Page 101 - RusRPTApr20

9.1.5 Retail sector news
Russian pharmaceutical retailers warn that the bill on regulating the industry submitted to State Duma on March 2 could increase the retail prices of medicine by as much as 10-15%, Vedomosti daily reports on March 3. The bill was drafted following the outrage that followed a jump in prices for facemasks and medicine as a result of the outbreak of the coronavirus. The document reportedly suggests setting the maximum marker share of 20% for pharmacy chains in a given municipal area or major cities, such as Moscow, St Petersburg and Sebastopol. The bonuses for promotion of certain assortment paid by distributors to the pharmacies would be limited at maximum 5%. Representatives of pharmacy chains 36.6, Neofarm, and Stolichka, argued to Vedomosti that the market is already heavily regulated, with 40% of the sales accounting for critical medicine the prices of which are regulated directly by the state.
The CEO of Russian children’s goods retailer Detsky Mir Vladimir Chirahov will step down from his job of manager in March to head the company's board, Vedomosti daily reported on March 3. As reported by bne IntelliNews, Detsky Mir is seen as one of the most attractive Russian equity names, and is also one of the best dividend payers overall. The main shareholder of the company AFK Sistema multi-industry investment holding supported the sentiment by saying that it does not intend to sell its stake in Detsky Mir post-SPO held in 2019. Vedomosti reminds that for the past two years Chirahov was rumoured to be getting ready to quit Detsky Mir. Unnamed sources close the shareholders of Sistema told the daily that Chirahov could join the parent conglomerate. Chirahov joined Detsky Mir in 2012, transforming the once legendary Soviet brand into the market leader in its segment. The company was in red for six consecutive years before he became the CEO and his tenure quadrupled the number of stores to 846, boosted the revenues 5- fold to RUB129bn ($2bn) and the market share 4-fold to 26%. He will be replaced by Maria Davidova, who has been with the company since 2013 and previously had experience in consumer goods, distribution, and retail.
Leading footwear retailers and the Forta union (the association of marking technology) have requested that the government move the marking of footwear to be sold from 1 March to 1 September 2020, due to the still existing operational difficulties in the system and the yet to be streamlined operating process. From 1 March 2020, footwear to be sold is to be marked and this adds to the list of goods that are already marked in stores. For large-scale retailers, analysts estimate that the additional equipment could cost some $1mn, a RUB0.60 increase per pair. The initiative is aimed at lowering the share of counterfeit sales. Analysts anticipate improved clarity on the marking of footwear to be sold and think there could well be more potential candidates for inclusion into the list of those marked. That would increase the overall financial burden on consumption while offering market share gains for leading industry participants.
101 RUSSIA Country Report April 2020 www.intellinews.com