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While foot traffic in malls plummeted after March 30, down some 70%-80% in the first week of the lockdown, it improved about four weeks ago after new rules to allow people to go for walks on a timed rotation depending on region. That increased the foot traffic to a c.60% fall y/y in Moscow.
A similar pattern has been seen in Russia’s “other” capital, St Petersburg, the second largest city in the country, although the residents of St Petersburg have been much more cautious and remained at home. Foot traffic there remained down c.70% for most of the lock down period and only fell into the 60s three weeks ago.
However, in the last week the foot traffic increased to the point where it was down by 30%-35% in Moscow and measured 30.5% on Monday June 15. On the same day the foot traffic fall in St Petersburg broke below 60 for the first time to reach 58.2% fall y/y.
Retail is main victim of the coronacrisis
The Russian consumer has been the biggest victim of the pandemic as seen in the most recent statistical data that shows large contractions in retail sales, services and residential construction.
Rosstat reported that retail sales were down a massive 23.4% year-on-year in April, the latest data available. The fall in retail was worse than the 17.7% consensus expectation by analysts. The drop comprised of a 9.3% y/y decline in food retail and a 36.7% y/y collapse in durable goods.
Turnover fell from RUB2.9 trillion ($41.3bn) in March to RUB2.3 trillion ($32.1bn) in April and is expected to fall much further in May.
Although foot traffic is now recovering, the overall retail trade turnover is likely to take months, or longer, to recover to the pre-crisis levels. In addition to restrictions on going out the spending power of the Russian consumer has been hurt.
A pickup in inflation that was accompanied by ruble devaluation and a rise in unemployment has been the prime driver behind the fall in real income. Unemployment has almost doubled in the May to 5.8% from 4.7 in March. At the same time real incomes have fallen and gone back to the six years of stagnation it has been suffering from. BCS GM forecast real disposable income to fall by 4% y/y this year and retail sales to drop by 5.4% y/y in 2020.
53 RUSSIA Country Report July 2020 www.intellinews.com
