Page 104 - RusRPTMay20

· Beer shops experienced a 12% correction in sales, and 14% in the number of operating sites.
· The pet goods trade contracted 14%, with the number of stores down 17%.
The most pressured retail niches showed the following trends.
· Beauty services: 89% of salons were not working in the quarantine week, and the segment's turnover slid 90%.
· Apparel retailers: 94% reduction in turnover, 89% of locations are not working.
· Footwear: similar trends, with 92% and 89%, respectively.
· Book shops: 88% reduction in revenues, 75% of locations put on
quarantine.
· Hardware (DIY) stores: 43% closed, turnover fell 58%
· Restaurants: only able to work delivering takeaways, so 28% of bakeries were closed, and the segment's revenues were down 62%.
According to the company, if the quarantine measures are prolonged for 1.5-2 months, up to 70% of those locations that have closed due to coronavirus are not going to resume their operations.
“According to Infoline, the retail sector is to see a further decline of 30-40% in April revenues, while restaurant sales are to drop by at least half. This will also translate into much faster sector consolidation than initially anticipated by the company (that the share of the top ten grocery retailers is to grow to 40% by 2020-21, from 33% in 2019),” VTB Capital (VTBC) said in a note.
The negative trends continue with sales in hypermarkets in various regions dropping by half, as most stores are in remote locations or in shopping malls that have been shut.
Expensive products, particularly in the fresh category, are also to see a reduction in turnover, as people’s reserves are diminishing and they are shifting to money preservation behaviour, according to VTBC, which has been seen in previous crises.
Russian beer production gained 2.8% y/y in 1Q20, to 162mn decalitres​, according to the Russian Statistics Service, while in March sales were up 4.8% y/y. These are decent numbers, given the tight regulations and 5% inflation in excise this year. The Russian beer market is consolidated, with the top three players holding some 70% and Anadolu Efes occupying the leading position (28%). Russia accounted for 60% of Anadolu’s beer volumes last year, and we anticipate its 2020 performance being robust, with the company strengthening its leadership position. Nowadays, the on-trade channel is closed, but it is some 5% of total sales in Russia, but this is offset by the slightly higher sales in modern retail. In Turkey, on-trade is 25% and is not compensated, so we see moderate downside risks for the consolidated sales in 2020.
104​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com