Page 27 - bneMag February 2021_20210202

bne February 2021 Companies & Markets I 27
“Rosstat data for September related to consumer demand was weaker than expected. Both retail sales for September (-3.0% year on year) and real wages for August (+0.1% y/y) not only fell short of the Bloomberg consensus estimates (-2.1% y/y and +1.4% y/y respectively), but were below the lower bound of the respective confidence intervals made of standard deviations around the consensus' mean estimates,” BCS GM reported.
However, the online sales of the top 10 retailers have been growing in triple digits this year. Market leader X5 Retail Group saw sales expand 3-fold, Sbermarket, the online offering from Russian state-owned retail bank Sberbank, up 8.4-fold and e-commerce leader Wildberries up 8.5-fold y/y in the first nine months of this year.
X5 is a leading player in this transformation, as bne IntelliNews reported in an interview with its CEO recently.
X5 now covers more than 500 outlets in 10 cities with
a blended ticket of RUB1,500-1,700 and over 16,000 orders
Government releases mandated phone app software list
FPRI BMB Russia
After much delay, lawmakers have determined which Russian-made apps must come pre-installed on smartphones sold in Russia under the so-called “law against Apple.”
Recall last December, Putin signed into law a bill that mandates all smartphones, tablets, laptops, PCs and Smart TVs in Russia come preloaded with domestic software. The legislation did not sit well with Apple, which forbids preinstalling third-party apps on its hardware and threatened to leave the Russian market
as a result. The legislation was supposed to enter into force on July 1, but it’s been held up by bureaucracy.
Which apps did the government choose? MinTsifry selected 29 software programs out of 100 contenders. Thirteen belong to Mail.ru Group and five belong to Yandex. Mail.ru’s email app, ICQ messenger, Marusya voice assistant, news aggregator, OK Live streaming service and Vkontakte will be mandated. Yandex won out on the browser, search engine, maps and cloud storage apps. From Kaspersky Labs, the government selected an anti-
daily, as of the October update. Stock-up shopping is mostly covered by online hypers (Perekrestok, Vprok, Utkonos)
and assemblers (Sbermarket, iGoods). In this segment, X5 is present via five dark stores with a blended check of RUB4,000 and more than 12,000 daily orders as of October.
X5 Retail Group leads in online food sales in Russia, with 9M20 turnover of RUB12.7bn. Stock-up shopping contributes 76%, and express-delivery 24%, of the total. By 2023, it aims for
a 20% market share, which would mean RUB120bn of sales.
The total investment into the online platform, as mentioned by the company in May, is RUB5-6bn.
“Future investment would be of a different nature
(i.e. application development, private labels, dark stores), while the existing store base, logistics and purchasing terms are the key tailwinds,” VTBC said. “The comment on the valuation of the online businesses implied some 1.6x P/Sales, compared with the existing multiple for X5 of 0.4x. Across global e-commerce operators, we see the multiple at 3.5x.”
The Russian government has released a list of 29 apps that have to be preinstalled on any phone sold in Russia, drawing mostly on the software from Russia's leading tech companies
virus and an office software. Vedomosti’s mobile app was chosen in the media category. Lastly, the state-run Mir payment system and government services apps will be required on each phone.
According to an analyst from Mobile Research Group, the government’s selections show that it’s much more interested in supporting certain tech firms than listening to the population’s desires. Mail.ru’s ICQ messenger, for instance, is obsolete in comparison to Telegram. The government will finalise the
list after a review on December 15. The Bell predicts that the legislation will enter into effect around April 1, 2021.
Apple hasn’t responded to the latest news, but there’s no doubt that the company is not interested in downloading
a messenger system associated with the siloviki, a voice assistant that would compete with Siri, and an anti-virus software that has been banned from use within the US government.
This article originally appeared in FPRI's BMB Russia newsletter.
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