Russia’s total retail sales are likely to increase by over 25 per cent in local currency terms by 2014 – growing from a projected $491.57 billion in 2010 to $719.96 billion. This was predicted by Business Monitor International’s (BMI) “Russia Retail Report Q3, 2010”.
Rising disposable incomes, an expanding middle class and rising levels of credit penetration are key factors behind the retail market expansion, the report says. Accelerating foreign direct investment (FDI) has allowed retailers to make significant inroads into the market, contributing to forecast annual average retail sales growth of nearly five per cent in local currency terms.
Retail sectors that are likely to see substantial growth over the forecast period include over the counter (OTC) pharmaceuticals, consumer electronics and automotives. According to BMI data, OTC pharmaceutical sales will reach $5.69 billion in 2010 and are forecast to increase by 67 per cent to $9.51 billion by 2014. The consumer electronics sector is predicted to expand by more than 40 per cent, growing from a predicted $17.22 billion in 2010 to $24.14 billion by the end of the forecast period. Vehicle sales are forecast to increase by nearly 68 per cent, from $79.63 billion in 2010 to $133.47 bn in 2014.
The availability of consumer credit is allowing an increasing number of Russians to make luxury purchases.
Russia’s nominal GDP is predicted to be $1,578.05 billion in 2010, with 2009’s decline of 7.9 per cent expected to turn into four per cent growth in 2010 as the economy begins to improve. Average annual GDP growth of 4.4 per cent is forecast by BMI between 2010 and 2014.
Although the population is forecast to decrease, from 140.5 million in 2010 to an estimated 137.7 million by 2014, GDP per capita is predicted to rise by more than 84 per cent by the end of the forecast period, reaching $20,683.
The country’s large population – and the affluent urban population of Moscow in particular – is providing a solid base for the expansion of the retail market. Russia has 13 cities with more than one million people, and consumers are increasingly looking to modern retail outlets for aspirational purchases.
Russia, Turkey and Poland are predicted to account for 80 per cent of regional retail sales in 2010, which BMI forecasts to remain steady through to 2014. For Russia, its predicted market share of 49.1 per cent in 2010 is expected to rise slightly, to 49.2 per cent, by 2014.
– IndiaRetailing Bureau