Variety Stores in Russia

PROSPECTS

The fixed price concept resonates with Russian consumers

In 2018, Russian consumers started to adapt to the new norm of low disposable incomes, job insecurity and very slowly improving economic prospects. This led them to put off long-term purchases until absolutely necessary and to save on fast moving consumer goods by buying the cheapest products available.

Macroeconomic factors drive growth

It is worth noting that all factors that underpin the rapid development and consolidation of variety stores are exogenous to the channel – it has not shown any qualitative evolution since before the economic crisis. It is also important to note that the channel’s trademark – extremely low prices for a variety of goods – is currently already being emulated by convenience stores, which capitalise on largely the same trend.

COMPETITIVE LANDSCAPE

Channel consolidation remains notably high

Despite the popularity of variety stores (most frequently fixed price stores), the channel remains firmly consolidated under Best Price. There are several reasons for this.

Best Price remains dominant

In 2018, variety stores remained dominated by, if not synonymous with, a single player – Best Price, operating a chain of fixed price stores aptly named Fix Price. It managed to boost its previously falling value share, bringing it back to the value share seen in 2016.

Studio Moderna’s novel concept does not withstand consumer scepticism

In the past, one of the players in variety stores was noted for being an exception to most other players in the channel. Studio Moderna, a home shopping company, has strived to fight the rising consumer scepticism about the quality and legitimacy of its products, and operates a small number of outlets in variety stores.

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