5/15/2016
Women’s Wear
in Russia
Report Paper
Author
[COMPANY NAME]
Table of Contents
1. INTRODUCTION ................................................................................................................................. 2
2. MARKET OVERVIEW ........................................................................................................................ 2
2.1 Exports of European fashion in Russia ................................................................................. 3
2.2 International players .............................................................................................................. 6
2.3 Main trends of women’s fashion market ............................................................................... 7
2.4 Distribution channels............................................................................................................. 8
2.5 Structure of clothing market .................................................................................................. 9
2.6 Conclusions & Challenges .................................................................................................. 10
3. REFERENCES ..................................................................................................................................... 12
4. APPENDICES ..................................................................................................................................... 13
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1. INTRODUCTION
This reported main goal is to analyses women wear for middle and upper middle segments.
Female segment: the largest and most mature in Russia. The share of women's clothing accounts
for about 60 percent of sales, calculated in INFOLine. At the same time women's clothing is not
only the largest but also the most mature, full-bodied players, highly competitive market
segment, which determines ultimately the general trend of slowing down.
According to analysts, fashion retail is one of the most attractive areas of the industry for the
development of modern trade formats. "According to our data, the annual clothing market is
growing by 8-10%, which is significantly higher than the growth of retail trade turnover (4-6%
per year), - says CEO Ivan INFOLine Fedyakov. - In addition, the clothing market is dominated
by traditional formats (retail markets) that allows you to effectively develop modern retail chains
in the region."
2. MARKET OVERVIEW
According to the data of January - September 2015 the retail turnover of clothes in the Russian
Federation, not including clothing made of fur, amounted to 1.193 trillion rubles, or 20.13 billion
dollars, that is 6% of turnover. (For the same period in 2014 - 6.2%). Compared with the
corresponding period last year, clothing turnover in Russia increased by 3% in rubles, but, taking
into account changes in the dollar, the retail clothing trade turnover in Russia in January-September
2015 has become 38% lower than in 2014 year.
Retail turnover for clothes Moscow during the same period amounted to 469 billion. Rubles or
7.91 billion. Dollars, an increase compared with the corresponding period last year by 1.2% in
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ruble terms, but with the change of the dollar becoming the first 9 months of 2015 by 40%
compared to the same period in 2014.
in Moscow on a national circulation of clothes made for the first 9 months of 2015 it was still 40%,
which was flat compared to the same period in 2014. In St. Petersburg apparel retail turnover in
January-September 2015 amounted to 36 billion. Rubles, or 3% of the total Russian retail clothing
trade.
2.1 Exports of European fashion in Russia
It continues to decline and the volume of exports of European fashion in Russia. Imported products
in Russia takes 80% of the total turnover of the clothing market, shoes and accessories (data
Fashion Consulting Group). As the president of the European Council exporters of clothing and
textile (EFTEC) Depfer Reinhard, in 2015 the EU clothing exports have fallen by 29% in Russia.
Also, imports drop 30% mentions Anna Lebsak-Kleimans, CEO of Fashion Consulting Group
(FCG). Most reduced export women's underwear - 43%, export men's wear decreased by 25%,
women's clothing - by 29%. Export from Italy decreased by 30% and exports of Germany - 28%,
UK - 42%. Even Spain, which had a very good position in Russia (Mango, Inditex), reduced
exports by 1%. The expert is confident that before the end of the year the volume of clothing that
"comes" to us from Europe, will be reduced by another 25%. According to the director of Fashion
Consulting Group Anush Gasparyan Turkey - one of the major importers in the Russian fashion
market. According to 2014 data for 2015 yet, Turkey is the third largest clothing imports 6% of
imports, after China and Italy. For imports of fabrics Turkey in second place after China, while in
the first half of 2015 apparel exports from China to Russia decreased by 20%.2.1 Main players
within the sector.
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However, for example, expanding their geographical presence in the Russian market brands such
