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  • DIYMARKETINRUSSIA2nd edition

    182012.

  • DIYMARKETINRUSSIA

    2

    CONTENTS

    MACROECONOMICREVIEW

    DIYGOODSMARKET

    DIYRETAIL

    OPERATINGCONDITIONSOFRUSSIANDIYCHAINS

    FINANCIALSOLVENCYRATING

    APPENDIX1.DIYCHAINSTORESINRUSSIA

    APPENDIX2.TOP10DIYCHAINSTORES

  • CONTENTS(1)1. CONTENTS2. MACROECONOMICREVIEW

    Grossdomesticproduct(GDP) Comparisonwithforeigneconomies Inflationrate Nominalpersonalincomeandrealdisposableincome Unemploymentrate Retailturnover GlobalRetailDevelopmentIndex

    3. DIYMARKETINRUSSIA SalesofDIYandhouseholdgoodsinRussia Retailmarketsegments CrisisimpactonRussianDIYmarket ComparisonofRussianDIYmarketwithforeigncountries RussianDIYmarketforecast

    4. DIYRETAILINRUSSIA SpecificsoftheRussianDIYmarket SaleschannelsofDIYgoods TypesofRussianDIYstores TypesofDIYchainsinRussia DIYchainstoresinRussianregions DIYhypermarketsinRussia DIYsupermarketsinRussia

    3

  • CONTENTS(2)5. OPERATINGCONDITIONSOFRUSSIANDIYCHAINSTORES

    Generalrequirements EnteringDIYchains Deliveryterms Paymentterms Bonuses Marketingcosts Penaltiesandtotalcontractcost

    6. FINANCIALSTABILITYRATINGOFRUSSIANDIYCHAINSTORES Ratingoverview Financialsolvencyrating Detailedoverviewofcompaniesintherating

    A. APPENDIX#1:DIYCHAINSTORESINRUSSIAB. APPENDIX#2:TOP10DIYCHAINSINRUSSIA

    4

  • DIYMARKETINRUSSIACONTENTS

    MACROECONOMICREVIEW

    DIYGOODSMARKET

    DIYRETAIL

    OPERATINGCONDITIONSOFRUSSIANDIYCHAINS

    FINANCIALSOLVENCYRATING

    APPENDIX1.DIYCHAINSTORESINRUSSIA

    APPENDIX2.TOP10DIYCHAINSTORES

  • In20102011Russianeconomyhasshownsignificantsignsofrecoveryaftergreatdeclinein2009.In20122015RussianMinistryofEconomicDevelopmentforecastsstablegrowthwithCompoundAnnualGrowthRate(CAGR)at..,.%incurrentpricesand.,.%inconstantprices

    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F

    trln.R

    UR

    GDP(currentprices)*

    CAGR+..,.%

    .,.%

    +..,.%+..,.%

    +..,.%+..,.%

    +..,.% +..,.%

    +..,.%

    Sources:FederalStateStatisticsServiceoftheRussianFederation(FSSSRF),MinistryofEconomicDevelopmentoftheRussianFederation(MEDRF)

    *The forecast is based on Forecast of socioeconomic development of Russian Federation till 2015 MED RF, adjusted according to the results of 2011

    100%

    120%

    140%

    160%

    180%

    2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F 2013F 2014F 2015F

    CumulativeInde

    xofGDPactual

    volumeGDP2003

    =100%

    CumulativeindexofGDPactualvolume(constantprices)*

    .,.%

    +.,.%+.,.%

    +.,.%+.,.% +.,.%

    +.,.%+.,.%

    CAGR+.,.%

    6

  • AtthesametimerecoveryrateofRussianeconomyismuchslowerthaninotherBRICcountries

    10%

    5%

    0%

    5%

    10%

    15%

    2008

    2009

    2010

    2011

    2012

    F

    2013

    F

    2014

    F

    2015

    F

    yoy,%

    GDPgrowthrate(constantprices)

    China+.,.%

    India+.,.%

    Brazil+.,.%

    RussiaRussia+.,.%

    Sources:InternationalMonetaryFund,EuropeanCentralBank

    CAGR20122015

    AccordingtotheInternationalMonetaryFundforecasteconomiesofChinaandIndiawillincreasein.,.timesin20122015,whileeconomiesofBrazilandRussiawillgrow.,.times.

