The REWE Group, one of Europe’s leading retail and tourism companies, is planning a major expansion in the retail grocery sector in Russia this year. Following in the footsteps of other foreign retailers, REWE aims to increase the number of outlets in its supermarket subsidiary BILLA from 84 to 94 stores by the end of 2012.
“The Russian market is one of the growth markets in which we see great potential,” Frank Hensel, CEO of REWE International, told Modern Russia. He expects his company to continue increasing investments in the coming years as it seeks to take advantage of untapped potential in the Russian market.
Indeed, the grocery store retail market in Russia is becoming increasingly competitive, with international companies such as Germany’s METRO GROUP and France’s Groupe Auchan increasing their presence to take advantage of growing consumer demand. For its part, REWE recently purchased all 12 stores from Turkish competitor Enka, pushing the well-known chain from the Russian grocery sector.
Active since 2004, REWE Group’s Russian operation is the company’s most successful venture abroad to date. “[T]hanks to a dense network of branches and despite tough competition we have very good local infrastructure in Russia,” Hensel said.
Last year’s financial results offer further proof that REWE is on the right track, with BILLA Russia’s turnover amounting to €436 million ($549 million) in 2011; a 14.6 percent increase on the previous year.
While REWE continues to maintain a rosy outlook for its Russian business interests, many Russian consumers have a more gloomy economic view: 17 percent of the population expects their financial situation to worsen, according to the Russian statistics agency Rosstat. A bright spot in Russia continues to be Moscow, however, where REWE will concentrate its expansion plans.
Hensel noted the “great purchasing power” and affluence of many Muscovites, saying, “Russia has some very wealthy and free-spending consumers, especially in the capital city. So there is great growth potential there compared with some other countries.”
He also reckons that the company’s success in Russia may be due in part to their strategy of tailoring stores to suit local tastes. “Our main concern is always to pay attention to consumers’ local needs…national origin is becoming increasingly important. We offer our entry-level brand clever in all CEE countries, but purchase the goods locally.”
REWE is a significant employer in the region, having undertaken recruitment drives in 2011 to increase its Russian workforce to 3,100, up from 2,800 in 2010. The increase reflects the company’s positive forecast for its Russian operations in the coming years.
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