as H & M, Uniqlo. In reporting the world's largest retail chain selling clothing Hennes & Mauritz
(H & M) for the first 9 months of the 2014-2015 fiscal year (December 1, 2014 - August 31, 2015)
refers to the increase in sales in Russia by 15% compared with the previous year - up to 2.629
billion SEK including VAT (about 312.429 million US dollars). At the end of the third quarter of
the current fiscal year, the company increased its revenues by 16% - up to 1.018 billion Swedish
kronor (about 120.978 million US dollars). At the end of the quarter ended number of stores in
Russia has increased by 2 units. In just nine months, 15 new stores were opened retailer in Russia.
Also, despite the difficulties in 2015, in the Russian Federation continue to receive new
international brands, such as On & On, Tsumori Chisato, Brums, Original Marines, Rocco P.,
Intersport Run & Fit and others.
A number of Russian players have stopped growing, but not reduced the number of stores - Befree,
O'stin, Baon, Love Republic, Modis, Sportmaster, Sela. This trend is confirmed by the cofounder of a network of salons "Kangaroo", Sophia Svetlosanova. "On the whole, while reducing
traffic, the number of checks, - she says, - we have kept the level of sales in 2014. In principle we
support the profitability. If we talk about the stores, we managed to move in three places, in
particular in Krasnoyarsk. In Vnukovo Outlet we now have a large area, where we have increased.
In principle, we are on these points is significantly reduced rents. I think this is a good result. We
do not fire. All optimizations that was possible, we did in 2014. In 2015, already in this sense, it
was nothing to do. "
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Diagrams below demonstrate the situation with women cloth from 2009-2014 years
2014 € 1.557 million (+41%)
Outdoor Jackets/Coats
15%
16%
Dresses
Costumes
4%
9%
19%
Sweaters / Cardigans
Trousers
Blouses
17%
8%
Denim Trousers
12%
Other Women's Wear
2009 € 1.107 million
Outdoor Jackets/Coats
Dresses
16%
12%
Costumes
3%
13%
8%
Sweaters / Cardigans
Trousers
15%
Blouses
Denim Trousers
17%
16%
Other Women's Wear
Despite the attempt to keep the price level in 2015, on the eve of the fall season on clothes retailers
have raised prices by 20% or more. Most prices have risen in the Russian network stores.
According to a study Fashion Consulting Group, which was presented at the Russian Fashion
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Retail Forum, the minimum prices for women's clothing fashion season "2015-2016" increased
compared to the minimum prices of the season "2014-2015" by 20-40%.
2.2 International players
142 new international brands entered the Russian securities industry during the last three years.
According to the latest retail research -nBy global property advisor CBRE, new market entrants
have opened around 390 new stocks since the beginning of 2013 and are planning to open, at least,
70 more by the end of 2016. For example, such retail chains as Dippin Dots, Krispy Kreme, Takko
Fashion, Anta Sports, Bimbus, Deichmann, Forever 21, Monki, and Derimod have already
heralded a further development in Russia.
Over 52 new brands entered the Russian market in 2015. This is only 2 brands less than a year
earlier. 12 new retail chains have announced plans to introduce the Russian market in 2016.
According to CBRE research, 31 percent of most active brands are retail chains of fashion segment.
In 2015 such chains as Circle of Gentlemen and Wrangler opened their first mono stores in Russia.
Malo, Henry Cotton’s, MCS, Nelva, and Tsumori Chisato also entered the Russian market. Usually
new players open 2-3 stores at once.
Despite Moscow is the first city to open in 85 percent, 17 new retail chains opened their first stores
in the Russian regions. This choice is mainly due to lower rental rates, comparable level of quality
supply and relatively high purchasing power.
Michael Rogozhin, Managing Director of Retail Department CBRE in Russia, commented:
“During 2013-2015, 2014 was the most active year for new entries when 54 new brands entered
the market place.
In 2015, despite negative economic conditions, the natural action of international retail chains and
the interest to Russian retail market have been saved. 52 new brands have entered the market
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during the twelvemonth. Nearly 60 percent of new participants are retail chains of middle and
budget price segments. Consumer goods of these segments are in high demand in Russia. The
decrease in real disposable income causes an increased demand for new budget makes. New retail
chains will highly likely continue to come in the market in 2016 and develop as consumer demand
stabilizes, both in Moscow and in regional markets. We expect in 2016–2017 about 30 new brands
to enter the Russian marketplace. In fact, this number could be higher.”
Turnover per segment, market share, average retail price points, categories of retail
channels, key supplier nations:
2.3 Main trends of women’s fashion market
In late December, it became known about the possible transfer of the production of Zara, Mango
