Retailers Seeking Expansion Shouldn't Skip Russia

Milen Genchev, deputy general director of IKEA Centers Russia.

LAS VEGAS—Russia is Europe’s largest retail market and can’t be missed by retailers seeking expansion in Europe. Those thoughts are according to Milen Genchev , deputy general director of IKEA Centers Russia , who chatted with GlobeSt.com about the country and what is provides when talking about trends he is seeing in the market. “According to data from the Russian Statistics Service, Russian retail sales turnover reached $367 billion in 2015, making it an essential destination for international retailers seeking growth in the region,” Genchev says. “The Russian retail market provides international retailers with an array of opportunities.” For example, he points out that Russia has 146 million consumers with a huge appetite for western brands. He also notes that “There is a rapidly growing middle class, increasing levels of urbanization, and consumers currently spend up to 70% of their pre-tax income on retail—more than any other European country.” And the increased levels of residential development and urbanization, he adds, support the development of shopping center space. Moscow—as well as other major Russian cities—Genchev says, is still far from reaching retail saturation point. “2015 retail stock per 1,000 inhabitants reached 3,980 square feet, still below the level of the biggest European cities, which highlights how far the Russian market is from retail saturation point.” Despite the current economic situation, Russia remains one of the strongest consumer markets in Europe and is still the number one market for western retailers in Central and Eastern Europe, Genchev tells GlobeSt.com. “We know that a lot of international retailers perform successfully in Russia.” According to Knight Frank, he explains, 14 new international brands entered the Russian market in Q3 2015. And according to CBRE, he says, 52 new foreign brands entered the Russian retail market in 2015 (54 in 2014). “Nearly 60% of the new players are retail chains in the middle and budget price segments.” According to Genchev, Russia remains one of the strongest sales markets in Europe and his company is committed to the country for the long term. It recently undertook a $2.3-billion investment program between now and 2020, “which will see us build new MEGA centers, and upgrade many of our existing centers with extensions, and new food & beverage and leisure space.” And while he acknowledges that geopolitical events and fluctuating economies affect many businesses in different countries throughout the world, he says that while they pay attention and monitor those issues, his firm’s long-term view on Russia is that “it will remain a highly positive market.”