Accenture Mega Analitics Consumer 2013 2015 English

Mega Analytics:
Consumer 2013-2015
Mikhail Pershin
Head of Russian Retail Practice, Accenture
To be covered
2. Consumer:
expectations &
preferences
1. Factors influencing
retail in Russia
Retail in
Russia
3. Retail in Russia:
channels dynamic
4. Retail in Russia:
segments dynamic
Copyright 2013 Accenture All rights reserved.
Factors influencing retail

in Russia
Three major factors that will influence the

Russian retail market in 2012-2015
Legislation
Competition
Consumer
preferences
Tightening of government regulations for tobacco and alcohol product sales

Active government regulation of e-commerce sales
Possible legislation changes in retail trade - reducing of the dominance limit
at the municipal level from 35% to 25%
Revenues of Top-30 retailers in Russia were 14% of the total turnover in
2012, compared to 12% in 2011, while the share of grocery retailers has
increased from 9% to 10% respectively
There is a shortage of quality retail and warehouse premises
Expansion of global e-commerce retail players onto the Russian market
Consumers are becoming more and more focused on retailers promises: 83%
are frustrated by failure to deliver on a promise
E-commerce market continues to increase by 25-30% annually
Price and quality are still the most important factors for consumers, and the
main drivers for growth in private label sales, up to 29% annually
Consumers are becoming more global and mobile: the volume of cross-border
shopping is growing by about 50% per year, and has now surpassed $15 billion
Source: Infoline, research by Accenture, news resources
Macroeconomic stability
The Russian economy has been stagnating
Level of populations purchasing power is stabilizing
due to lower unemployment rates
Retail market has experienced a rapid growth
phase, and is now entering a phase of stagnation
Russian market is No.1-2 in Europe for most
producers
Unemployment, %
-2%
6.3%
Q1 2012
GDP, billion RUR

15,880
5.8%
5.4%
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
14,988
13,802
11,925
8,878
5.1%
Main indicators of growth in comparable prices, %
13,249
10,816
5.1%
17,434
+5%
10,619
5.3%
14% 13%
9,996
9%
8,335
5%
9%
7% 6% 6% 7%
6%
6%
5%
4%
4%
3%
3%
2009
I Q IV Q I Q IV Q I Q IV Q I Q IV Q I Q IV Q I Q
2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013
GDP
Source: Federal Statistics agency, Ministry of Finance, Accenture Analysis
2008
2010
5%
2011
GDP
2013F
2012
Retail turnover
Inflation
-8%
Russia now has a leading position in the

European retail market
Russian retail turnover, 2006-2015, trillion RUR
+6%
+14%
21.4
22.6
23.8
19.1
16.5
+26%
13.9
47%
45%
47%
48%
45%
55%
2006
2007
Food
53%
2008
52%
51%
2009
2010
52%
2011
53%
54%
55%
2011
2012
2013
2014
5%
6.1%
5.2%
5.2%
(1 year prior period in comparable

prices)
16%
12%
56%
2012 2013F 2014F 2015F
Non-food
MED forecast
Fact
Ministry for Economic Development (MED)

forecasts ~5-6% CAGR of retail turnover in
comparable prices
49%
45%
55%
44%
48%
10.9
8.7
14.6
46%
25.2
Thanks to enormous growth, as well as the

sheer size of the economy, Russia in 2012
became the leader in retail turnover in
Europe
TOP-5 countries by retail turnover in

2012, bln EURO
Russia
509.5
France
418.2
Germany
410.1
UK
377.6
Italy
253.1
Source: GFK, Federal Statistics Agency, MED forecast 2013-2015
Retail sales productivity in Russia is much

lower than in Europe
TOP-5 European countries and Russia by retail sales productivity
(turnover per sq.. m. of sales area (/sq. m.) in 2012
Per capita sales area (sq. m. per

1,000 people) and sales productivity
(/sq. m.) in Russia is 1.5 times
lower, compared to leading
European countries
Finland
Norway
sq. m. per
1,000 people
1,260
sq. m. per
1,000 people
1250
/sq. m.
6,246
population
9.5 M
income
$/year
25 739
Russia
sq. m. per
1,000 people
660
/sq. m.
4,771
/sq. m.
,7832
population
4.9 M
population
142.8 M
income
$/year
31,459
income $/year
9,899
Luxembourg
sq. m. per
1,000 people
1,430
/sq. m.
7,406
population
0.5 M
income
$/year
40,000
Earnings in Russia are also two

times lower
TOP-100 Russian retailers increased
their productivity by 6%
Sweden
sq. m. per
,1000 people
1,210
/sq. m.
6,411
population
9.5 M
income
$/year
26,242
TOP-100 Russian retailer

productivity, /sq. m.*
+6%
6,000
Switzerland
sq. m. per
1,000 people
9%
10%
9%
5,000
1,510
/sq. m.
6,936
4,000
population
7.9 M
3,000
income
$/year
30,060
2,000
8%
7%
6%
6%
4,504
4,807
5,207
5,319
4%
2%
1,000
Source: GfK GeoMarketing, OECD Better Life Index
2009
2010
Sales productivity
Productivity count based on the retail turnover by total amount of retail space
In current prices, 1 euro = 42 RUR
2011
2012
Inflation
Consumer: expectations &

preferences
Modern Russian Consumer who is it?

