Organized Retail Sector-Kick Starting The Retail Market

Competition is getting stiff day by day in retail food sector in Russia and will get stiffer in the future, with foreign retail chain entering the retail food market of the country. Food business in Russia will, most probably, belong to the retail chains in the country. Retail chains in the country seem to be relatively developed, and don't differ much from that in the West.

Retail chain's share is estimated to be around 10 percent in the whole retail trade at the moment. Organized retail food sector is growing at the cost of unorganized sector, with retail chains rapidly taking over the markets.

Though there're some producers within the unorganized retail foodstuff trade with a significant customer base. However, they need to consider retail chains to expand their business and in fact maintain it at its current level. This implies they must enter the organized food retail sector.

Retail industry in Russia is highly fragmented, with its top five players accounting for 5 percent of total sales volume. Though it's been growing fast, it hasn't been very competitive so far. Large shopping malls are fast emerging in Moscow, however main target of these malls are people who own a car and can afford to pay significant sum of money on their weekend shopping. Retailers in Moscow are vying for suitable real estate, so that they can open their stores for customers.

Sales through E-commerce retail were estimated at around US $650 Million last year (20 percent of all e-trade in Russia), as per the participants of National Association of E-Commerce. By the summer of 2005, Russia had more online stores than expected. Internet penetration rate is highest in Moscow, with above 80 percent online stores. Most e-retailers need either credit card payment or cash on delivery.

For further information about Russian food industry you can read RNCOS report " Organized Retail Sector in Russia (2005-2008)", available at:
http://www.rncos.com/Report/CP14.htm

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