Clothing, footwear and accessories market in Russia increases its value by 5% in 2009

Struggling market still provides opportunities

Despite the weak economic situation in the country, foreign CFA retailers tend to continue their expansion and increase the level of market penetration. For example, since March 2009, Swedish clothing retailer H&M has opened five stores in the country. A new Japanese clothing retailer, Uniqlo, opened its first store in Moscow in spring 2010. In addition, one of the largest footwear chains in the US, Payless, owned by Collective Brands Inc., also announced its plans for entering Russia in 2010. Nevertheless, the Russian market retains difficulties for foreign companies' expansion. In addition to such difficulties as significant administrative barriers, market non-transparency, weak logistics and poor legislation, the market offers also smaller return on investment in the CFA retailing than in some other emerging markets.

Moreover, the penetration of foreign CFA companies in Russia is partially influenced by the lack of department stores and poor development of multi-brand retailing. The fiercest competitors among foreign operators are represented by retail chains which have established a strong presence in Russia and have gained popularity among Russian consumers. Such chains include Inditex, Mango, Motivi and Sixty Group. These companies are acquiring stores from their franchisees and gradually increasing the number of their own stores.

At the same time, some Russian CFA manufacturers plan to invest in development of their own retail chains as well. Sela, one of the leading retailers on the market, has managed to increase its storecount in Russia, although the company closed some units in other countries and in Russia as well. The other company operating on the market, Gloria Jeans, one of the leading clothing producers in Russia, decided to withdraw from the loss-generating wholesale business and focus on its own store chain. However, worsening economic conditions had a negative impact on the company, which was forced to take some measures in order to reduce costs and postpone its expansion until the financial situation has improved.

This press release is based on information contained in the latest PMR report entitled "Clothing and footwear retail market in Russia 2010. Luxury market insights and development forecasts for 2010-2012".

Clothing, footwear and accessories market in Russia increases its value by 5% in 2009

By: PMR

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