The most important thing for me, and the importance of it is growing
Family
Security and
Still important to me, but gradually their importance is decreasing
Wealth
One of the most important words for me and over the
Peace and
years their importance is growing
Justice
30,245 RUR
I received on average per month in 2013
The average amount current

personal loan/credit
43.5 K RUR
493 RUR
I spend an average of one

trip to the store
67%
Consumers still love to go

shopping and enjoy the shopping
process, but their volume is starting
to decrease (fell by 1% compared
to 2011)
Source: Romir, FOM, Federal Statistics Agency, National Bureau of Credit Histories, GFK
Working-age population in the near future will

begin to decline, but their incomes will rise
Population with middle and
upper-incomes is growing ...
Retirement age population will decline ...

As well as the working-age population ...
Population distribution by age group with
forecast up to 2014, thousand people
30,058
30,006
29,839
29,953
30,178
0-19
Up to 45,000
27,000 - 45,000
19,000 - 27,000
-1.2%
14,000 - 19,000
53,252
53,279
53,414
54,020
54,874
40-69
70 and more
14,210
14,219
14,380
14,181
13,733
8.4%
10.5%
10.5%
17.0%
17.3%
16.6%
17.0%
15.5%
15.7%
15.4%
15.5%
12.1%
11.9%
+0.4%
45,303
45,361
45,423
45,202
44,769
20-39
Distribution of population by income, %
+3.0%
10,000 - 14,000
7,000 - 10,000
-3.4%
Source: Federal Statistics Agency, Accenture Analysis
2010
2012
2011
2013
2014
15.1%
15.9%
Income
gains
compared
with 2011
amounted
to 10%
15.6%
16.2%
13.4%
5,000 - 7,000
8.1%
7.0%
6.7%
Below 5,000
7.3%
5.9%
5.4%
2011
2012
1 H 2013
10
Income of Russian citizens is growing, but they

want to spend even more than they earn
Consumer income in 2013 has already grown by 14%
Consumer loans have grown by 5% in Q2 2013
compared to Q2 2012, and keep growing, mortgage
+14%
loans have grown by 27%
In 2013, consumers have increased savings, savings
accounts have grown by 5%
The volume of individuals with overdue loans in the Q2
2013 increased by 23%, compared to the same period
in 2012
Average monthly income, RUR

+12%
30,245
26,629
17,290
18,638
2008
2009
20,952
23,369
2010
2011
2012
1 half
2013
Consumer and mortgage loans taken out during the

period, billion RUR
Accrued money savings, billion RUR

+5%
10,010
9,632
+27%
11,721
10,754
10,478
1,922
1,619
1,588
1,736
1,534
1,252
3,931
3,861
3,923
3,842
3,866
1,046
1,098
1,204
1,337
1,495
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Saving accounts
Securitites
Cash
181
249
270
Q1 2012
Q2 2012
Q3 2012
332
Q4 2012
Consumer loans
316
227
Q1 2013
Q2 2013
Mortgage loans
Source: Federal Statistics agency, Accenture Analysis, Central Bank
11
On average, a Russian citizen spends on food

about 9,375 RUR each month
Average family expenditures split,
% to total
100
32.1%
100
32.0%
100
35.0%
100
33.6%
10.8%
10.1%
6.2%
6.5%
5.9%
6.2%
6.0%
6.4%
18.5%
18.3%
17.3%
14.9%
15.9%
15.0%
17.5%
11.3%
11.4%
11.3%
11.1%
2010
2011
1
2012
1
2013
9.1%
8.3%
6.0%
6.4%
17.1%
On average, a family spends about 55% of its

budget on buying goods (food and non-food)
Income growth and active development of car
loans is increasing the share of spending on
the purchase and maintenance of vehicles in
2013, the consumer is starting to spend 18%
of total income on this, which is 16% more
than in the previous year
Expenditures on clothing and footwear in
Russia fell by 9% in the 1H 2013 compared
with 2012
Food, Alcohol beverages and tobacco
Entertainment, Telecom, Hotels, restaurants and caf, Edu
Clothes and shoes
Transport
Household equipment
Utilities
Other goods and services
Source: Federal Statistics Agency
12
Price is still the most important factor during

