Page 6 - BELRptOct18

“We believe that the macroeconomic environment will support Eurotorg’s performance going forward. Consumers benefitted from growth in real wages and real disposable household income of 13.0% and 7.6%, respectively, in 1H 2018. Inflation has also declined to its lowest level in 10 years, hitting 4.1% in June 2018. We are hopeful that the Belarusian economy is on a path for growth, and that this will be reflected in the performance of our consumer-oriented retail market,” Eurotorg CEO Andrei Zubkov toldbn e IntelliNews in an exclusive interview.
Eurotorg , the largest food retailer in Belarus with around a 20% market share, just reported strong first half of 2018 results where net profit was up by 16.6% year-on-year to BYN68.7mn ($34.5mn) and a net profit margin ticking up slightly to 3.2%.
In Russia the leading supermarket chains are world class companies and the business has just run up against structural constraints after two decades of expansion that mean they have switched from opening more stores to cement their market share to improving profitability of existing stores and even paring back the numbers a little. In Belarus these sort of issues still lie far in the future.
Belarus is under-penetrated by modern retail formats – BCG estimates the penetration of modern retail formats currently at 46%, similar to Poland eleven years ago. “This means there is tremendous potential for further growth with Eurotorg leading the way, as the largest food retailer in the country. Growing wages and increasing availability of consumer lending drive rapid growth in consumption generally and the grocery retail market in particular. Analysts estimate that wage and consumption growth will exceed 10% in 2018-2022, so we look to the future of Belarusian retail with excitement and optimism,” Zubkov toldbne.
Having a little spare money to spend is key and real disposable income (the money left after food and utility payments) in Belarus increased by 7.4% year-on-year in January-April, according to news agency BELTA. Real disposable cash earnings are expected to grow by 3.4% year-on-year in 2019, according to Eurotorg.
If Belarus follows the same path as its neighbours to the west and east then incomes will continue to rise for another decade and the population will spend a large part of it gathering the materials comforts associated with capitalism. Food shopping is the first to benefit as punters trade up to the “little luxuries” before they spend more money on anything else.
“Our retail concept is based on our unique understanding of customer needs across various market segments in urban and rural areas of Belarus. Our unparalleled market knowledge allows us to put forward the best customer proposition in Belarus across the board with price leadership and customer loyalty being the main differentiating factors,” Zubkov says.
In terms of trends, while price is still extremely important, people are also looking for a broader range of products, and Eurotorg is already fleshing out the product mix to offer a bigger variety to punters. “Fresh produce is an important category – for example, we sell almost a quarter of all vegetables
6 BELARUS Country Report October 2018 www.intellinews.com