The X5 Retail Group has consistently remained the largest player on the retail market in Russia. However, it was the only retailer among the top 20 companies in the country whose market share decreased last year, down just a tad from 3.1% to 3%. So says a new report entitled “Retail in Russia 2013 – Market Analysis and Development Forecasts for 2013-15,” published by PMR, a Krakow, Poland-based market research and consulting company that specializes in Central and Eastern Europe.
The Russian retail market (excluding sales of motor vehicles and fuels) has undergone changes in the pace of development following the financial crisis. Although the industry has demonstrated continuous growth, there was a sharp drop in the growth rate, from 28.3% in 2008 to 8% the next year. In 2010 and 2011, the market had double-digit growth.
In 2012, the Russian retail industry was worth RUB 16.2 trillion (€406 billion or $521 billion). The rather moderate year-on-year growth compared to approximately 12% in past years was a result of the noticeable slowdown of the Russian and global economy, especially in the fourth quarter when GDP in Russia reached 2.3%.
It is expected that beginning in 2012 the Russian likely resumed to rather moderate growth, which should increase at about 11% annually from 2013-15).
The leading company in terms of revenue in Russia, with sales of RUB 491.1 billion, is the X5 Retail Group. It operates grocery stores under the Pyaterochka, Perekrestok, Karusel and Kopeyka banners.
Tander, the second-ranked retailer, is at the same time the largest chain in Russia in terms of store count (6,884 units at the end of 2012). Its sales last year totalled RUB 448.5 billion, excluding revenues generated in the wholesale sector.
The Auchan Group was the third-ranked retailer in 2012, with sales of RUB 232.6 million accounting for a 1.4% market share. Next come the Metro Group (1.1% market share; RUB 174.1 billion, excluding wholesale receipts) and the Dixy Group (0.9% market share; RUB 145.3 billion).
The top 20 groups active in retail accounted for more than 15% of the Russian retail market, and operated some 15,000 stores in 2012. Their share increased by 1.2% in comparison to the year before, which is a sign of retail market consolidation in the country. The five top players alone controlled more than 9% of the retail trade in Russia.
Almost all retailers managed to increase their market shares in 2012. The only one whose market share decreased slightly (0.1%) was the X5 Retail Group, due to relatively weak financial results. The group’s revenues increased by “only” 8.1% during 2012, compared to growth of approximately 30% in previous years.
One of the year’s major events, and one likely to influence the competitive landscape of retailing in Russia for the foreseeable future, was the acquisition of Real hypermarkets from the Metro Group by the Auchan Group. In November of 2012, Auchan Group signed an agreement with Metro Group concerning the divestment of Real’s business in Central and Eastern Europe. In May of 2013, Auchan completed the acquisition of Real hypermarkets from Metro. According to the agreement, Auchan became the owner of Real hypermarkets in the Central and Eastern Europe market, including 16 existing Real stores, one hypermarket under construction and seven shopping malls in Russia. It is planned that all Real stores in Russia will be rebranded as Auchan during 2013.
While Auchan and Metro respectively rank third and fourth among the leading retail companies in Russia, they lag far behind X5 Retail Group and Tander in terms of sales. While the difference between the Auchan’s and Metro’s revenues is not very significant in Russia at the moment, the acquisition of Real is likely to generate a synergy effect for Auchan, as Real stores operate in regions where Auchan owns distribution centers or runs its own stores. Thus it will be easier for Auchan to operate and supply the newly acquired assets. This gives Auchan the opportunity to break away from Metro in the near term.
