park" (86.5 thou. sq.m.), "Festival" (56 thou. sq.m.), "Real" (35 thou. sq.m.), "Mosmart" (33 thou. sq.m.). The next big center in terms of concentrations of shopping premises is Saint Petersburg. The range of existing shopping centers "Sennaya" (60 thou. sq.m.), "Akademichesky" (56 thou. sq.m.), "Nord" (45 thou. sq.m.), "Gulliver" (45 thou. sq.m.), "Mercury" (45 thou. sq.m.), "Pik" (35 thou. sq.m.), "Zanevsky kaskad" (32 thou. sq.m.), "Ikea_Kudrovo" (31 thou. sq.m.) will soon be completed by "Mega" (2009), "Slovatsky Shopping Center" (2008), "European Center" (2007), "City Moll" (2005_2006). The area of centers under construction will be about 100 thou. sq.m. Among megacities (by habitancy) Kazan is the leader (about 500 thou. sq.m. of shopping premises), Novosibirsk, Omsk, Chelyabinsk, Ufa, Perm are waiting for their retailers.

The article is based on publications taken from www.rbk.ru