    TheimpactoffinancialcrisisonRussianeconomywasthemostsignificantcomparedtootherBRICcountries:GDPofRussiahasdecreasedby.,.%in2009whileGDPofChinahasshowngrowthof.,.%

    7

  • DIYMARKETINRUSSIACONTENTS

    MACROECONOMICREVIEW

    DIYGOODSMARKET

    DIYRETAIL

    OPERATINGCONDITIONSOFRUSSIANDIYCHAINS

    FINANCIALSOLVENCYRATING

    APPENDIX1.DIYCHAINSTORESINRUSSIA

    APPENDIX2.TOP10DIYCHAINSTORES

  • TheconstructionworksvalueisthebasicindicatorthatpromptlyreflectsthedynamicsofDIYgoodsmarketvalue

    9

    0

    150

    300

    450

    600

    750

    900

    2005 2006 2007 2008 2009 2010 2011

    bln.RUR

    DIYANDHOUSEHOLDGOODSMARKETVALUE

    0

    2

    3

    5

    6

    2005 2006 2007 2008 2009 2010 2011

    trln.R

    UR

    CONSTRUCTIONWORKSVALUE

    Sources:FederalStateStatisticsServiceoftheRussianFederation(FSSSRF)

    +..,.%

    +..,.%

    +..,.%

    ..,.%

    +..,.%

    +..,.%

    +..,.%

    +..,.%+..,.%

    ..,.%

    +.,.%

    +..,.%

    ConstructionworksvalueIncludesthecostofconstructionandinstallationworksofthefollowingtypes: constructionofnewfacilities; capitalandcurrentmaintenance, reconstruction,modernizationofcommercial

    andresidentialbuildingsandengineeringstructures.

    In20002008annualgrowthofconstructionworksvaluereached..,.%.

    In2009reductionofconstructionworksvaluewas..,.%. DIYmarketreactedby..%decrease

    In2010mostexpertsbelieved,thathouseconstructionvaluehasadelayedimpactontheDIYmarketwithalagof..,.yearsandDIYmarketwouldplungeintocrisisinnextfewyears

    Despiteoftheseexpectations,in20102011DIYgoodssales showedhigherratesofgrowththanconstructionmarket

    CAGR+..,.%CAGR

    +..,.%

    CAGR+..,.%CAGR

    +..,.%

  • IninternationalcomparisonRussianDIYmarketreductionin2009wasoneofthemostsignificantinEurope

    10

    DIYMARKETTRENDSIN2009(EUR)

    Sources:EuropeanDIYRetailAssociation,DIYGlobal

    Fallinnationalcurrency(inRUR)

    FallduetodevaluationofRussianRuble

    44,2

    36,5

    20092008

    EXCHANGERATE,RUR/EUR

    Austria Belgium Germany

    France Netherlands Spain RUSSIA

    In2009salesofdoityourselfproductsweredowninthemajorityofcountriesinEurope.AccordingtoinformationfromEDRA,acomparisonofthelikeforlikesalestrendsrevealsthatitwasthecountriesofeasternandsouthernEuropethatsufferedmostfromtheconsequencesoftheeconomicandfinancialcrisis.

    WhileAustria,BelgiumandGermanycanpointtopositiveresults,France,theNetherlands,SpainandRussiawereunabletoavoidlosses.

    CAGR+20,9%

  • AtthesametimeconsumptionofDIYproductsperpersoninRussiaisseveraltimeslowerincomparisonwithEUcountries

    11

    0

    100

    200

    300

    400

    500

    600

    IE UK GR DE FR HU PL IT RO BG ES RU AL TR UA CN

    DIYMARKETVALUEPERCAPITA,EUR

    Sources:KingfisherAnnualreportandaccounts,CastoramaRussia,FEDIYMA,DIYGlobal,FederalStateStatisticsServiceoftheRussianFederation(FSSSRF),20092010,2011(Russia)

    TwoyearsagoDIYmarketvaluepercapitainRussiawasalmosttwotimeslessthanthecurrentvalue just..EUR

    RapidgrowthofRussianmarketcanquicklycatchupwithEUcountriessomeofwhichareclosetothestagnation.