purchase decisions for the consumer in Russia
While buying goods the most important
thing is the price*
Consumer is less ready to spend time

searching for the best deal*
+12.38%
% of those who agree
% of those who agree
-6.61%
80
70
72.13%
70.15%
66.03%
72.46% 69.90%
73.67%
65.55%
80
60
70.39%
71.59%
64.00%
66.86%
60
50
50
I analyze the
price first
40
30
20
20
10
10
0
Q2 2008 Q4 2008
2009
Q4 2010
I wont waste my
time looking for the
lowest price
40
30
2007
69.59% 66.67%
70
Q3 2011 Q2 2012
Price is the most important thing while buying goods*
Q2 2008
Q4 2008
2009
Q4 2010
Q3 2011
Q2 2012
I am ready to try a new place for a better price*
73.7% of consumers consider price as the most important thing in making decision to buy a good,
with strong upward trend (growth rate of those who agreed is 12.4%)
66% of consumers are ready to spend additional time on searching for the best price and comparing
price in different places in order to make the best deal. This trend is declining, which can be
explained by the expansion of discounters and convenience stores.
Source: GFK Omnibus consumer habits
Responses to the questions:

1. Price is the most important thing in making decision to buy
2. I am willing to purchase essentials in several stores, if this will get me a better price and greater choice
13
A lower price is more important to the consumer

than the communication with him, which cannot be said
about the price
The consumer is indifferent to
communications with him ...
The consumer is not willing to sacrifice

quality for price ...
41%
68%
28%
32%
28%
4%
* Response to the statement : I am willing to accept

lower levels of product quality, if it ensures I get the
lowest price

lower frequency of communications, if it ensures I
get the lowest price
The buyer does not compare the price and

the assortment when making a choice ...
The level of service for the consumer is

almost as important as the quality *
54%
50%
37%
38%
Agree
8%
lower levels of customer service, if it ensures I get
the lowest price
Strongly Disagree Disagree

Neither Agree nor Disagree
13%
lower levels of product ,if it ensures I get the lowest
price
Source: Accenture Consumer Pulse 2012
14
Consumers increasingly expect integration of the big

three (Product, Promotion, Price) across all channels
Online
In-Store
Mobile Device
51%
Expect it to be the same

across channels
81%
Expect it to be the same or less than InStore
Product
Assortment
49%
Expect it to be the same

across channels
45%
Expect it to be sometimes different across

channels
Promotions
63%
Expect it to be the
same across channels
83%
Expect it to be the
same or more than In-Store
Price
53% of consumers would like to earn and use their loyalty rewards In-store, Online or on a Mobile Device
45% of consumers would like to have an account that is completely connected between purchases and
loyalty points both Online and In-Store
43% of consumers would like to have one account to use In-Store, Online, and on Mobile Devices, to
make check outs easy and fast
Source: Accenture Seamless Retail Research 2013
15
Brand loyalty is still important, but it does not

imply private labels do not have a bright future
Consumers prefer well-known brands to unknown
products*, % of those who agree
Share of private labels in Russia and Europe, %

99%
98%
89%
-3%
100
80
83% 79%
72%
73%
73%
62%
70%
65%
82%
79%
69%
60
27%
40
21%
18%
11%
20
2%
1%
Russia
Ukraine
0
2005
2007
Q2 2008 Q4 2008
2009
Q4 2010 Q3 2011 Q2 2012
Brand-named goods are better than no-name goods
Austria
Czech
Republic
Poland
Bulgaria
Private labels
National brands
Russian consumers have to constantly weigh their choice of brand versus private label. As we
see from the graph above, consumer preference for well-known brands is highly related to the
economic conditions (lower during an economic downturn). Currently, the consumer would rather
choose a well-known brand, and his/her intentions have become stronger during the last period
60% of respondents have already decided on the brand to buy before they come to the store
Despite strong adherence to well-known brands, Russians are ready to buy retailers private
labels as we can see from the growth of private labels turnover of 29.6% in 2012, compared to
2011.
Source: GFK, AC Nielsen Households Research Panel
Response to the question:

1. Well-known brand name goods are better than no-name goods
16
Consumers still mostly use word-of-mouth information

from family and friends, but with internet penetration,
online sources are growing in popularity
Usage of information (% of consumers using the channel while
choosing and making a purchase)
Word-of-mouth information
from people I know
Online information from sources like
expert review sites
Corporate web site
(company, brand or product website)
In store information from sales people
or displays
86
73
72
86% of consumers seek advice of their

relatives and friends before making a
decision to buy, 60% of these usually follow
this advice
70
64
Print ads (newspaper, magazine)

