The problems, solutions, and future of Russian retail

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By: Wise Marketer Staff |

Posted on March 29, 2006

In Russian retail markets, retailers have a number of worries about space and range management, private label development, and customer loyalty, according to a report by RNCOS Research.

The company says that Russian retailers also have pressing concerns about other issues such as stock, category management, and creating an efficient supply chain. A crucial issue in the future success of the Russian retail market is cooperation between retailers and their suppliers. And this applies equally to multinationals and local retailers, the company says.

The retail market in Russia is dominated by small and medium sized traditional stores, open markets and kiosks. This has significantly changed the consumer's attitude to shopping: they regard shopping almost as a form of entertainment, preferring to buy luxury goods and have a friendly shopping experience.

Market drivers
This is increasingly fuelled by increasing individual incomes, as well as the country's new-found political stability, and the economic recovery of the past few years. Because the market is not yet saturated, the report suggests that domestic retailers have great development potential and a promising near-term future for growth.

Both retailers and manufacturers can meet consumer needs and expectations through tools such as category management. Brand equity and customer loyalty have also been identified as long-term goals for Russian retailers. However, as consumers are given more choices in the High Street, their purchase behaviour is also becoming increasingly sophisticated. Consequently, the retention and growth of brand equity is now of great importance to Russian retailers.

Future of Russian retail
In the recently published RNCOS market research report, Organised Retail Sector in Russia (2005-2008), the company predicted that the retail market in Russia will outgrow real disposable income in the country, and that the retail market is expected to grow at between 11% and 13% (CAGR) until 2008.

The report noted that, due to infrastructure constraints, corruption and 'red tape' in the country, as well as open market competition, many Russian retailers are facing an acute lack of space, as well as inefficient supply chain and logistics operations.

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