International food and retail research group IGD has predicted that France’s Carrefour will be the first international retailer to make serious in-roads into the developing Russian market.
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The value of the grocery market across Central and Eastern Europe was EUR242bn (US$308.13bn) in 2005, and IGD has predicted that it will grow at an annual compounded rate of 5% over the next 10 years, to reach a value of EUR368bn by 2015. Accordingly, IGD has ranked the Russian market as the third most important emerging market, behind China and India.
“Carrefour is the most likely of the global retailers to be first to enter Russia,” says Cecile Riverain, IGD senior international business analyst. “There are various methods by which it could enter the market, including franchising, acquisition of an existing player, or independent entry.
“One possible way forward for Carrefour is to target regional towns, which would be easier and quicker to access than Moscow and St Petersburg where the competition for retail space is intense.”
Despite the opportunities Russia affords, IGD predicted that the UK’s Tesco would want to achieve, consolidate and extend market leading positions in central Europe before expanding further east.
“Russia is one of the most exciting emerging markets in Eastern and Central Europe,” Riverain said. “Although investing in Russia would present a growth opportunity for Tesco, it has recently committed large financial capital expenditure to other high potential markets like the USA and China, whereas Carrefour has stated that it intends to enter Russia soon.”