Online information from Social Media
(Twitter, Facebook)
60
TV or radio ad
56
Usage of information sources varies with

product category
Main info sources for
supermarkets
Word-of-mouth from
family and friends
Off line catalogues, leaflets
23
21
42
Main info sources for electronics

31
Retailer corporate site
Online ads in search engines

Google, Yandex, etc.
Online ads through banner ads,
pop-up ads, etc.
54
55
Retailer corporate site
44
Product comparison site
Search engines
34
Main info sources for apparel

37
Manufacturer corporate site
34
In store display or demo

Word-of-mouth from
family and friends
29
Source: 2012 Accenture Global Consumer Research Russia, Locata, GFK
17
Consumer expects retailers to deliver on their

promise
83% of consumers feel frustration

when they do not get what
was promised from a
company
78%
of consumers will switch

to another seller in such
case
The consumer constantly monitors the company and its promises, and cares more about relations to his\her needs*
Promised one thing but delivered another
83%
Employees are not knowledgeable or do not acknowledge

consumers specific needs when considering a purchase
76%
Company does not make it easy to do business with them
74%
Unable to access information or buy a product/service using

multiple channels
63%
The company asks me the same questions or market s to me

the same offer again
58%
Inconsistent offers through different channels when shopping

for the same product or service
The company is not using personal information to make
interactions and offers more relevant
Inconsistent experience of treatment when using different
channels
Source: Accenture Consumer Pulse
47%
47%
29%
Responses to the question:

1. For each of the following situations, please indicate the extent to which you personally
find frustrating, and affect your buying choices?
18
Consumer prefers to go to the store more

frequently, but buys less
Average usage frequency, # of usage for a half
year
+19%
Hypermarkets
131
14
Supermarkets
39
Searching for
necessities?
Analyzing
price?
155
18
39
Searching for
discounts?
Just browsing?
35
Discounters
28
Open markets
15
BTC
34
1H 2012
17
Do not
want to buy much?
Like the
atmosphere?
46
1H 2013
66% of consumers are ready to spend time on searching for better price and price comparison, in order
to get the best deal from their favorite brand
The importance of store atmosphere, compared to discounts, has declined in 2012 by 1.3%
Average value per purchase in 1H of 2013, compared to 1H of 2012, has declined by 1.3%
57% of consumers feel frustration, if they cannot find everything they want in their standard search
channels
Source: Romir, AC Nielsen Consumer Habits, GFK changes in consumer behavior, Accenture Consumer Pulse
19
Consumer is going to open markets more

frequently and is buying more food items there
x1.5 increase in average
usage frequency of open
markets for buying food in
Cheaper?
1H of 2013, compared to the same period

in 2012 (from 10 to 15 times for half a year)
Healthier?
27% increase in average

value for food purchase
at open markets in 1H of
2013, compared to the same period in
2012 (from 282 to 359 RUR)
Closer?
Only 1/3 of consumers buying on markets, choose them because of the cheaper price, the remaining 2/3
of consumers value mostly the non-price factors (location, broad product range and freshness of food
products)
60% of consumers in Russia declare they prefer to buy "green" or bio goods, even if their price is higher
The consumer cares about where food is produced. Almost 80% of consumers prefer "local" meat and
diary produce
71% of consumers like to buy produce of subsistence agriculture
Source: Romir, AMI VETRA-Marketing, AC Nielsen Consumer Behavior, MarketingBuro, GfK
20
Consumers in Russia seem to consider retail

as an alternative to standard eating out options
Where people choose to go, when not eating at
home,%
Habit?
Good
price?
100%
40%
28%
48%
17%
15%
14%
Convenience?
7%
Broad
choice?
11%
53%
58%
68%
41%
Canteens, vending & others
Restaurant, caf
+5-7% a year forecasted growth

of the eating out market
+10% a year - forecasted growth
of retail as a channel of eating out
Retail
TOP-5 reasons for choosing retail to purchase prepared meals:

60% of consumers choosing retail to purchase prepared food, prefer convenient location and 15%
of consumers did it due to lack of time
1/3 of consumers chose retail because they always go there

19% of consumers indicate as a reason the low price of the option
12% of consumers prefer broad choice offered by retail
Source: The NPD Group/CREST Russia, Feb 2012-Mar 2012
Responses to the questions :

