Moscow, January 20, 2017 – In 2016, the Russian market gained 33 international brands (down from 50 in 2015), 29 of which opened their first mono-brand stores in Moscow. At least another ten international retailers announced plans to enter the Russian market in 2016, but had no openings.
The decrease in the number of new brands demonstrates foreign retailers' ongoing reserved approach to the Russian market, formed as a result of a changed economic situation and significantly increased risk of entering a new market (two devaluations of the national currency, a steady decline in purchasing power, changes in the structure of household expenditure in favour of essential goods, etc.).
A positive trend is that only three international brands left the Russian market in 2016 –Magnolia Bakery, LaSenza and Prenatal Milano. In 2015, however, 12 international brands (8 of which are fashion brands) left the Russian market.
The structure of demand for new international brands has also undergone some changes. Despite the fact that fashion brands still have the largest share, their number decreased by almost 200% compared to 2015 – 15 versus 27. At the same time, in 2016, three household appliance and electronics brands (LeEco, Xiaomi, Fujifilm) and one international children's products brand entered the market, but there were nine such new brands in 2015.
Regarding demand from longtime players, more than half (56%) of the number of stores that opened in existing high-quality shopping malls in Moscow in 2016 were fashion retailers, 15% were food service operators and 4% entertainment service providers. In terms of occupied retail space, fashion is also in first place, but entertainment and children's goods are respectively in second and third place.
In 2016, many retailers, both Russian and international, optimised their retail space and changed the format of their stores. Accordingly, mass market fashion mostly increased floor space and expanded their chains (for example, Tvoyo and Gloria Jeans) becoming a full-fledged family stores. However, many brands have reduced the number of stores, closing unsuccessful ones and increasing floor space in successful ones, thereby maintaining balance.
Some major retailers (Decathlon and Hoff), on the contrary, have introduced a new, more stores in a compact format, reducing floor space, increasing the number of potential sites for new stores. Other retailers, for example, Lady & Gentleman, downscaled stores locally. Grocery retailers, which are the least affected by the redistribution of consumer demand, are diversifying their formats and adding stores in residential areas, which are particularly in demand during the current economic crisis.
Dina Postolenko, executive director, retail property department, Colliers International Russia
: “In 2016, the positive trend that shows that the retail market is already adapted to the new economic realities is the small number of brands that have left the Russian market. At the same time, as in 2015, retail chains have continued optimising their business. Operators have reviewed the prospects for their development and closed unprofitable or underperforming stores and food service establishments, and also changed the format of their retail outlets.”