A year ago when the Olympic torch arrived in Sochi, many observers were warning that interest in the Russian Black Sea resort would fizzle out once the 2014 winter games were over. But that was before western sanctions and falling oil prices began weighing on the Russian economy and sending the rouble into a nosedive.
Russians no longer able to afford foreign ski holidays and chalets are now flocking to the slopes of Sochi and investing their depreciating rubles in mountain side homes built for the Olympics. For the first time Sochi has been included in the annual ranking of the world’s top twenty ski resorts by price growth for prime residences, compiled by Knight Frank, the global real estate consultancy. Read more
As Gazprom bullies Ukraine to settle its $3.5bn gas arrears, Russian domestic gas consumers are also running up multi-billion dollar debts. Ukraine is broke and Russian buyers, hit by the economic downturn, will struggle to pay up. Just as well then that Gazprom has finally clinched a $400bn gas contract with China which opens up a new potential market in the east from 2018.
Gazprom’s customers owed Rbs115.8bn ($3.35bn) for gas at the end of 2013, almost 40 per cent more than on December 31st 2012, Kirill Seleznev, director general of Mezhregiongaz, Gazprom’s gas distribution subsidiary, told reporters in Moscow this week. Read more
Russia: good footwear required
A Siberian retailer that began selling mid-priced shoes in Russian regions a decade ago is growing so fast that there is local talk of the company becoming “the Magnit of footwear”. Obuv Rossii now plans to go public offering investors a foot in the door to one of Russia’s most buoyant consumer sectors. Read more
A contraction in Russian economic growth is taking a toll on consumer confidence. But while Russian shoppers are spending more carefully, it appears they can’t say ‘no’ to their kids. Detsky Mir, the country’s biggest children’s goods retailer, is anticipating a double-digit increase in revenues in 2013 for the second year in a row and is confident enough about the outlook to begin planning for an initial public offering. Read more
With European stores looking empty, commercial real estate investors have turned to Russia where shoppers are still out in force.
After splashing out more than $1bn to buy a mall in Saint Petersburg last year, Morgan Stanley has returned to the Russian market to buy an even more expensive retail outlet in Moscow. Read more
Coming soon: sportswear for dogs
X5, the Russian food retailer controlled by Mikhail Fridman’s Alfa Group, has won a tender for rights to market official merchandise for the 2014 Sochi Winter Games.
The prestigious deal may boost the appeal of X5’s grocery stores but probably comes too late to prevent the London-listed retailer from being overtaken by its fast growing rival Magnit in the battle for sales. Read more
Most businessmen would be glad to be compared to Sam Walton, the US retail visionary who founded Walmart. Not Sergei Galitsky, the billionaire chairman and chief executive of Magnit, the Russian grocery chain. He thinks the flattery goes too far.
For a start, Magnit, although Russia’s biggest food retailer by stores and growing at breakneck speed, will never match Walmart in scope or size, he says. And Galitsky has no plans to follow the US multinational’s example and take his company global. Read more
Bad news for Russia. In a new study by management consulting group, AT Kearney, Russia has fallen behind BRIC and other emerging market peers in terms of the countries’ attractiveness for investments in the retail sector.
On a list of 30 emerging markets, Russia ranks 26, down from 14th place a year ago. Brazil, China and India, by contrast, all rank in the top-5, placing first, third and fifth, respectively. So what is holding Russia back? Read more
One of the founders of X5, Russia’s top food retailer, has decided to leave his job after disappointing results and warnings that the days of dizzy sales growth are over.
X5, which has built a network of more than 3,000 food stores from scratch since 1998, like any highly successful start-up, has become just too big to continue growing so fast. But the slowdown is worrying investors who have seen X5 as one of the few non-resource companies in Russia worth putting their money in. Read more