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adding that the "situation is exacerbated by the fact that household budgets are still under pressure and shoppers have learned to look for promos."
Market access for international brands is at a 5-year low. Fewer international clothing brands are entering the Russian retail market. This trend opens space for native competitors to get valuable real estate in shopping districts and at malls. The declining presence of international brands is likely due to a mix of lower incomes, VAT increases, difficulty navigating Russia's business world, and a sluggish economy. Moscow and St. Petersburg are really ground-zero for market entry, and retailers are shifting to focus on expansions at malls due to a lack of adequate real estate. That's a vector for well-connected businessmen running domestic competitors to push foreign firms out of development deals. Market forces seem to be helping import substitution for things like clothes.
● International retail clothing brands are opening stores in Russia at just over half the rate they did last year. Because entering the Russian market takes two to three years, this decline reflects international pessimism after the 2014 crisis.
● Most of the international clothing brands entering the Russian market in recent years are European, not American.
● Prestigious real estate is scarce in Russia since shopping mall construction has slowed. The lack of new international brands makes it easier for Russian designers to expand.
● The planned VAT increase will squeeze the already-tight margins of clothing retailers.
9.1.6 Agriculture sector news
Two decades after Russia opened its farmland market to private ownership and investment, wheat yields per hectare have reached American levels, The Wall Street Journal reports in major story headlined: “Struggling US Farmers Have a New Worry: a Resurgent Russia.” With new productivity, Russia now grows and exports more wheat than the US – for the time since the Tsarist era. To handle the harvest, the Black Sea port of Novorossiysk is completing this fall a three year construction plan that nearly doubles its grain handling capacity. Mitigating the impact of Russia’s wheat surge is a 58% jump in world wheat consumption over the last decade, to 183mn metric tons.
Russia will set up a network of diplomatic attachés of Ministry of Agriculture abroad , V edomosti d aily reported on September 20 citing the 20202-2024 budget draft. About RUB3.1bn ($47mn) will be spent from the Development Fund on the agricultural missions, whose main goals will be to boost export potential of Russian produce. As bne IntelliNews has reported, Russia's agriculture has been the main benefactor of the import substitution drive and the counter-sanctions imposed on Western food products, boosting domestic development across multiple segments. Following the agricultural revival and record-high crops , the Ministry of Agriculture has set up an ambitious target of more than doubling agricultural exports to $50bn by 2024 from $20bn seen in 2017 . Currently about 10 representatives of the ministry operate in India, Canada, the US, Egypt, the EU, the UAE, but are not numerous enough and have no centralised system of gathering and analysing necessary data. The ministry plans to increase the number of attachés to at
89 RUSSIA Country Report October 2018 www.intellinews.com