Foreign retailers respond to Russians' modest spending

Subject

Foreign brands in the Russian retail sector.

Significance

Last year fewer foreign retail 'names' entered the Russian market than any year since 2012. Poor GDP growth prospects and diminishing consumer purchasing power continue to deter expansion of foreign retailers. New entrants are often retailers targeting high-end consumers, who are more immune to falling real income, inflation and ruble depreciation.

Impacts

• Economic uncertainty and Western sanctions will discourage further European and US retail expansion.
• Far Eastern retailers will try to move into the clothing market, mainly sports and urban youthwear.
• In the medium to long term, the ageing of Russia's population will discourage foreign retailers.