  • DIYMARKETINRUSSIACONTENTS

    MACROECONOMICREVIEW

    DIYGOODSMARKET

    DIYRETAIL

    OPERATINGCONDITIONSOFRUSSIANDIYCHAINS

    FINANCIALSOLVENCYRATING

    APPENDIX1.DIYCHAINSTORESINRUSSIA

    APPENDIX2.TOP10DIYCHAINSTORES

  • SPECIFICSOFTHERUSSIANDIYMARKET

    13

    Intheverycentre oftheDIYtermstandconstructionandmaintenanceofhouses,homesandgardens,includingeverythingfromrenovationofe.g.kitchenandbathrooms,todecorations,accessoriesandfurnitureofthelivingrooms.Privatepersons,i.e.notprofessionals,shouldaboveallperformalltheseactivities

    ThisdefinitionwasintroducedinEuropeandNorthAmericaandeventhereitisnotworkingproperlyinpractice now.AsforRussiathereareseveralconstraintswhichimplyontermDIY:

    Doityourself(DIY):HomemaintenanceandimprovementworkconductedbyhouseholdmembersontheirownhouseholdwithoutthepaidservicesofaprofessionalWilliams,C.(2008) Rethinkingthemotivesofdoityourself(DIY)consumers

    Firstofall,thecultureofDIYisnotwidespreadinRussiaandthenpeopledoconstructionandrenovationworks,theyusuallycallprofessionalstodoitforthem.Thus,thetermDIYinRussiaismoreoftenDIFMdoitforme

    Second,InRussia,especiallyinregions,theboundariesbetweenDIYretailers,wholesalersandprofessionalstoresareevenmorefuzzythaninEurope.InregionsbigDIYstoresarejustbecomingconventionalandgraduallyreplacetraditionalshopsandDIYgoodsmarkets.StillmostofRussianDIYretailershaveasignificantshareoftheirsalesemanatedtocorporateclients(e.g.buildingandengineeringcompanies).ThereareeventypesofDIYstores(retailwholesalebase,constructionwholesalebase)whicharemostlyspecifiedforcorporatetypeofclientsbutalsosellingDIYgoodstoprivateconsumers

    TheotherpeculiarityoftheRussianmarketisalargenumberofstoressellingDIYgoodswithareaabout100200sq.m.ThereareevenregionalchainsconsistingjustofsuchsmallshopswhichcallthemselvesDIY,butthisDIY canhardlybecomparedtoEuropeanDIYstores

    1

    2

    3

  • INDOORANDOUTDOOR(OPEN)MARKETS

    14

    Outdoor(open)marketsareopenareaswherelargegroupsofsmallshopssellingdifferentDIYgoodsaregrouped

    OUTD

    OOR(O

    PEN)M

    ARKETINDOORMAR

    KET(TRA

    DINGCEN

    TRE)

    IndoormarketsarebigormiddlesizetradingcentreswhereareaisdiviededbetweenmanysmallshopswhichselldifferentskindsofDIYproducts

  • ThemajortypesofcivilizedDIYstoresinRussiaaresupermarketsandhypermarkets,whilediscountstoresandcashncarry arenotwidespread

    15

    STOREAREAsq.m STORELOCATION

    ASSORTMENTthousands

    DEPTHOFPRODUCTASSORTMENT

    HYPERMARKET

    SUPERMARKET

    Sources:RosBusinessConsulting,companydata,Inventicaestimations

    CASH&CARRY

    DISCOUNTSTORE

    NEIGHBOURHOODSTORE

    BOUTIQUESTORE

    MAJOR

    STORE

    TYP

    ESothe

    rstore

    type

    s

  • ForthepurposesofthefollowingresearchwewilltakeintoaccountonlycivilizedDIYretailwhichmeetsthefollowingrequirements

    16

    CRITERIA REQUIREMENTS

    STOREASSORTMENT

    Thestoreassortmentshouldincludemostoftheseproductcategories:

    Timberandbuilding materials Finishingmaterials Doors&Windows Handtools&Powertools Electrical&Hardware Plumbing&Heating&Cooling Furniture&Kitchen&Bathrooms Garden&