With French retail group Auchan planning to open six new stores in Russia this year and other giants such as Wal-Mart mulling entry into the market, retail in Russia is proving to be an attractive choice for foreign companies.
Auchan, the second largest retailer by sales volume in Russia, opened its 39th store in April. Arriving ahead of the competition eight years ago, the group focuses on the budget end of the market and has been highly innovative in its approach. It is currently pioneering a new chain of Raduga (“rainbow”) stores which sell mostly frozen products, cutting equipment and maintenance costs. In place of cashiers, customers scan their own products at payment terminals, reducing queues. While the Raduga formula is still being tested, it has so far yielded positive results, and it may be implemented across all Auchan stores in Russia.
Wal-Mart, the world’s largest retailer, is also looking to enter the sector of retail in Russia. A company spokesman recently reiterated to the Financial Times that “we believe, long-term, Russia is a market where we aspire to have retail operations, and our team in Moscow [have] continued to evaluate the most appropriate way to enter the market”. Reuters reported that Wal-Mart is currently in talks to purchase Russian retailer Lenta.
Facing decreased demand at its seven stores in the UK and Ireland, the British department store chain Harvey Nichols is also eyeing retail in Russia in its quest for foreign markets, The Times reported earlier this year.
Meanwhile, Kingfisher Plc, Europe’s largest home improvement retailer, is planning investing in Russia “aggressively," according to Chief Executive Officer Ian Cheshire. “We expect Russia to be one of the highest growth markets in the world” over the next five years, Cheshire said, according to Bloomberg.
Following a lull in 2009, sales of retail in Russia rose for a fourth month in May, jumping 4.2 percent after growing 2.9 percent in March.
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