Talking strategy: opportunities for Western apparel retailers in Russia

The consumer market in Russia remains one of the most important drivers in the Russian economy and is strong due to the country's low unemployment rate and significant growth in wages. Russian consumer habits are similar to those in the West, but Russians spend a larger proportion of their income on retail. Over the last decade, retail trade turnover in Russia has grown at double digit rates, encouraging international apparel retailers -- many of whom were finding it hard to grow in saturated Western markets -- to enter the Russia market. The Russian government is working on making the country attractive to foreign investors by improving organisational procedures and cutting bureaucracy for business. Russia's accession to the World Trade Organization (WTO) in 2012 has also helped improve procedures and has enabled foreign brands to penetrate the market faster and at lower prices. Russia's capital city, Moscow, has a large amount of retail space. But much of it is unused, and retailing in the city -- as in other major cities in Russia -- is far from reaching saturation point and there remains huge potential for further development. In "Talking strategy" this quarter, Armin Michaely, the general director of IKEA Shopping Centres Russia, part of the Sweden-based IKEA Group, discusses the key issues in the Russian apparel retail market. In particular, he discusses the strategies used by Western apparel retailers to enter the Russian market and the challenges they face. Also, he offers insight into the opportunities for Western apparel retailers in the future.

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