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Carrefour or Perekrestok What will Russians prefer?
01.11.2007 16:58

perekrestok Carrefour and Perekrestok ("crossroads" in English) mean the same for those who know both Russian and French. However, for the Russians this word also means a chain of popular supermarkets, while for the French, Carrefour is the world's second largest retail distribution network, which started its business in France. It is possible that in the future these chains will meet in Russia and other CIS countries.

In the past few years, retail trade has been growing rapidly in Russia. Starting in the year 2000, the growth of hypermarkets and supermarkets alone has averaged no less than 40% a year. Trade will continue developing in Russia at a similar pace next year. Lev Khasis, X5 Retail Group CEO, estimates that in the next five years all sectors of retail trade will go up at the rate of no less than 14%, while supermarkets and hypermarkets will make an even faster progress - from 16% to 32% a year.

Khasis runs Russia's biggest retail chain that includes Perekrestok and Pyatyorochka supermarkets. Paradoxically, being the leading retailer, his company controls only a little more than 2% of the market, and three of its closest rivals put together account for another 6%. This means that the majority of other retailers have not yet adopted modern methods of trade.

However, despite the achievements and prospects of Russian consumer market, the world's biggest retailers have not yet moved to Moscow. German Metro is the only exception from among the top ten. Neither Wal-Mart, nor Makro, nor Tesco have arrived here. Carrefour is not here, either, although its emergence in Russia has been talked about for a long time. Way back in the late 1990s, Carrefour had two good locations in Moscow - one in the center, and the other on the outskirts, in a prestigious area. But the default of 1998 discouraged the company from moving to Russia.

Nevertheless, two years later, its possible arrival in Russia was again in the news. But although it would seem logical for the leaders of international trade to move their business to Russia, Carrefour is not here yet. However, the recent rumor about its move to Russia in the near future seems to be very convincing. Khasis said this is very likely, considering that Russia is Europe's fastest growing market, and will be its biggest market in five years, and fifth in the world. World retailers still have an opportunity to occupy a befitting place in the Russian market.

Last July, a Carrefour delegation visited several Russian regions, met with local officials and conducted talks with potential rivals. Some sources claim that in Tyumen and Rostov-on-Don Carrefour top managers have even picked plots for their supermarkets. True, in both cities the French company will have to compete against the companies that are already there - Turkish Ramstore, which has strong positions in Russia, and the Mosmart chain, which conducts business in Russia with German Rewe's participation. Carrefour negotiators have a difficult time in both capitals - Moscow and St. Petersburg.

Most probably, the world's leading retailer will prepare in the provinces for its advent to the capitals. Russia's metropolises do not have the best conditions for retail. The most comfortable and profitable sites have already been taken.

PriceWaterhouseCoopers partner Chris Skidrrow believes that big foreign investors will not be discouraged by Moscow's high real estate prices and rents. He thinks there are ways of dealing with this problem, and retailers will continue moving to Russia if its market remains attractive. It is clear already that the number of hypermarkets will remain more or less the same, while that of supermarkets and discount stores may soar. The number of players will also grow.

Carrefour is not the only company to find its way to Russia. A Wal-Mart delegation held talks with St. Petersburg-based Lenta chain, although there have been no rumors about the purchase of this Russian retailer by the U.S. giant. But the in-depth study of the Russian market is on.

Carrefour has not been marking time, either. Herve Deforrey, the son of one of its founders, has recently been appointed head of X5 Retail Group supervisory board. He said Carrefour had been busy developing other markets for several years. But he expressed confidence that now Russia was turning into a promising market.

News source: freshplaza.com
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