Opinion: the changing shape of Russia's retail market
By RK Marketing/Fruitnews.ru general director Irina Koziy
Just few years ago the key factor for the fresh produce supplier’s success in the Russian market was the ability to interest large importers of fresh produce. While importers and wholesalers are still playing significant role in certain segments and geographical areas of the Russian fresh produce business, it is hard to ignore the changes caused by the growth and increased sophistication of the retail chains, which are playing a more and more significant role in the shape of the Russian fruit and vegetable market.
Retail chains in Russia are growing at an unprecedented level. According to an Infoline Agency report, in 2012 the top 130 Russian retail chains opened 4,059 new outlets; a record number that surpasses even the previous pre-crisis record of 2008 (Vedomosti, February 28, 2013). The largest number of stores was opened by such leading chains as Magnit, X5 Retail Group and Dixi. However, proportionally the regional chains of medium size, such as Holiday, Maria-Ra, Intertorg and others were growing faster than the market leaders.
At the same time retail chains are changing their attitude to the fresh produce sections of the stores, moving them to the store entrances, increasing the variety and quality of the fruits and vegetables on display and providing additional convenience, information and education to consumers. Consumers recognize these efforts and make their own steps towards the fresh produce departments of the chain retail outlets. According to a GfK Russia survey held among Russian consumers in 2012, 52% of the fresh produce purchases are already conducted at modern retail outlets and not in open markets, which were the traditional place to buy fruits and vegetables over the last two decades.
This convergence between retailers and consumers affects the criteria that retailers are using to select products and suppliers. While the traditional criteria - price and availability of the credit terms - are still important, many more product features are now taken into consideration. These features are: consistency of the product quality and standardization, reliability of supply and delivery timing, product shelf life, attractive appearance, taste, versatility of produce types and varieties offered by the single supplier and the marketing support provided.
Due to these new requirements, the majority of large Russian retailers prefer to import fruit and vegetables directly or at least to choose the product that they need in direct communication with the foreign suppliers. This new trend provides additional possibilities to those exporters that recognize it and are ready to fulfill the needs and new requirements of the changing market.
There is still a long way to go and a number of aspects related to direct shipments to the Russian retailers have to be discussed and developed. At the current stage, such questions as resolution of quality issues, needs in additional sorting, repacking, storage, credit terms and the like are being raised constantly during initial negotiations with the Russian retail buyers and sometimes in the critical situation after the shipment has arrived in Russia.
On the other hand, experience will help to overcome such difficulties very soon. Meanwhile, the number of retail chains which are involved in the fresh produce import business directly or in cooperation with their partners or import service providers will keep growing. Thus, this trend will influence the larger number of international exporters; fruit and vegetable suppliers to Russia.