Page 26 - RusRPTFeb19

value all year after 519 in week 10, but still below the previous years (564 in 2014, 560 in 2015, 524 in 2016 and 512 in 2017).
The volume of foot traffic in Moscow’s malls has been falling steadily in each of the last four years since the index was launched. While some of this is due to a squeeze in real incomes, which fell for the fifth year in a row in 2018, the reduction is also been driven by a migration of shopping to online retailers as e-commerce booms.
Real disposable incomes of Russians (revenues minus utility payments adjusted for inflation) in November 2018 decreased by 2.9% in annual terms, after rising by 0.3% in October, decreasing by 3.2% in September and down by 1, 6% in August.
At the same time the volume of online sales is expected to have increased again in 2018 to RUB1.5 trillion ($21.5bn), up from RUB1 trillion in 2017, and the rate of expansion of e-commerce shows no sign of slowing down, according to research by Data Insight.
"Data Insight’s forecasts imply a gradual slowdown in the growth of the Russian domestic e-commerce market (after the 20-21% y/y rise in 2017), although it still remains robust," VTB Capital commented on December 18.
Several big online retail platforms are expected to develop rapidly in 2019 that were being tested in 2018. Major alliances are being formed among IT companies, credit institutions and retailers (both global and local). Most notable Sberbank and Yandex.Market joint venture and strategic partnership of internet major Mail.ru, its shareholder mobile operator MegaFon, the sovereign Russian Direct Investment Fund (RDIF) with Chinese e-commerce major Alibaba and its AliExpress and Tmall platforms.
According to a Morgan Stanley report released in September, the Russian e- commerce market for physical goods will grow to $31bn by 2020 and may reach $52bn by 2023, reports East-West Digital News (EWDN).
The rapidly changing shopping habits in Russia have already made themselves felt in food retail. After a decade of growth, Russian supermarket chains are running up against constraints to growth – both in terms of saturation in local markets and market share limits – and are switching their focus from organic growth to higher profits.
More generally vacancies in retail real estate objects have passed bottom but vacancies remain higher than in the boom years and the type of store retail objects are being used for is changing and moving towards the services end of the spectrum.
“The main trend on the Moscow high street retail market is a rising share of foodservice tenants (to 33.5% in the first quarter of 2018), while the presence of fashion operators is declining. The share of fashion and footwear stores has been gradually decreasing over the past years, from 15% in 2015 to 10.5% in March 2018,” says Yulia Nazarova, head of street retail in Moscow, JLL.
26 RUSSIA Country Report February 2019 www.intellinews.com