The Russian Fashion Retail Market - CPM Moscow

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4. Shopping Mall Development 4.1. New RIO Shopping Center opened in the City of Vologda 4.2. MANDARIN MALL to open in Sochi in Summer 2012 4.3. RODNIK Shopping Center in Chelyabinsk started Operations 4.4. New Shopping Center SUNNY to open in Solnechnogorsk 4.5. AFIMALL CITY Shopping Mall in Moscow: Reasons for Failure 1) Economics 1.1. Key Macro-Economic Indicators, First Eight Months 2011 Source: ROSSTAT.RU Whereas Gross Domestic Product (GDP) in Russia increased by 3,7 % real over the first semester of 2011 against the same period of last year, data on the development of GDP for July and August 2011 are not yet available. Instead, key indicators determinating the overall GDP development have been published by cisstat for the first two months of the third quarter of this year. According to this official source Volume of Industry Production in Russia turned out week over this period at an increase of 1,1 % in August against July. Capital Investments however rose at a rate of 12,7 % compared to the month before. Retail Trade Turnover showed a fairly nice upward trend at 3,8 % on a month – to – month basis. The Consumer Price Index as indicator for inflation fell by 0,2 % in August against July 2011. The number of Unemployed decreased by 6,9 % at the end of August compared to the end of June 2011. Finally the exchange rate of Russian Ruble appreciated in August 2011 to RUR 28,86 for one US $ (+ 4,6 %) and to RUR 41,84 for one € (+ 5,7 %) against the average rate valid for July. 1.2. Moscow Financial Markets not immune to Debt Crisis September 1, 2011; rbth.ru; Vladimir Ruvinsky Russians are looking at their financial markets more sensitively because they still carry the fear of stepping into a second wave of crisis which was forecasted amidst the crisis year 2009 but did not happen at the time. Since August 2011 the Russian markets have moved into a period of greater instability, with daily MICEX fluctuations reaching 8 percent. The slump on the Russian Stock Market was triggered by Standard & Poor’s downgrading of the US credit reating and continued its volatility due to the European Debt Crisis over September and October. Andrey Kykk, Chief Trader of UralSib Bank commented the situation in saying: “what we see is a paradox with investors moving from shares to bonds”, Alexey Dolgikh, Vice President of Troika Dialogue said: “There is still a lot of uncertainty, big investors are confused and are sitting on loads of cash. So there will be a lot of volatility; the market is emotional, but we do not expect a slump”. 1.3. “Russia is a civilized Market”: Putin in Sochi September 16, 2011; Pravda.ru Prime Minister Vladimir Putin, who chaired an international investment forum in mid-September at the Southern City of Sochi, urged foreign investors not to be afraid of Russia. He claimed Russia to have developed as civilized partner over the past ten years. He said ”We are not going to steal any technologies, we simply want full-fledged cooperation with our investors”. He pointed out that Russia’s state-run companies have launched investment programmes totalling RUR 700 billion (US $ 25 bn.) this year. Putin also gave an outlook on the economic perspectives of the country. According to the Prime Minister, the speed of Russia’s economic development will account for around 4 percent. He expects that the level of the economy will reach the pri-crisis level in 2012. The inflation rate in 2
2011 is not likely to surpass 7 percent, Putin said. He also promised that this year the government will not face a budget deficit. 1.4. Sberbank receives Trade Finance Loan from JP Morgan September 21, 2011; rt.com/business JP Morgan will provide a five-year trade finance loan to Sberbank, worth US $ 100 million, to facilitate pre-export finance for the Russian oil and gas sector. Jeremy Shaw, head of JP Morgan’s trade finance business commented the deal in saying: “JP Morgan’s loan to Sberbank comes at a time of uncertainty about the availability of liquidity in Europe and is testimony to our trusted relationship with Sberbank, the strength and capacity of our trade finance capabilities, and our ongoing commitment to the Russian market”. On Sberbank’s side, Andrey Ivanov. global head of trade finance, praised the agreement, which helps Sberbank’s clients to better manage supply-chain risk and support their ongoing export sales. 1.5 German Fashion Industry with moderate Expectations on Russian Market October 6, 2011; ITMM GmbH At the second annual meeting of its Industry Task Force Group monitoring the Russian Fashion Retail Market, the Chairman of this conference, Reinhard E. Döpfer observed a rather reluctant sentiment among participants on the development perspectives of fashion retail in Russia. “Although the majority of our members returned from CPM in Moscow with good, partly excellent pre-order results for the season Spring/Summer 2012, their outlook on the present retail season Autumn/Winter is not euphoric”, Döpfer said. The reason for the modest expectations is explained by the very slow take-off of fashion retail sales during the month of September and a rather dull performance at the points of sale over October 2011. “It looks as if the average Russian consumer keeps delaying purchases until the first discounts get advertised”, explained Döpfer. He also said that there seem to be less Russian “fashionista” ready to buy fresh seasonal clothes at regular prices at the beginning of a season. “We are getting more and more aware of this phenomenon now spreading across Russia” said Stefan Lange, Country Sales Manager of BRAX and a permanent member of the task force group. According to Lange, his company increases efforts to support their Russian retail customers to get more attractive for their clients through improved visual merchandising and event-marketing. “We had a good experience with some of our retail customers by organising Oktoberfest events at stores. In some cases day revenues tripled, just from doing the events” said Lange. He strongly believes in the drawing power of better brand promotion, PR, communication and event marketing to fight the ongoing deterioration of the competitive environment in the Russian Fashion market, caused by the dramatic expansion of vertical fast fashion retail chains together with increasing online retail. 1.6. Majority of CIS-States sign Free Trade Zone Agreement with Russia October 19, 2011; RIA Novosti St. Petersburg The majority of the Commonwealth of Independent States (CIS) have agreed to set up a free trade regime after two decades of long, heated, but constructive negotiations. This was announced by Prime Minister Putin on October 18, 2011. CIS includes Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine. Putin said that the document was signed by all the CIS states except Azerbaijan, Uzbekistan and Turkmenistan, which will consider signing the agreement by the end of the year. “The agreement cancels export and import duties on certain groups of goods. There are still certain exemptions” but they will gradually become a thing of the past," Putin said. The CIS prime ministers also signed an agreement on the basic principles of currency regulation and currency controls in the CIS. 3
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