Page 24 - RusRPTNov19

So far the only Artic project to get off the ground is run by state-owned Gazprom Neft at the Prirazlomnoye field in the region, and no new Artic fields are expected to go into production until after 2030.
Fossil fuels still accounting for around 54% of its export revenues. The concern is therefore that as the industry becomes ever more reliant on the Arctic and other remote areas for growth, the government will increasingly struggle to afford the tax relief needed to spur development. Moscow may have to look for cash in other areas, potentially adding to the tax burden of its citizens of bring in large international oil companies as partners, which means making more concessions to the west to ease the sanctions regime.
2.13 Watcom shopping index extends gains as people are feeling poor
The mild recovery in foot traffic in Moscow’s leading shopping malls extended gains that began at the start of the summer , as retail turnover results for all of Russia also picked up in the third quarter of this year.
The shopping index started this year with the worst results since it was founded in 2014 – and that year was the start of a crisis following the collapse of the oil prices and subsequent deep devaluation of the ruble. However, over the summer foot traffic volumes overtook those of 2018, a year of economic recovery, but still remain well behind the levels of traffic seen in previous years.
Thevolumeoffoottrafficinmallsthisyearbegantopickupinthe23r d week and has gathered some modest momentum since then. Part of the reason for the improvement is after six years of contracting real incomes, is malls have rationalised and several leading chains have been closing hypermarkets and less profitable stores as they refocus on profitability, as the race to grab market share is largely over.
“The low dynamics of commercial space commissioning as well as other factors boosted the rise of Shopping Index in Moscow in the third quarter overall by 5.2%. In St Petersburg it increased by 4.6%, and in Russia on the whole by 1.1%,” Watcom CEO Roman Skorokhodov said in a press release.
The explosive growth of Russia’s supermarket chains has come to an end as organised retail starts to run up against structural constraints . The leading chains have switched from expansion to grab more market share to improving profitability and have even begun to close some of their more unprofitable stores.
At the same time retailers are moving away from the large format stores and increasingly opening smaller “local” stores in built up areas that more precisely cater to the wants of shoppers. Part of this package is also the rise in the entertainment malls offer to compete with the growing volume of online retail that is eating into their business. The exceptionally cold summer weather also drove shoppers indoors.
And although the structure of organised retail is changing Russia is still adding a net amount of new mall floor space, opening more new shopping malls than any other country in Europe, real estate firm Cushman & Wakefield found, reports the Moscow Times. In the first half of 2019, around 200,000 square metres of new mall space was opened in Russia, accounting for nearly one-quarter of all new retail complexes in Europe. Moscow alone accounted for around 12% of all Europe’s new developments opened during the first six months of the year. Cushman & Wakefield says another 1.4mn square metres of mall floor space is set to open in the second half of 2019 and 2020 —
24 RUSSIA Country Report November 2019 www.intellinews.o