Moscow Times June 23, 2004 Russia Ranked No. 1 Retail Target By Denis Maternovsky Staff Writer
Russia is the No. 1 destination for retail expansion, according to a new industry ranking of 30 emerging markets.
For the second consecutive year, Russia ranked as the most attractive investment choice in an annual study released Tuesday by management consultants A. T. Kearney.
This year's list is heavily dominated by Eastern Europe, with Slovenia, Croatia, Latvia and Slovakia also making it into the top 10.
The Global Retail Development Index ranked countries according to economic and political risks, market attractiveness, saturation and time pressure, or the urgency to enter a market.
After Vietnam and Turkey, Russia is still perceived as the riskiest of the top 10, but by overall market attractiveness it places well ahead of No. 2 India and No. 3 China.
Country risks include relatively low per capita consumer spending, poor infrastructure in the countryside and bureaucratic hurdles.
However, the study found that the risk of investing in Russia is decreasing as the country "took steps to improve economic and political stability and moved closer to entering the World Trade Organization."
Ranked according to how urgently retailers wanted to invest, Russia and Slovakia were the only countries to receive the maximum possible score.
"For international retailers interested in the Russian market, the time to act is now," Fadi Farra, an A. T. Kearney manager who worked on the study, said in a statement.
"Competition is rising as both domestic and international retailers speed up their expansion plans in new retail sectors and in new cities."
Among European countries, only Ukraine -- which placed No. 11 in the overall ranking -- had a less saturated retail market than Russia.
Between 1999 and 2003, Russia's consumer market grew by nearly one-third to an estimated $280 billion, the study said.
Natalya Zagvozdina, a retail and consumer goods analyst at Renaissance Capital, said she "wholeheartedly agreed" with the study's findings.
"Even low per capita consumer spending does not slow down the growth," she said. "Last year the retail sector, along with construction and telecoms, grew by over 10 percent -- well ahead of the rest of the economy."
Russian GDP grew 7.3 percent in 2003.
The A. T. Kearney study comes on the heels of similar rankings placing Russia as a high-priority expansion target for international firms.
The country ranked as the continent's second-most attractive investment target in Ernst & Young's Attractiveness of Europe survey published last month.
A September study by A. T. Kearney placed Russia in eighth place in terms of overall investment attractiveness worldwide.
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