Spoilt for choice: the children’s goods sector surges ahead. Source: Kommersant
Russia’s population is no longer dwindling, as the birth
rate has been steadily rising since 2009. So much so, that in 2011 Russia became the largest market in Europe for
children’s goods as parents splash out on the cute clothing and toys they never
had when they were growing up in the former Soviet Union.
The political stability of the past
decade has helped inspire more couples to start families, resulting in a tidal
wave of post-Soviet babies. This has fed through to the children’s goods sector
and sales of baby clothes, baby food, toys and accessories have rocketed,
allowing chains like Detsky Mir (Children’s World) to benefit.
The toys sub-sector is one of the fastest growing of all non-food product
groups, with the market expanding by 76 percent in the past five years, according to
market information service PMR. Indeed, legendary UK
Hamleys is cashing in on the
growth, and has just opened a new store in Moscow.
In Soviet days, it was the dream of every child to visit Detsky Mir and queues
encircled the huge building. Founded in 1957, the company has transformed
itself into a modern retailer and is expanding fast. Vladimir Yevtushenkov, the
owner of parent company Sistema, said in December at the Russia Forum: “I
believe that the turnover will amount to nearly $1 billion (£631m).” He plans
to add another 25 stores to the existing 146 outlets operating in 73 cities
around the country.
There were 22 million children under the age of 14 in Russia last year, and sales in Moscow accounted for one quarter of the total
demand for toys, says PMR retail market analyst Katarzna Twardzik. That represents
a market worth $11.3 billion against the $7 billion made on toys in 2006, according
to RBC Market Research, making Russia Europe’s biggest toy market.
By contrast Germany
posted $10.5 billion of sales in toys in 2009 but is only growing at an annual
rate of 1.5pc. Most other major European toy markets are in decline.
Despite the increase in births, this growth in sales of children’s products is
in line with other aspects of Russia’s
consumer market. For instance, Russia
became the largest European milk market in 2011. By 2018, Russia is predicted to become the largest
consumer market in Europe for all goods.
With a population of some 11.5 million registered inhabitants, most consumer
spending growth is concentrated in Moscow, the
largest city in Europe. But as Russia recovers from the economic crisis, its
burgeoning prosperity is spreading slowly to the 11 regional cities with more
than a million residents – known as the Millionniki – turning Russia into a
retailer’s paradise. Russia’s
per capita incomes may be half of those in Europe,
but as Russians have no debt to speak of they have the same spending power as
Europeans – and they love to shop.
has already become the 11th-largest consumer market in the world and the second
or third largest in
Europe in many product
categories, according to
market research company Euromonitor.
“Rising wealth levels over the past decade have turned Russia into a
middle-class country arguably for the first time in its history,” says
Citigroup’s chief Russian strategist Kingsmill Bond.
Russia is quickly closing
the gap on Germany –
currently Europe’s largest retail market. Russia’s total
annual retail turnover was $470.3 billion (£296.9 billion) in 2009, according
to state statistics agency Rosstat. In 2010, this figure rose to $543.5 billion, and
grew by 5.4 percent in the first half of 2011. While Germany’s
total retail sales are still higher than Russia’s, its growth rate was not
as sharp, increasing by 1.1 percent and 1.3 percent in real terms in 2010 and
2011 respectively, according to provisional figures from the federal statistics
With the increase in consumer spending power, Russians are looking to buy
better quality and more sophisticated products. “Food is the fastest-growing
segment in Russian retail,” says Ms Twardzik. “It can already compete with
leading western European countries.”
More generally, Russia’s clothing, footwear and accessories market is the fastest growing in Europe and was already worth $56.8 billion (£35.9 billion) in 2010. “If it maintains its current 10 percent-a-year expansion, then it will overtake Germany to become the biggest market in this segment within the next two years,” says Ms Twardzik.
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