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Retail Barometer

Research
12 April 2019
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Release date
09/03/2018
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In the first half of 2018, GDP in Russia demonstrated positive dynamics. Analysts observe low official inflation rates and a growth in real wages. Still, consumers continue to feel inflationary pressure. There is a growing tendency towards cutting one’s spending, while the average purchase amount is going down. Consumers tend to prefer cheaper products and convenience stores and are getting increasingly sensitive to rising prices. Meanwhile, a further surge in prices is unavoidable due to an increase in cost prices for many goods.

Despite all this, retailers in the majority of segments state that their business is growing. The household appliances and consumer electronics segment is developing the most actively, while the slowest growth is found in the segment of children’s products.

Compared to previous years, retailers have much more pessimistic expectations for the future. Growth of strong players will most likely be achieved at the expense of weak companies which didn’t manage to adapt to the new conditions. The new VAT rate, together with a decrease in purchasing power, is expected to result in a drop in operating profits. This situation will force retailers to revise their strategies. They will have to «tune in» to consumer needs, build a flexible operational system, and raise cost-effectiveness.

In the new conditions, qualified personnel, well-organized work with suppliers, and digitalization of internal processes will become main drivers of growth.

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