1. What are the main reasons that you chose Retail for breakfast/lunch/dinner/snack
yesterday?
21
Retail in Russia:
channels dynamic
Discounters will demonstrate the most potential

grow by 2018
Main channel shares in retail turnover, billion RUR
TOP-3 channels of average annual

growth (2012-2018)
(20% main players in each segment)
Discounters
7,548
Speciality Stores
Discounters
+16.5%
Convenient
+15.3%
Non-store retail*
+14.2%
Hypermarkets
Supermarkets
+14%*
Cash and Carry
2,263
Non-store Retail
Convenience Store
+17%
2,081
Discounters will see the largest

increase in sales, in 6 years it will be
about 125%
1,482
Sales growth of supermarkets and

hypermarkets in 6 years will be at the
same level 104% and 106%,
respectively
3,371
906
2,098
897
474
606
735
441
536
383
50
1,128
117
27
2009
Source: * Forecast by Kantar Retail
90
310
172
2012
36
86
199
The share of discounters sales

turnover will grow from 26.9% to
30.9% from all channels
2018
* The compound annual growth rate of 20% of the market of all the major players in the
retail market
*E-commerce, sales by catalog, etc.
23
Hypermarkets have become the most fast-growing sales

channel in 1H 2013, thanks to rising average frequency
Channel share in consumer expenditures and key
drivers in 1H 2013, %
Average
frequency,
per month
Main indicators change in 1H 2013 to 1H 2012, %
22.90%
Modern trade
BTC
13.80%
Traditional trade
15.67%
Supermarket
16.30%
7.69%
9.30%
Discounter
2.97%
0.87%
Hypermarket
4
Drogery
5.20%
Open markets
6.10%
16.70%
DIY
3.00%
Clothing and footwear

6.10%
E-commerce
4.00%
1.20%
-1.37%
-4.63%
Average
frequency
Electronics
0
0
500
1,000
1,500
2,000
-1.17%
Average value
per purchase
# SKU
Channel share
Average value
per purchase,
RUR
Hypermarkets have become the most fast-growing channel in 1H 2013, due to rising penetration rate and
average usage frequency
Modern retail is losing its share in the 1H of 2013, which is connected to rising popularity of open food
markets average usage frequency, and the greater variety of food offered there
In 1H of 2013, average usage frequency of hypermarkets has increased with slightly decreasing average
value per purchase
Source: Romir
24
Further sales growth in hypermarkets is expected

Sales turnover in food hypermarkets, 2011-2016 , $ million
+18%
1,559
1,723
1,383
1,216
965
Hypermarket penetration rate, sales area/population

0.15
0.135
0.10
0.119
0.05
750
2008
2012
2013
2014
2015
2016
Total sales area in food hypermarkets, 2011-2016, thousand

sq. m.
+13%
6,863
6,239
5,615
4,991
4,367
3,743
2011
2012
2013
2014
Source: VTB Capital, Romir, Kantar Retail
2015
2016
France
Poland
0.062
0.017
Russia
0.029
0.00
2011
Germany
2011
2012
2016
Hypermarkets are underpenetrated in Russia,

x7-8 times lower than in developed countries
and x3-4 times lower than in emerging
markets
Expected average annual growth in
hypermarkets sales (18%), higher than in
supermarkets and discounters (16%) and
traditional stores (13%)
Expected increase in retail space is also
larger in the hypermarket format (13%) than in
supermarkets and discounters (5%) and
traditional stores (7%)
Leaders of growth: Magnit, Auchan, Dixy
25
E-commerce market in Russia continues to grow

rapidly
E-commerce sales volume, 2011-2012,
billion RUR
+27%
320
76.5 mln.*
405
Are Active internet users in

Russia
125
95
+24%
280
225
2011
2012
Services (tickets and digital products)
Material goods
In 405 billion RUR not included ...
Online purchase for corporate needs

Group sales
MLM-distribution
Coupons
Sales in terminals in outlets
Catalog sales
Cross-border sales (both direct and via
intermediaries)
22 mln.
Consumers in
Russian e-commerce
+5 mln.
People starting to use

internet for purchasing in
Russia
According to the forecast, the online market will

grow from 2% of total retail turnover to 4.5% (in
European countries this level is about 6.5%)
The main areas of growth:

In the regions, especially in middle towns
Among consumers with low rate of income
Among newly connected to the Internet
Source: Data Insight, *TNS, Morgan Stanley Forecast, Accenture Analysis
26
E-commerce high growth rates are driven by rapid

consumer base growth
Material products most often purchased in online
stores*, %
# of years buying online*,

% consumers
10%
2%
5%
Consumer goods and electronic

gradually giving their share to other
products
11%
3%
4% 3%
27%
less than 1 year
10%
Consumer goods and electronic
44%
5%
1 year to 2 years
2 years to 3 years
3 years to 4 years
27%
More than 5 years
7%
Children products
Cosmetics and Fragrances
10%
Books and disks
Do not remember
Last year 27% of consumers started

buying online
Further growth is expected in such

categories as clothing and footwear,
tickets, baby goods, PC and peripheries
Food
13%
Other products
Frequency of online purchasing in world and

