RUSSIA FINAL PRESENTATION

RUSSIA & THE FASHION INDUSTRY

Valeria De Luca / Tanya Dobrevska/ Maria Estegneeva

GENERAL FIGURES 窶｢ Clothing, footwear and accessories remains the second窶人argest retail sector after food retailing in Russia. In 2008 it amounted to 1,452 bln RUB (40 bln.

EUR) 窶｢ In 2008 clothing accounted for 61.7% of the total market, footwear 35.9%, accessories 2.4% 窶｢ In 2009 there is a decrease of about 4.9%

Figures given by Global Retail Development Index

RUSSIAN DISTRIBUTION CHANNELS • • • • • • • • •

Hypermarkets Supermarkets Trade fairs Department Stores Outlets Store Chains Independent stores Open Air markets Internet/mail

Figures given by PMR Research

MARKET & DISTRIBUTION

Main cities

Main cities • Moscow and St. Petersburg are the largest cities for retailing clothes • Most fashion brands are located in regional capitals • In the Central and South Federal Districts 62% of the operators prefer opening their stores in malls.

• In the Ural and Siberian Federal Districts prefer opening their stores in street retail format.

• In Northwest, Volga and the Far East Federal Districts brands operators open equal number of stores in street retail format and malls.

Malls outside Moscow • St . Peterburg Apraksin Yard, Vanity Opera, Grand Palace, Atmosfera • Novosibirsk Aura • Yekaterinburg Gallery, Architecture, Fan Fan, Evropa • Nizhny Novgorod Etagi • Samara Cosmoport • Kazan Koltso, Tandem • Rostov na Don Astor, Horizont

Figures given by the Leningrad Region Chamber of Commerce

Footwear Market

• Volume of the market: $ 8.33 Billion • Consuming per capita was 2.6 pairs in 2008 • Footwear production has decreased during the period Jan-Aug 2009 for 3,8% and accounts 36.7 million pairs • Moscow takes about 25-30% of all footwear retail

Figures given by the Leningrad Region Chamber of Commerce

Accessories market

• • • •

Market is in constant growth New stores appearing Market with low competition the accessories market in 2008 was almost $2 billion and then increased further: up to $2.4 billion • Main imports from: France, Czech Republic, Germany, Italy and Turkey

Figures given by the Leningrad Region Chamber of Commerce

Accessories market share

Figures given by the Leningrad Region Chamber of Commerce

Accessories Distribution

BUSINESS OPPORTUNITIES Change in consumer behaviour

BUSINESS OPPORTUNITIES • Retail sector is booming: need of know-how • Many unskilled managers: need of know-how / Investment in new designers • Accessories Market with low competition • Men’s wear is growing • E-commerce boom: By 2012, 43% of population will be internet users. By 2013, users will be 61.9 million. FORECAST: 5.2 MILLION ON-LINE CONSUMERS

FUTURE PERSPECTIVES • Russia: 2nd in the world for opportunities in retail development • Regional Markets will develop • Accessories Market will boom • E-commerce will boom • Independent stores will decline • Retail chains will be the most popular • Consumers will be more educated • Russian designers will need western’s help

STRENGTHS • • • • • • •

Market in constant growth Luxury products are still in demand Growth of the middle class Major fashion events High demand for fashion apparel High awareness of international brands High media coverage

WEAKNESSES • • • • • • • • • • • •

High dependence on economy No support for Global brands Low support for Local brands Price policy: HIGHER in Russia High costs of starting businesses High rent prices Low management Skills Lack of education resources High shipping costs Weak distribution (for locals) and production process Tax system Poor production capabilities

OPPORTUNITIES • • • • • • • • • • • • • • •

Shopping malls in South and West of Russia Important retailers in the East Online selling growth Transparency New consumer boom Change of consumer behavior High demand for accessories/low competition Low local competition Constant demand for luxury products Men’s wear growth Children’s wear growth Cheap oil price Events sponsored by the government Fashion Market open to foreign brands Low management skills for local designer promotion: need of know-how • High media coverage

THREATS • Cultural differences • Economical Instability • Eastern consumers aren’t as educated as Western consumers • High rate of smuggling • Tax system • Poor infrastructure • Competition with oligarchs

Does Russia have good opportunities in the Fashion Industry?

If risks are overcome, Russia can be one of the most profitable countries for the Fashion Industry.

THANK YOU!