Spot growth: retailers expand networks in small towns with defense industry enterprises
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- Spot growth: retailers expand networks in small towns with defense industry enterprises
Retailers have started to expand their chains in small towns with defense-industrial complex (DIC) enterprises against the background of rising salaries of their employees, business representatives told Izvestia. As a rule, these are compact retail outlets, two or three times smaller than the usual ones. With the increase in the incomes of employees of enterprises and their families, 5.5-6 million additional solvent customers have appeared in the Russian Federation, experts say. In the future, defense industry centers may turn out to be islands of stability and business growth points for retailers, they believe.
How the retail market is changing
Business representatives told Izvestia that retailers have started to actively expand their networks in cities and towns where defense industry enterprises are concentrated.
- We are opening compact stores in new locations and cities, including Siberia and the Far East, where historically we have been less present and where there are a large number of customers - employees of Russian industrial enterprises, who have good incomes in the current conditions," a source in one of the federal chains told Izvestia.
The tendency to open compact stores is confirmed in M.Video-Eldorado and in the Svyaz.ON network. Thus, a representative of the united retailer said that since the beginning of the year the company has opened more than 90 stores in 21 cities. Among them are Kachkanar (Sverdlovsk region), Solikamsk (Perm region), Ishim (Tyumen region), Elista (Kalmykia), Volzhsk (Mari El Republic), Krymsk and Novotitarovskaya (Krasnodar region), Alekseevka (Belgorod region) and others.
The new format of retail outlets assumes an average area of 500-600 square meters, which is half the size of traditional stores (1-1.5 thousand square meters), with the entire assortment available to customers.
- According to the interim results, the already opened stores of the new format demonstrate better indicators of turnover than it was initially planned, - said the representative of the company.
Retailers are indeed opening more and more new stores in locations related to the defense industry, and it did not start yesterday, said the network "Sviaz.ON". Quicker than classical retailing were the networks of marketplace outlets, which require minimal investment and allow very easily respond to new solvent demand. Then, more capital-intensive types of retailing also pulled up, its representative specified.
Relatively small formats are indeed preferred. There is no need to open a flagship with a full suite of large appliances to sell refrigerators and dishwashers, which can be delivered by pre-order online or after consultation with a salesperson, the company added.
- In our view, the new demand in such regions combines several things. First, more investment purchases of durable goods, appliances, electronics. Second, a noticeable step in the cost of preferred models. Thirdly, the demand covers the "big family" of the DIC worker. It is not only his wife and children, but also his parents, brothers-sisters, which is expressed in the gradual purchase of several items of the same category, say, a refrigerator for himself and his mother, - points out the representative of the network.
Most retailers, as well as cellular operators interviewed by Izvestia, did not respond to requests or declined to comment.
Marketplaces, however, assure that they are not engaged in targeted business development in regions where the growth of prosperity is recorded, in particular, in the centers of the defense industry.
- We do not urge our partners, owners of points of delivery to open in specific regions, it remains at the discretion of private entrepreneurs, - say in Ozon. - If partners see the potential for growth, and we can send goods, we are happy to cover an additional part of the country's population with convenient and comfortable delivery.
"Izvestia" sent an inquiry to the Ministry of Industry and Trade.
Why retailers are expanding their networks near military plants
At the beginning of 2024, Minister of Industry and Trade Denis Manturov said that over the previous two years, salaries at defense industry enterprises had increased by 30-60%.
According to Eldar Murtazin, a leading analyst at Mobile Research Group, retail chains are going to defense industry centers for customers. According to him, with the beginning of the SWO it turned out that 5.5-6 million Russian citizens, including defense industry workers and their relatives, became quite solvent buyers.
- Retailers are opening more and more stores in such locations, but these are mostly relatively small retail outlets, not flagships," he agrees.
Salaries and purchasing power in areas where defense industry enterprises and related infrastructure are located are growing - food and clothing retailers are developing where there is solvent demand, added Content-Review project manager Sergei Polovnikov.
- Business goes after money, so new stores are popping up where there were no more," he points out.
For retailers and their customers now is a difficult time - prices are rising, in particular, due to the increase in the Central Bank rate and the weakening of the ruble, said the general director of TelecomDaily Denis Kuskov. Therefore, it is quite logical to close stores where the effective demand has decreased and to open them in places where it is concentrated, he believes. In the current situation defense industry centers may turn out to be islands of stability and points of business growth for retailers, the expert did not rule out.