Russia comparison, %
Rarely
40%
57%
32%
Once in month
28%
Once in week
Daily
Source: FOM, PWC, Data Insight
Auto Parts
Home and furniture
4 years to 5 years
20%
Clothing and footwear
26%
3%
World
2%
13%
Russia
Answer to question: how long ago you started buying products and services through the internet?
27
Main e-commerce players are still representing

a small part of entire e-commerce sales market
Level of e-commerce sales concentration, 2012
TOP-10 e-commerce stores
Remaining players
Russia
USA
New global players on the Russian e-commerce

market :
18%
48%
In the next 2.5 years, eBay plans to increase sales in Russia

by 4 times, and users by 6 times. Company turnover in
Russia already has reached $400 million
52%
82%
Plans to double their performance in Russia
Market volume
~$13 billion
Market volume
~$184 billion
Cross-border shopping - the

fastest growing and at the same
time the most unclear market
segment
5-8 million purchases (for
personal use and not for resale)
during 2012
~ 45 billion rubles of turnover
(16% of sales of tangible goods)
~ 2 million consumers (10% of
total)
Purchases increase by more
than 50% in 2012
Opened an office in Russia

TOP-10 online stores turnover in 2012, $ billion/ year
774
2012
433
290 297
600
115
Ulmart
2011
493
286
187
231
168
68
Exist.ru Svyaznoy Ozon KupiVip.ruHolodilnik
150
127 134
34
147
71
188 211
94
Wilf- Sotmarket Biglion M.Video Utkonos

Berries
Source: Digital Guru, Data Insight, Accenture Analysis
28
Payment for goods in online stores are more

often being made by wire transfer
Methods of payment, % of consumers
64
Cash upon receiving
10
bank card online
22
6
6
5
5
5
7
electronic money
bank transfer in the bank
payment terminal
internet banking
bank card upon receiving
SMS
virtual bank card online
59
Payment by cash is decreasing with

growing preference of paying by credit
card, payment terminal and internet
banking
More and more online customer choose

courier delivery to the office or home
According to Romir research in 2013,

the average # of online purchases has
decreased by 8% with 28% increase in
average value per purchase
3
5
3
3
2
1
2
3
Oct 2012
March-April 2013
Ways of goods delivery, % of consumers

38
courier services
43
33
post
38
21
20
customer pick up
postomats
7
3
Oct 2012
March-April 2013
Source: FOM e-commerce market in Russia 2013, Romir

The answers are not summarized to 100%, as one respondent could choose more than one answer
29
Retail in Russia:
segments dynamic
Fashion segment is growing rapidly, while

specialized retailers are losing their market share
Dynamics of retail sales in Russia by segment**, %
27,4%
Grocery
Specialized retailers*
Fashion
Drogery
15.8%
13.0%
Consumer electronics and technics

17,5%
15,9%
15,1%
Transport, oil purchasing

Other segments
Total retail turnover
4,6%
12,0%
12,0%
9,5%
12,0%
18,8%
2011
15,8%
12,7%
11,8%
11,5%
15,8%
13,8%
19,9%
14,1%
9,4%
10,1%
11,1%
7,2%
13,0%
12,8%
2010
DIY and hosusehold equipment
12.0%
2012
In 2011 car market was driver of growth

The growth rate of grocery retail activity decreases
The growth rates of DIY market are growing , the buyer is activated
In Consumer electronics and technics significant drop in growth, with a forecast of further slowdown, but
still non-negative dynamics
Source: Federal Statistic Agency , Accenture Analysis
* The specialized retailers segment includes selling books, jewelry, etc.

* * Statistic does not include auto segment : purchase of automobiles, motorcycles, gas,
bicycles
31
Grocery retail: the market growth rates of food

retail network are declining
The share and dynamics of grocery chains in
the total retail turnover, %
Billion
RUR
45
0.10
42
0.09
40
34
35
0.08
0.07
30
23
25
0.06
22
20
20
15
15
19
0.04
14
0.03
10
5
0.05
11%
12%
11%
13%
13%
14%
15%
2006
2007
2008
2009
2010
2011
2012
14%
0.02
0.01
0.00
2013
Decline in the
share by 1%
Share in retail turnover, %
The entire food market grew by 8.7% in

2012, mainly due to inflation
In retail turnover in 2012, the share of
food retail chains is about 15%, 1 p.p.
increase compared to 2011. But in 2013,
1% decline is forecasted due to slower
growth rates of 18-19%
In the first half of 2013, the leader of food
retail has changed. The new leader
Magnit has overcome the X5 Retail
Group, not only by the number of stores,
but also by sales
Growth rate, %
Source: RBC Research, Romir
32
DIY and Household retail: dynamic market share

growth of modern DIY retail formats and substitution
for traditional retail
DIY retail chains penetration, # of stores per 1 million
people
Year over year, the DIY retail chain

penetration is increasing, by the start of
2013 the level is 66.4 stores per 1 million
people with leading role of DIY
hypermarkets in the total DIY sales
66
2013
42
2012
+60%
26
2011
DIY-retail turnover split by formats, 2012

