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54 I Eastern Europe bne October 2018
This statement followed an announce- ment in December by the Swedish fur- niture retailer that it intended to enter the Ukrainian market. According to IKEA, the decision to enter a new coun- try is made by the company on the basis of "thorough market studies in which franchisees are carefully evaluated".
IKEA South East Europe (SEE) will run the operations in Ukraine. IKEA SEE also handles the IKEA retail operations
in Croatia, Serbia, Romania and Slove- nia. They are currently in the process of identifying a suitable business model that would allow the large number of potential customers to shop in IKEA in Kyiv within one or two years, according to the company's media office.
According to official data, Ukraine’s retail sales increased by 6% year-on- year in real terms in January-July in real terms. In July alone, real retail sales
picked up 3.9% month-on-month and 6.6% y/y (vs. a 0.8% m/m decrease and 6.3% y/y rise in June).
Regionally, the highest January-July retail growth occurred in Ukraine- controlled Luhansk (23.4% y/y), Zakar- pattia (10.9% y/y) and Poltava (10.5% y/y) regions, while growth was slowest in Chernivtsi (0.6% y/y), Kharkiv (2.1% y/y) and Kirovohrad (2.9% y/y).
The long march of Belarusian retail
Ben Aris in Moscow
Nothing epitomises the transfor- mation Eastern Europe has been through over the last two and a half decades like the supermarkets full of fresh and enticing produce.
Long known as the “last dictatorship in Europe” thanks to a throwaway remark by former US secretary of state Condoleezza Rice, Belarus is starting to move out of that shadow and is maturing as it follows the other countries in the region and indeed outperforms most of them. Retail is fast becoming one of the most modern sectors of the economy.
Belarus currently has the fastest GDP growth rates in Eastern Europe and that is creating a middle class. GDP grew
by 4.4% year-on-year in January-July, following a 4.5% y/y growth in the first
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half of the year, which compares to 1.8% in Russia and 3.6% in Ukraine. The Belarusian economy is recovering well on the back of the ongoing recovery in neighbouring Russia, which still domi- nates the republic’s economic fortunes.
The emergent middle class has a surpris- ingly balanced income distribution. President Alexansder Lukashenko has been pushing to increase the average salary to BYN1000 ($461) per month from around BYN800 now, but incomes have been rising steadily and Belarus’s current average income is on a par with Russia’s and ahead of that in Ukraine.
According to the latest survey Belaru- sian individuals with a monthly income between BYN300.1 (around $150) and BYN500 ($240) accounted for 44.6% of the population in January-March, versus
17% with monthly income of between BYN200.1 and BYN300, and the better off individuals with a monthly income of between BYN500.1 and BYN600 that made up 11.6% of the population in the first quarter of 2018. Those with over BYN600.1 made up another 22.6%.
Rising incomes are feeding into retail trade, which increased by 10.1% y/y to BYN17.2bn ($8.6bn) in January-May, according to Belstat. And that is fuelling the development of organised retail in the republic.
Eurotorg is Belarus’s leading super- market chain and hoping to repeat
the success of supermarket chains in neighbouring countries that have been portfolio investors’ darlings as they give direct exposure to the transformation of Eastern Europe’s economies.