and H & M in Turkey in connection with the Russian sanctions. Analysts do not doubt that it will
lead to higher prices.
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"Deliveries are from Turkey, because it is economically feasible. Even if the company has
manufacturing facilities in other countries, restructuring of supply chains, renegotiation of
contracts and other formalities cannot lead to a rise in prices ", - explains financial analyst THEIR"
Finam "Timur Nigmatullin. He also stresses that the transfer of production will result in the
reduction range. Networks do not profitable new delivery, when due to the increased prices are not
sold out prior.50% (in volume terms). About 30% of heat-insulating materials in Germany - is
polystyrene.
Over the forecast period womenswear in Russia is expected to register a value CAGR of 1% at
constant 2015 prices to reach sales of RUB1,169 billion in 2020. This moderate growth will be
related to the increasingly challenging trading environment in Russia. Russian consumers are
likely to remain rather price-sensitive when it comes to apparel purchases, especially in light of an
anticipated increase in the cost of living and fall in consumers’ disposable incomes. Those who
value quality over price are expected to reduce the frequency with which they purchase
womenswear.
2.4 Distribution channels
Among the distribution channels in the women's clothing market is still dominated by the
uncivilized retail. In early 2013, it accounted for about 46% of sales. Although the proportion of
Russians in the flea markets of consumption model is gradually reduced, this channel is often the
only place for clothes shopping in the small towns and cities with a population of less than 100
thousand. Man. Reducing the share of market is mainly due to an increasingly dynamic
development of retail chains in medium and large cities in the Russian regions.
It is interesting that the civilized retail offers are often much more competitive prices in the lower
and middle price segments. Thus, market prices 15-20% higher than the prices for similar product
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categories in these stores of retail chains in the lower price segment as Oodji, Sela, Gloria Jeans
and Jennyfer. However, despite the structural changes in the lower price segment and the
transition to the regional markets apparel consumption in the retail network of Western-style, at
flea markets will still account for about 35% by 2015.
Multibrand and multi-format stores in the second place in popularity among Russian women - they
account for 20.3%. This is partly due to the inheritance of the Soviet model of consumption, when
the store was the main place to shop. In many cities today and in the buildings of the Soviet Tsumov
and shopping centers are located players lower price segment, the assortment differ little from the
flea markets are nearby.
2.5 Structure of clothing market
In the Russian market of women's clothing, regardless of price segment is not the first season of
the rise in the share of sales of dresses. This is due to focus on femininity and the desire to create
the most cost-effective one-piece look. On dresses today accounts for an average of 20% of sales
(15% - in the medium price segment, about 23% - at the top).
A growing share of the dresses, and generally focus on femininity occur as opposed to style and
fashion for unisex androgyny that prevailed eight or ten years ago. The increased popularity of
dresses is also associated with the crisis: the dress can more efficiently create a whole image,
suitable for a hike on the job, and for everyday life. Moreover, almost all brands offer "input
group" dresses at a price close to the knitwear, which makes this category range is also very
accessible to a wider audience.
T-shirts, T-shirts and similar categories make up the largest offer on the market - their share in
sales of women's clothing on the market is 30%: on the jersey for 20%, in the "lower classes" -
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11 on the outer clothing - 7.5%. The smallest share of sales accounted for coats / jackets - about
0.5%.
In general, the structure of the range of both product categories as well as for functional and
stylistic groups is fairly typical and a little different from the structure of the markets, for
example, in Europe. The greatest demand is for casual wear - it accounts for more than half of
women's clothing sales (53%). However, even in casual clothes Russia distinguishes brightness,
decorative - it should emphasize femininity, and not just be a basic and minimalistic.
2.6 Conclusions & Challenges
Market access conditions for imported clothing remaining difficult. The studies of the situation in
the country showed that in the first 9 months of 2015, Russia is in recession. Considerable
influence on the situation is prevailing geopolitical situation and the existing EU sanctions.
Continued decline in GDP, the production, the dynamics of investment and construction. At the
same time, falling living standards, its real purchasing power is reduced and the retail trade - sums
up the year Elena Kuznetsova.
Market entry in Russia has become more difficult over the past five years due to:

Mandatory registration of economically active companies and legal entities at the Register of
the Attorney General of Russia, due until December 31, 2009

Foundation of the Eurasian Customs Union (EAC) between Russia, Belarus and Kazakhstan
in 2010

WTO Access of Russia after DUMA-ratification in August 2012

Consolidation of Consumer Safety Rules and Regulations in one unified “Technical
Regulation” replacing the former GOST-R Certification by the EAC Conformity Declaration
and Hygiene
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
Certification, Baby- and Childrenswear Safety Certification and EAC Product Labeling,
enforced for clothing products on July 1, 2014
Players affected by such legislative changes are:

Foreign suppliers, smaller and medium size European brands (SMEs) in particular which sell
directly to retail clients in the EAC-area

Fashion agencies and import distributors operating as “Representative Offices” but not as
registered OOO (LLC, SrL, GmbH)

Customers residing in the three member-states of the Customs Union which do not provide
the legal status of a registered OOO and which are not accredited at the Attorney General’s
Company Register (most of the privately owned multi-brand shops and boutiques are not
registered and do not pay V.A.T.)
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3. REFERENCES
Casual-info.ru. (2016). The structure of the fashion market. What kind of clothes we buy ?.
[Online] Available at: http://www.casual-info.ru/shopping/1480/28451/ [Accessed 15 May
2016].
Cpm-moscow. (2016). CLOTHING MARKET REPORT AUTUMN 2015. [online] Available at:
http://www.cpm-moscow.com/download/exhibitor/CMR_Autumn2015.pdf [Accessed 15
May 2016].
Data.worldbank.org. (2016). Russian Federation | Data. [Online] Available at:
http://data.worldbank.org/country/russian-federation [Accessed 15 May 2016].
Effet.ru. (2016). network retail clothing market in Russia and in the regions: the state, trends and
prospects of its development | News. [Online] Available at:
http://www.effet.ru/novosti/rynok-setevogo-riteyla-odezhdy-v-rossii-i-regionah-sostoyanietendentsii-i-perspektivy-ego-razvitiya.html [Accessed 15 May 2016].
Europaproperty.com. (2016). Russia attracts 52 new retail chains in 2015. [online] Available at:
http://europaproperty.com/news/2016/03/russia-attracts-52-new-retail-chains-in-2015-2353
[Accessed 15 May 2016].
Popova, N. (2016). Review of the Russian fashion market: facts, trends and forecasts. [Online]
Fashionunited.ru. Available at: https://fashionunited.ru/novostee/vistavkee/obzor-rossiiskogo-fashion-rynka-fakty-trendy-prognozy/2015091613360 [Accessed 15 May 2016].
Khody, C. (2016). What will happen to the clothes in 2016 prices. [Online] secret of the
company. Available at: http://secretmag.ru/article/2015/12/28/odezhda/ [Accessed 15 May
2016].
Dollars, O. (2016). The volume of apparel market will grow to $ 7 billion - FashionUnited,
fashion news, events in the fashion industry, fashion clothing and fashion brands, garment
production. Working in the fashion industry, all vacancies of the fashion industry in Russia
.. [online] Fashionunited.ru. Available at: http://www.fashionunited.ru/78-fashion/6092obiem-rynka-odezhdy-vyrastet-na-7-mlrd-dollarov.html [Accessed 15 May 2016].
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Ivan Fedyakov, city (2014). Liberally dressed women. [Online] Expert.ru. Available at:
http://expert.ru/northwest/2014/11/obilno-odetyie-zhenschinyi/ [Accessed 15 May 2016].
Rosbalt. (2016). Analysts: In the market of women's clothing in Russia is dominated by
"uncivilized retail." [Online] Available at:
http://www.rosbalt.ru/business/2013/09/23/1178868.html [Accessed 15 May 2016].
4. APPENDICES
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