Summary
Despite what sometimes in believed, Russian supermarket arena is quite established and benefits from customer awareness. The fact that Carrefour opened its second store and plans acquisitions shows how important this market is becoming.
Analysis
Russia is a growing economic power. Moscow is the most expensive city in the world home to more billionaires than any other city at present. Wealth emerges at a fast rate but there is still a lot of poverty. Luxury goods sell at an incredible rate and it is already the largest car market in Europe that attracted direct investment from main car makers.
Having conducted business in Russia for the past 11 years I cannot fail to see the country's development and how international firms got established in the market. In this case we look at supermarket chains.
We have to say that despite Careefour being among the world's largest supermarkets it is a late entrant into Russia. With this I do not mean it is impossible to achieve a market presence, but it is much harder. A similar situation happened in Portugal where Carrefour sold all its stores to the largest Portuguese player. Obviously in market potential, size and growth trends there is no comparison between Portugal and Russia.
Looking at the retail market itself, and considering Hypermarkets, Supermarkets and Discount stores, the Russian market is quite populated already by local chains but also by well established international companies that make the retail place highly competitive. Among the most recognized market players in the above three categories are:
- Aunchan
- Karusel
- Perekryostok
- X5
- Metro
- Billa
- Spar
Metro is a quite well known retailer along with Auchan that in main cities hold stores in key locations.
Furthermore in March 2008 TESCO, the largest UK supermarket already present in other Eastern European countries, announced that it had plans to enter the Russian market. If it did enter it is still not a recognized in the market.
When launching a new frozen product in Europe we came across very stiff competition in frozen food in Russia and the key supermarket chains identified by over 85% of our interviewees were among the above. Therefore a new entrant like Careefour, despite its dimension, indeed has to consider acquisitions as likely the key market entry step.
It will be very interesting to see the future developments.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
