7 December 2009
Russian retailing is still attractive for global players who remain confident in the crisis-hit sector despite the high-profile exit of France's Carrefour, PriceWaterhouseCoopers said on Wednesday.Dale Clark, PwC Retail & Consumer Practice Leader for Russia, told reporters that every multinational company he is working with has eyes on the biggest market in Eastern Europe.
"With a 140 million population, it's the largest market and still has low saturation of modern retail. As a result, it is still a very attractive market for international consumer products producers."
French retailer Carrefour said in October it was pulling out of Russia only four months after gaining a foothold in the market, pressured by the "persistently challenging" environment in Europe.
But U.S. rival Wal-Mart said last month it was continuing to explore investment opportunities in Russia, after the head of its Moscow office quit.
Clark said he believed that "the re-allocation of resources" was the main reason behind Carrefour's exit and did not mean the Russian retail has lost its appeal for strategic investors.
"We are working with a number of international companies who are looking at investments into emerging markets including Russia... and that's part of the reason why we know that Russia is still one of the headline countries for new investments."
Analysts had predicted a wave of acquisitions by global majors looking to target Russia, although so far most have chosen the organic route.
For a detailed look at foreign forays and failures in Russian retail, see factbox
3 PERCENT GROWTH NEXT YEAR
Russian retailers have had a tough year as disposable incomes shrank and unemployment spiked, but virtually all major players escaped sales declines although the rates of growth have dramatically slowed.
Clark said the Russian retail market would "remain stable" in rouble terms this year and contract by about 20 percent in dollars due to the rouble weakening against the greenback.
"For 2010, we are expecting a year of consolidation when we will see retail sales growing by approximately 3 percent in total in roubles terms," he said, adding that retail sales would be focused on sectors rather than grow across the board.
Russia's top food retailer by revenue, X5 Retail Group, last month trimmed full-year sales guidance, anticipating a tough final quarter as signs of consumer recovery were still distant. But to prepare for a recovery, the grocer announced plans to boost spending on new stores, mainly discounters, while its recent acquisition of supermarket chain Paterson should help when consumption recovers in full.