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delivery within 15mins earlier this year. But as the virus spread delivery dates have been pushed out to several days and many of the items ordered, such as toilet paper, are sold out by the time for the delivery comes around.
Many retail outlets have simply closed down for the duration of the lockdown, while food retailers, children’s goods stores, pet food, pharmacies, telecommunications outlets and other shops selling essential goods and services remain open. Restaurants are working, but only on a home delivery basis (another service provided by Yandex amongst others).
“Our core focus is now on the ultimate timing of social distancing measures and their impact on consumer budgets (which currently points to a significant slowdown in the short term). We anticipate cost optimisation initiatives, from hiring freezes to wage adjustments and the renegotiation of rent contracts, while government support is also vital,” VTB Capital (VTBC) said in a note.
The demand for online services has almost quadrupled, reports VTBC, overtaking the current capacities.
“Last year, e-grocery was only RUB45bn and 0.3% of food retail (that is only a sixth the level in developed markets). The current situation removes one of the prime hurdles in the area of service promotion and is set to speed up the segment across all niches (stock up and express delivery) while pushing offline retailers to join the e-commerce race,” VTBC said.
As bne IntelliNews reported, the pandemic will be a boon to e-retailers across the entire region as those who were reluctant to use these services until now are forced to use them. While e-commerce has been growing quickly in the region the share of online services in the overall retail turnover has been lagging that of the west. The coronavirus pandemic will go some way to closing the gap.
Most of the leading supermarket chain and retailers had already targeted online delivery as a growth area, but the crisis will only catalyse this trend. X5 Retail Group targets leadership across e-grocery this year with its flagship Perekrestok.ru supermarket chain.
“It has been rolling out express-delivery from convenience outlets since January and joined technology companies Samokat and Yandex.Lavka in the segment, which we think offers prime growth opportunities,” VTBC said in a note.
25 RUSSIA Country Report April 2020 www.intellinews.com