Page 102 - RusRPTJun20

9.1.5​ Retail sector news
E-grocery is set to become the fastest growing segment of e-commerce countrywide, ​surging from RUB42bn last year to RUB716bn by 2024F (up 17x), accounting for 3.5% of the food retail market. X5 is targeting a 15-20% share of online food retail, while the upper boundary would mean 6% of total sales in our model. Strong emphasis was placed on both stocking up shopping and express deliveries, while its competitive advantages are unmatched purchasing power, existing infrastructure and the ability to leverage the loyalty card base (40mn people). 16-20% y/y spikes in March-April sales are likely to cool to 10% y/y by 2H20F.
Russia’s retail revenues saw a 30-40% y/y correction in April, ​with the non-food segment losing up to 80% of its turnover, according to Infoline. In the week of 20-26 April, the key declines in sales (on a y/y basis) in the various segments were as follows.
- Apparel and footwear: 77%.
- Cafes and restaurants: 65%.
- Pet goods: 4%.
- DIY and households: 15%.
- Consumer electronics: 21%.
- Grocery products: flat.
- Medical goods: 3%.
- Wine shops were the only exception, showing 16% y/y growth.
The Russian government has provided a list of rules for the online sale of over the counter (OTC) medicines​. In order to receive such rights, a pharmacy must submit a statement to the Federal Service for Surveillance in Healthcare and present certain documents. The latter include its licence (issued not less than a year ago), details of the website or mobile app, and its own delivery service (or a contract with a third-party courier). The statement is reviewed within five days, after, which a decision is made whether to allow the pharmacy to conduct online sales.
There was a major decrease in traffic in April after the peak in March, while the average check growth also started to slow​, according to the Association of Retail Stores (AKORT). Convenience formats lost 20-30% of traffic, while hypermarkets and supermarkets showed declines of 40-60%. The food retail sector saw a spike in mid-March, as people stocked up, while demand has started to cool in April. Hypermarkets are in a disadvantageous position, as they tend to be located further away and are largely present in shopping malls (rather than other formats), while supermarkets are lagging due to their more premium offer. The convenience format is less affected, due to store proximity and their basic offer, which is relevant during the social distancing measures.
102​ RUSSIA Country Report​ June 2020 ​ ​www.intellinews.com