Key Topics Covered in the Report
- Detailed profile of the Retail Market in Ukraine
- Consumer demographics, trends and behaviours
- Historic and forecast retail sales value & growth in Ukrainian Retail Market
- Competitive landscape of Ukraine’s Retail Market
- Analysis of key distribution channels of Ukraine’s Retail Market
- Emergence of online retailing in Ukraine’s Retail Market
- Detailed analysis of changing retail dynamics across various product segments
Ken Research announced its latest publication on, “The Future of Retailing in Ukraine to 2020; Comprehensive data overview of the market, with retail sales value and forecasts to 2020”, offer insights on the category and channel trends within theUkrainian Retail market.The report further covers the overall retail sales of products through four channel groups (Value Retailers, General Retailers, Specialist Retailers and Online) which includes 17 individual channels, such as Hypermarkets, supermarkets and hard-discounters; Home improvement and gardening supplies retailers; Food and drinks specialists; Online; Convenience Stores (including Independents) and Gas Stations; Department stores; Clothing, footwear, accessories and luxury goods specialists; Other specialist retailers; Electrical and electronics specialists; Home furniture and homewares retailers; Value, variety stores and general merchandise retailers; Music, video, book, stationery and entertainment software specialists; Cash and carries and warehouse clubs; Other general and non-specialist direct retailers; Drug stores and health and beauty stores; Vending machines; Duty free retailersThe analysis of the aforementioned trends has been done across nine product groups including Apparel,Accessories, Luggage and Leather Goods; Books, News and Stationery; Electrical and Electronics; Food and Grocery; Furniture and Floor Coverings; Health and Beauty; Home and Garden Products; Music, Video and Entertainment Software; Sports and Leisure Equipment
Economic Environment of Ukraine
The economy of Ukraine is an emerging free market. The economy has experienced a consistent fall in the GDP for a period of 10 years, starting 1991 that is following the collapse of the Soviet Union. However, as the Ukrainian economy began to recover in 2000, with a rapidly growing GDP between 2000 and 2008, the growth was ceased by the global financial crisis that reached Ukraine as the 2008-2009 Ukrainian financial crisis. The economy recovered and achieved a positive GDP growth rate in Q1 2010, but again in 2013, the economy lapsed into another severe recession and since then, the Ukrainian economy has been suffering from a serious downturn.
Stringent and outdated labour market regulations and lack of labour force due to emigration and aging of population, has depressed investment and hurt the productivity of all sectors including that of the agricultural sector. Ukraine which was once known as the breadbasket of Europe, is now only a far off memory, thanks to the lack of modernization of the Ukrainian agricultural sector. The government procurement procedures in in Ukraine is biased towards the domestic companies, as a result the investors will not purchase the agricultural land. Russia-Ukraine conflict continues which affects investment flows and trade along with the ever increasing number of non-performing loans.
Looking at the key economic snapshot of the country, Ukraineis the home to 42.8 million people. With a GDP of $370.8 billion and a per capita income of $8,668, Czech Republic has a global ranking of162ndand a regional ranking of 44th in Europe. The GDP has a negative growth rate of 6.8% and a 5 year compounded annual growth rate of -0.2%. The country has an unemployment and inflation rate of 7.7% and 12.1% respectively.
Brief Overview of the Retail Market in Ukraine
The per capita retail sales in Ukraine is significantly low, lower than that of Russia and Western Europe, despite having the 6th largest population in Europe. Political instability, tough economic environment and strong currency devaluation are all factors contributing to reduce the consumer’s purchasing power in Ukraine. As a result, the Ukrainian retail market’s current situation is not very bright. As incomes are falling, people are cutting on their expenses, even on the essential of goods. As the Ukrainians observe rising prices of products and services, they economize their purchases and limit them to the most necessary products. As a result, the sales volume were highly affected which was slightly compensated by the rising prices.
Apart from the aforementioned factors working to contract the sales volumes, the falling population owing to the separation of Crimea in 2014 and inactive purchases from the people living in the Eastern regions led to a fall in the volume of sales in Ukraine.
Coming to the various channels of distribution, convenience stores and discounters remain the most popular distribution channels. General retailers hold the largest share of retail sales in 2015, and will continue to lead the market in 2020. There has been a tremendous increase in the quality trading areas by the rising stock of modern shopping centres which in turn has attracted many well -known international brands to the Ukrainian retail market. Online trading is another emerging channel of distribution. The total turnover of online trading in Ukraine has already exceeded USD 1,000 m, and in 2010 and is expected to register the fastest growth during the forecast period. Hypermarkets, supermarkets and hard-discounters recorded the highest channel sales value. In the product category, Furniture and floor coverings is expected to grow the fastest followed by Music, video and entertainment software over the next five years.
Major Players in the Ukrainian Retail Market
The grocery retailers proved to be more competitive than their non-grocery counterparts as non- grocery products could be economised in the time of economic difficulty. As a result, the Ukrainian retail market is led by grocery retailers.
The major food retailers in Ukraine are Fozzy group and ATB market which had a major competitive advantage due to their nationwide presence. Other major food retailers were Metro Cash&Carry, Auchan, Amstor, EKO market and many more. The Ukrainian food retail market is highly fragmented with the top 5 retailers holding only 15% of the market share in 2010. Share of unorganized trade such as open markets is still very high, accounting for almost 50% of the total food retail sales.
The major non grocery retailers operating in the Ukrainian retail market are Foxtrot, Comfy, Eldorado and some international retailers such as Yves Rocher, L’Occitane and Lush.
Ukraine’s Retail Market Prospects
The retail industry is one of the most dynamic and prosperous industries of Ukraine, contributing 16% to the country’s GDP and ranking third in terms of total foreign investment inflows. The growth prospects of the Ukrainian retail market is dependent on a number of factors such as the economic recovery, speed of dispute settlement within the country and Europe, return of consumer incomes along with the consumer confidence.
Some of the key factors expected to drive growth of the Ukrainian Retail sector are:
- Rising consumer incomes
- Stable national currency reduced exchange risks
- Increasing proportion of young population
- Availability of quality commercial real estate
However, the retail market in Ukraine is also subject to certain challenges such as low salaries in some part of the country prevents the growth of non-grocery retailing, widespread employment in the private farm sector supports the continued existence of farmers’ markets and restricts the growth of the retail sector in the country.
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Ankur Gupta, Head Marketing & Communications