Other formats
25%
DIY-supermarkets
13%
62%
DIY-hypermarkets
Traditional retail formats decline, # of construction

markets
Q2 2013
Q1 2013
2012
2011
32
45
66
Despite the dynamic growth in Russia, it is

still far behind the mature European
markets where the level is much higher,
with 50-55 hypermarkets per 1 million
people
The share of traditional retail is declining
(21% annually based on Federal Statistic
Agency data). Now, traditional construction
markets have about 1/3 of market share
with variations by regions
-21%
72
Source: RBC Research, Infoline. Federal Statistic Agency
33
DIY and Household retail: international DIY chains

keep their leading positions in the segment
Top-3 DIY retailers, sales, billion RUR, 2012
77
35
21
Leroy Merlin
OBI
Castorama
% of consumers visited TOP-3 retailers by regions,

1H of 2013
17
18
Central
5
10
Severo-Zapadny
16
8
7
Privolzhsky
10
14
13
Yuzhny
8
8
Sibirsky
7
7
7
Dalnevostochny
0
0
But leading positions vary by regions

The regional expansion of majority of DIY chains is
slowing (Castorama, OBI, Home Center, K-Rauta,
Starik Khottabych", "SuperStroy", etc.)
DIY retail market keeps consolidating, the
competition between Russian and global markets is
rising
DIY retail logistics function has grown in 2012, due
to new distribution centers construction, supplies
automatization and logistics outsourcing
11
Urals
TOP-3 retailers in 2012 are international chains:

Leroy Merlin, OBI, Castorama
Leroy Merlin
OBI
Castorama
Source: RBC.Research, Federal Statistic Agency
34
Consumer Electronics: smartphone and tablets

sales boost electronics segment growth
Smartphone market dynamics, 2010-2013
76.0
53.5
13.4
32.6 11.4
1H 2010
1H 2011
#, bln
10.5
1H 2012
Sales, bln RUR
10.4
7.3
5.1
2.9
1.1 14.2
1H 2013
Average price, 000 RUR
Tablet market dynamics, 2011-2013
Consumer Electronics and Technics becomes

stock exchange item: you can easily check price,
price competition become lower and lower,
consumer actively use Omni channel
Structure of portable electronics sales actively
changing:
In the first half of 2013 smartphone sales
accounted for 79% of mobile phone markets
Smartphone sales in product terms exceed
laptop/netbook sales
The highest growth rate is shown by tablet
PC market (239% compared to the previous
period)
33.1
20.3
14.3
0.1
18.4
2.6
0.8
2.8
1H 2011
#, bln
1H 2012
Sales, bln RUR
12.5
1H 2013
Average price, 000 RUR
Source: Research by Evroset Company
35
Fashion retail: growth potential is seen in all

categories in fashion retail
Sales growth of the largest mass market fashion retailer
chain, 2012 in %
+30%
38
2011
+158%
2012
+50%
35
+14%
29
+71%
23
16
15
18
14
12
7
Centobuv
Gloria
Jeans
+36%
Sportmaster Inditex
odji
(Ostin)
(Zara,
(OGGI)
Bershka,
Stradivarius,
etc.)
InCity
Share of premium and lux product purchases made

abroad, %
71
57
2010
2011
52
2012
51
2013F
In the Q1 of 2013, modern fashion retail format

sales (53%) exceeded for the first time the
traditional formats (through markets) (47%). In
2009, the ratio was 48 to 52%
This event is supported with the sales growth rates
of top fashion retailers operating in mass market
(see graph)
Estimated amount of purchases abroad ~ $8 billion,
with 30% being online purchases
In premium and lux segment in 2011, for the first
time the trend to buy premium goods domestically
appeared. This trend is being maintained in 2013,
supported both by demand and supply side:
- Growing loyalty to domestic premium products
sales points offering comparable service level
- New brand entry onto the market, lux department
stores opening
Source: Infoline, Fashion Report
36
Drogery & Pharma retail: drogery segment

increases market share
Cosmetics & perfume market, 2001-2012
35
0.10
33
0.09
30
0.08
26
25
0.07
23
21
20
0.06
19
18
15
10
10
5
8
6
0.05
15
15
13
11
11
8
7
10
9
4
9
9
10
4
11
10
14
14
10
0.04
0.03
0.02
5
4
0.01
0
0.00
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Growth rate ($), %
Growth rate (RUR), %
Cosmetics & perfume market turnover, $ bln
There is a growth slowdown in sales turnover of

