Ex­pert Speaks

Apparel Online - - Emerging Market -

Kon­takt (In­terSearch Group Rus­sia) is a con­sult­ing com­pany pro­vid­ing ser­vices of Ex­ec­u­tive Search and Man­age­ment Se­lec­tion. The com­pany was founded in 1990 and is among the first agen­cies work­ing in the area of HR con­sult­ing in Rus­sia. In ap­parel sec­tor, the com­pany works with more than 250 clients, who source from China, Bangladesh, Uzbek­istan and some lo­cal man­u­fac­tur­ers. Speak­ing to Ap­parel On­line, Mariya Kelina, Senior Con­sul­tant – Re­tail & FMCG, Kon­takt (In­terSearch Group Rus­sia) shares her per­spec­tive on the

Rus­sian re­tail sec­tor… Here are the ex­cerpts!

AO: Growth po­ten­tial and mar­ket trends…

Mariya: Rus­sian mar­ket has good po­ten­tial for growth. Af­ter the cri­sis in 2015 (due to the growth of ex­change rates), the mar­ket has started to grow again and ac­cord­ing to var­i­ous sources, the growth rate is some­where be­tween 2-7 per cent at present. Some gen­eral trends of the Rus­sian re­tail mar­ket are as fol­lows:

• Off-price seg­ment is grow­ing.

• In terms of pro­duc­tion, there is em­pha­sis to re­duce the man­u­fac­tur­ing cost by us­ing lo­cal fac­to­ries while also sourc­ing from new des­ti­na­tions (in­stead of tra­di­tional ones) that are more cost­ef­fec­tive.

• There is emer­gence of start-ups and

pri­vate la­bels.

• In fash­ion sec­tion, there is a lot of scope

in cat­e­gories such as in­ner and out­er­wear. • Many fash­ion brands are plan­ning to

open rep­re­sen­ta­tive of­fices in Rus­sia.

AO: Prod­ucts for the fu­ture…

Mariya: In­ner­wear, out­er­wear, shoes and kids’ fash­ion items in mid­dle and mid­dle plus seg­ment with good price/qual­ity cor­re­la­tion are very promis­ing. Peo­ple here are even ready to pay more, pro­vided what they buy lasts long.

AO: Fac­tors to con­sider while work­ing with Rus­sian stores/ im­porters/brands...

Mariya: The most im­por­tant cri­te­ria are pric­ing and busi­ness terms as most brands have a ten­dency to shift to fast-fash­ion re­tail scheme. Also, it is im­por­tant to stress on qual­ity/price fac­tor as Rus­sian buy­ers are very par­tic­u­lar about value for money.

AO: Ma­jor cities for ap­parel mar­ket…

Mariya: Moscow and Saint Peters­burg are very in­ter­est­ing as these two have a sub­stan­tial num­ber of stu­dents be­sides the gen­eral pub­lic. These two cities also have higher dis­pos­able in­come and pur­chas­ing power. Apart from these, Ros­tov-on-Don, Yeka­ter­in­burg, Omsk, Tomsk, Kras­no­yarsk and Vladi­vos­tok also have vi­brant mar­kets.

AO: Rel­e­vance of smaller mar­kets…

Mariya: Smaller mar­kets are very rel­e­vant as we do not have big malls in all cities and trade cen­tres. For ex­am­ple, in a city with a pop­u­la­tion of less than 5,00,000, there are not many fash­ion brands and not even street re­tail, so peo­ple count on the small mar­kets.

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