Emily Balsamo, Moscow Office, Bord Bia – Irish Food Board

Retail space in Russia’s regions (outside of Moscow and St. Petersburg) has seen rapid growth in the last year. Total retail sales were valued at RUB 5.23 trillion ($164bn) for the first quarter of 2013 according to Russian Federal Statistics Service (Rosstat), showing a 7.9% increase over the same period of 2012. Retail companies and sole traders in Russia account for 90.5% of officially registered retail revenue in March 2013, though open markets and private trade is still ubiquitous.

In 2012, 225,000m2 of retail space opened in Krasnodar (a region in the Northern Caucuses) alone, with six new shopping centres being built currently. Proprietors of Krasnodar’s new retail facilities include Magnit, Galeriya, Karnival, Strelka, Gorizont, and Khozyain. In the past year, Krasnodar has seen a 6% increase in retail sales turnover.

Analysts have long noted that retail in Russia grows at a much faster rate than retail in other markets. The Krasnodar-based grocery store Magnit, for example, is ranked as the 5th fastest growing retailer in the world. Only two grocery retailers are more highly ranked, though both grow through acquiring pre-existing retailers. Conversely, Magnit has grown entirely organically. Magnit’s success can be attributed largely to its move towards vertical integration and expansion into high traffic areas which had been previously dominated by open air markets and private commerce. Since 2012, Magnit has operated the largest fresh produce production and holding facilities in the country.

The Russian Ministry of Economic Development reported 5.9% total retail growth for 2012, and forecasts 4.3% total retail growth in 2013.