supermarket retailers, such as Letoile, Rive Gosh
and Il de Bote
In contrast, drogery format is developing more
dynamicly, expanding to small and medium cities
According to expert estimates, the number of
drogery stores increased by 25%. The influence of
the drogery format on the cosmetics market is
growing, market share is rising
During the period, the average usage frequency of
drogery is rising significantly (58%) while the
average value per purchase stays almost the same
(9%). This can be explained by the development of
international drogery chains (Yves Rocher, Body
Shop, etc.) and their marketing efforts. Drogery
format is finding its consumers
Source: RBC Research, Romir
37
Jewelry retailers expand to regions using

franchising
Jewelry market sales, Russia, 2005-2013
39
40
25
30
20
20
10
0
-10
2005
2006
-20
2007
2008
11
4
-22
-30
2009
Jewelry market sales, $ bln
2010
2011
2012 2013F
Growth, %
TOP-3 regions by jewelry retail sales growth in 2012
Dalnevostoc
hny region
+19%
Yuzhny
region
+22%
8
7
6
5
4
3
2
1
0
TOP-5 jewelry retailers by the number of stores:

Adamas", MYUZ", SUNLIGHT, Jewelry chain
"585", Yashma Zoloto"
Greater sustainability are demonstrating large
chains that develop jewelry retail "from the
manufacturer" and use franchising (Adamas",
MYUZ", SUNLIGHT)
Several federal operators (Jewelry chain "585",
Yashma Zoloto") uses diversification strategy,
simultaneously developing several jewelry chains
with different brands.
Volume of purchasing abroad was $1.8 billion in
2012, simultaneously, the volume of online
purchasing abroad grew by 6 times, compared to
2011, and amounted to 40%
Sibirsky
region
+18%
Source: RBC Research
38
Summary
Three main facts to remember
Market is in a stagnation phase, competition is

escalating
The middle class is growing, but is liking less the

process of buying
Service, quality, price
39
Thank you
Mikhail Pershin,
Head of Russian Retail Practice, Accenture
mikhail.pershin@accenture.com
www.accenture.com
This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of
such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such
trademarks.
Copyright 2013 Accenture. All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document is produced by
consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any
matters referred to, please contact your Accenture representative.

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Factors influencing retail

Three major factors that will influence the

Tightening of government regulations for tobacco and alcohol product sales

Source: Infoline, research by Accenture, news resources

Copyright 2013 Accenture All rights reserved.

GDP, billion RUR

Main indicators of growth in comparable prices, %

Russia now has a leading position in the

(1 year prior period in comparable

2012 2013F 2014F 2015F

Ministry for Economic Development (MED)

Thanks to enormous growth, as well as the

TOP-5 countries by retail turnover in

Source: GFK, Federal Statistics Agency, MED forecast 2013-2015

Copyright 2013 Accenture All rights reserved.

Retail sales productivity in Russia is much

Per capita sales area (sq. m. per

Earnings in Russia are also two

TOP-100 Russian retailer

Source: GfK GeoMarketing, OECD Better Life Index

Copyright 2013 Accenture All rights reserved.

Consumer: expectations &

Modern Russian Consumer who is it?

I received on average per month in 2013

The average amount current

I spend an average of one

Consumers still love to go

Copyright 2013 Accenture All rights reserved.

Working-age population in the near future will

Retirement age population will decline ...

Distribution of population by income, %

Source: Federal Statistics Agency, Accenture Analysis

Copyright 2013 Accenture All rights reserved.

Income of Russian citizens is growing, but they

Average monthly income, RUR

Consumer and mortgage loans taken out during the

Accrued money savings, billion RUR

Source: Federal Statistics agency, Accenture Analysis, Central Bank

Copyright 2013 Accenture All rights reserved.

On average, a Russian citizen spends on food

On average, a family spends about 55% of its

Food, Alcohol beverages and tobacco

Entertainment, Telecom, Hotels, restaurants and caf, Edu

Clothes and shoes

Other goods and services

Source: Federal Statistics Agency

Copyright 2013 Accenture All rights reserved.

Price is still the most important factor during

Consumer is less ready to spend time

% of those who agree

% of those who agree

Price is the most important thing while buying goods*

I am ready to try a new place for a better price*

Source: GFK Omnibus consumer habits

Responses to the questions:

Copyright 2013 Accenture All rights reserved.

A lower price is more important to the consumer

The consumer is not willing to sacrifice

* Response to the statement : I am willing to accept

* Response to the statement : I am willing to accept

The buyer does not compare the price and