Retail and leisure
Russia is no longer fueled by oil money making branded fashion very affordable. Rubles now have to be earned by focused marketing.
The value end of the market is dominated by retailers selling in bazaars (open-air markets). These retailers and wholesalers tend to be from non-Russian ethnic groups and the clothing comes via imports from China, Vietnam, Pakistan, Bangladesh and India. It can be very hard to break into this end of the market because of the high level of interpersonal trust involved.
Retailers selling in indoor markets, are at the higher end of the low priced clothing market. This was where most people bought clothes in Soviet times, and now, they tend to sell former Soviet brands made in Russia and other countries of the former Soviet Union. In general, this distribution channel offers reasonable quality clothing at an affordable price. The clothing is not always high fashion, and the retailers also sell high priced items such as mink coats and suits. A few high street shops also fall into this market, as do most clothing shops in smaller towns.
Most high street shops are independent clothing shops, selling relatively fashionable clothing and branded wear. Brands with a good point of sale can do well in this part of the market. Retailers selling branded fashion also have shops in trading centres.
Trading centres are privately operated, multiple units that are similar to an indoor market but smaller than a shopping centre.
Internationals brands are usually found at outlers in new shopping centres. This channel is growing and more are being built.
Russia demographics should be noted. There was a baby boom in the years 2007-2015 should be noted. The oldest of these children are now teenagers. The retail system is short of capacity to cater for them.
The large number of independent retailers in Russia means that wholesale distributors are generally the key to the market place. There are no national wholesalers in Russia, they operate on a regional basis, selling to hundreds of stores in a particular area.
Importers who sell nationally, sell their products to multiple wholesalers across the country.
Market entry is challenging. Importers supply to wholesalers but they do not actively sell. At least initially, you will need some element of product management to pull sales through the distribution system. Distances are huge so calling on individual buyers is not often practical. Moscow is not enough to gain a large share of the market. Indeed, there is less competition with regional wholesalers. So, trade shows are necessary. They are well attended as the one time everyone can network. However, exhibiting without preparation (cold calling prospects/advertising) can be a route to large expense and no result.
Trade magazines are also particularly good channels in Russia because distance discourages face to face meetings.
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