Date
28 May 2017
Fix Price is currently the leader among Russia’s budget fixed-price shops, but competition is intensifying as new players -- both domestic and foreign -- are entering the market. Photo: Fix Price
Fix Price is currently the leader among Russia’s budget fixed-price shops, but competition is intensifying as new players -- both domestic and foreign -- are entering the market. Photo: Fix Price

Why HK suppliers should reach out to Russian retailers now

Russia may be bracing for its longest recession in decades following the oil price slide and Western sanctions, but there is at least one business segment that is booming in the country — budget fixed-price shops.

Operators of these stores, the equivalent of the HK$10 shops in Hong Kong, typically look to source from China and Southeast Asia.

As the businesses expand, there is a clear opportunity for Hong Kong manufacturers and distributors, the Hong Kong Trade Development Council notes in its research.

Among Russian budget stores, the undisputed leader currently is Fix Price.

The retailer operates about 2,000 shops across the country, offering a wide assortment of items including household goods, food, beverages, toys, books, perfumes and personal care stuff, all priced between 45 and 135 rubles (US$0.72 to 2.16), according to the research.

A smaller player, Zaodno, was launched last year to tap the demand from the increasingly price-conscious shoppers. The firm currently operates about 60 stores.

Euroshop from Germany has also jumped on the bandwagon. Its unit Euroshop Russland has opened its first store in Saransk, a city 300 miles from Moscow. The company plans to expand the outlet number to 200 by the end of next year, and to 2,000 eventually.

The budget concept is spreading to the supermarket segment as well. Budget supermarket chains Pyaterochka and Lenta both reported 30 percent or more sales growth in the second quarter.

Encouraged by the booming sales, budget household stores and supermarket chains will continue to expand their operations, throwing up opportunities for Hong Kong manufacturers and trading firms.

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RC

EJ Insight writer

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