German Retail: Who's Brand-New?

Despite the difficult economic situation, new names continue to appear on the market.

German retailers have long been present in the Russian market and have won over local shoppers in various spheres — from the METRO supermarket chain to Adidas sporting goods. In 2014, the consolidated revenues of German retailers in the Russian market totaled 453 billion rubles — 35.1 percent of the revenue for all major international companies operating in Russia, according to market research firm INFOLine Analytics.

Despite the difficult economic situation, new names continue to appear on the market. In April 2014, Deichmann, a retail chain offering footwear and accessories, opened its first store in Moscow. "In half a year the company launched nine stores  — five in shopping centers in Moscow and four in St. Petersburg," said a representative for Deichmann in Russia. "Stylish, quality shoes at reasonable prices for all age groups is the concept upon which Deichmann has been working for over 100 years," said the representative. In the average year, the company's stores together sell about 167 million pairs of shoes, and overall revenue exceeds 4.6 billion euros.

Tengelmann Group, which is already operating a number of OBI home-improvement stores in Russia, announced early this summer the opening of its Plus network of discount grocery stores. The company plans to launch its first 12 stores by the end of the year. The first stores will be opened in smaller regional cities in the Central Federal District, Tengelmann Group representative Justine Tsagalak said in an interview with business daily Vedomosti. The company is focusing on cities with populations under 500,000 people, including the Moscow Region cities of Pushkin, Stupino, and Orekhovo as well as a number of cities outside the Moscow Region — Kaluga, Tver, Murom, Tula, Nizhny Novgorod and Dzerzhinsk.

Free-standing buildings will be built to house the stores. One of these buildings in the Moscow area city of Pushkin is already built. The average retail area will be 940 sq. m. It is intended that buyers will have a choice of about 2,200 brand name products, with 70 percent of this selection being devoted to food stuffs. The company buys all its products only from Russian suppliers, said a representative from Plus. Whether the company will have enough time to have all 12 outlets in operation by the end of the year as planned, the representative did not say. A source familiar with the situation in the company said the discounter is currently bringing its Moscow area distribution centers into operation.

"Of course, all retailers are being held back by the economic crisis, which is affecting people's purchasing power. For the first time in recent years, buyers have the feeling that income is not rising in parallel with inflation of food prices," said the general director for the Globus hypermarket chain in Russia, Johannes Tholey.


Russia - Germany 2015
Russia - Germany 2015
Despite the difficult political climate and economic downturn, German companies remain committed to Russia. Read about the challenges facing them, as well as success stories in this supplement.
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