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15 Jan, 2008 05:01

Retailers eye up Russia’s booming middle class

Russia’s ever-expanding middle class is being targeted by a new wave of luxury goods retailers. Russians are estimated as being the world’s fourth-largest consumers of luxury goods after the Japanese, Americans and Chinese.

Russian specialty food chain Globus Gourmet has recently opened the first luxury hypermarket in Moscow, and France's Hediard, which has recently been purchased by Billionaire Sergey Pugachev, says its Moscow store has one of the largest turnovers of its 200 worldwide outlets.

Andrey Yakovlev, the head of Globus Gourmet in Moscow, says he would define the target audience as people who keep to a certain lifestyle – irrespective of their status and revenue.

“Our average bill totals about $US 80 but more than half of our consumers make one-time purchases costing not more than $US 20,” he said.

And like other retailing sectors, the premium market works to a rule of 80% of customers making 20% of sales and vice versa. 

Retailers consider large cities with more than one million inhabitants as the icing on the cake. There are eleven in Russia, each supporting a growing number of consumers who are looking for premium products.

“We are looking at about 15 Russian cities where we can open a Globus Gourmet – with Ufa and Krasnoyarsk to be the next,” said Andrey Yakovlev.

The expansion of luxury retailers into Russia's regions is likely to be complicated by logistical challenges, which can be quite a problem even for standard retailers.