“About zero”: why mainland retail in the Crimea on the verge of profitability

"Около ноля": почему материковый ритейл в Крыму на грани рентабельности

Mainland food network drastically reduces its presence in the Crimea. What problems faced the retailer on the Peninsula, what is the real “investment attractiveness” of the region in this segment of the market, understood RIA Novosti Crimea.

The Crimea – at risk

Grocery network “Assorted Product” from Rostov-on-don was the first and remains the only retailer from the mainland, which operates in the Crimea. The most obvious answer to the question why large food networks popular in Russia, came to the Peninsula – the notorious sanctions. The presence in the asset retailers of foreign capital makes the problem hard to solve. However, only in the sanctions?

“Sunset in the Crimea – it was a risky move, of course. The opening of any store – risk, and here – twice”, – says the Director of a trading network “Allsorts-Crimea” Vitaly Voronin.

The first stores in Rostov retailer appeared in the Crimea in 2014. Despite the risks, the conditions for the development of a new market the company was favorable: the Peninsula suffered a food blockade from the region left the company with Ukrainian residence permit and has not yet been adjusted to the supply of goods from Russia.

“We had to establish all this the difficult logistics associated with the ferry crossing, and it was actively engaged in our network. It was difficult, but it was important and necessary for the buyer. But the price of rental property here was already higher than on the mainland,” – says Voronin.

In the end, after four years of work, a network of “Assorted” shut down six of its nine stores on the Peninsula. Remain the largest in Sevastopol, Simferopol and Bakhchisarai.

“The cost of renting retail space in the Crimea is very high. Nowhere such to the rent you had to pay 5 percent of turnover – here it turns out more than 10. I am from Siberia and I can say that it rates for rental property in 2-4 times lower, depending on store location. Here now we offer 2 thousand rubles per square meter, and in Novosibirsk – megacities – 600-800 rubles per square. That is, there is almost Moscow rates, as I understand it, and the momentum and potential – not the capital”, – says the Director of the trade network in the Crimea.

He also notes that for the same reason, soon to be closed shop in Bakhchisarai.

“Retail space in Simferopol, the deficit, and the new not open. Although they are necessary, in my opinion, it would allow the development of retail business and to reduce, in particular, the final price of goods on the shelf, – the Director of a grocery network. In Sevastopol we have a lower rental rate. And if you stroll around the store, you will see that there is on average cheaper by 5 percent, and this is serious. For a loaf of bread the difference in price is 1 ruble, and for a bottle of elite cognac – much more.”

The issue price

The two remaining stores in Simferopol and Sevastopol – with similar popularity, the buyer (they performed every day around 5 thousand purchases) demonstrate very different financial indicators. In Sevastopol, the average bill for a purchase in two times more than in the Crimean capital. And, as explained in the management of the network, it is not only the purchasing power of the Crimean people. One of the determining factors for the development of the retail business is the transportation infrastructure around the Mall. Director of the network indicates that near the Central Department store in Simferopol there is a full Parking lot, and it means that people come here only for small purchases. Operation of rental space in the absence of full Parking lots of cars are generally thought Siberian the Manager of the Rostov retailer strange feature of Simferopol.

One of the important claims to the mainland grocery chain from the consumer – not only the quality of services, but also pricing. In the “Assorted” prices are not cheap, and head of the trade representation in Crimea is confirmed. Therefore, according to him, the management network is looking for new forms of work in the spring on the Peninsula you should see the first discounter store a limited supply of goods, but with a minimum premium, so the cost of products on the shelf usually 10 percent lower. For this reason, this format of shopping is popular among buyers in Russia discount stores opened in tens.

But, according to the head of the network, the high cost of renting commercial space in the Crimean capital will mean that the discounter will not be able to appear in Simferopol. Therefore, the representatives of the retailer looking to place the pad in Sevastopol, Feodosia and Yalta.

Moreover, stores with low prices – where would they end up any is – on the shelves will not be of Crimean goods.

“When we started to work on a range discounter, faced with the fact that we actually can’t afford to put on the shelf products from local suppliers, so a lot of goods will go from Rostov, Krasnodar, despite the problems with the cost of logistics. This option would be cheaper,” – said Vitaly Voronin.

According to him, the launch of the Crimean bridge has significantly simplified the delivery of goods from the mainland. The cost of one truck with food was worth half the price – not 120, and about 60 thousand rubles for the car. But adjusting the price tag consumers are not noticed in any of the stores in which products are shipped via the bridge.

“The cost of delivery, say, from Moscow will be about the same – in the Crimea, in Novosibirsk, although there distance twice. Because there is reverse logistics and in the Crimea, this is a serious problem. Many cars that come back empty,” explained Vitaly Voronin.

A slight decrease in prices affected non-perishables. But the buyer first drew attention to the cost of another group of commodities, which refer to socially significant – milk and bread. A significant part of them at retail grocery chains Crimea – domestic suppliers is not profitable to transport fresh milk from the mainland. And here, according to the head of the Crimean branch of the Russian network, from retailer a little that depends: on the Peninsula of milk when purchasing more expensive by at least 10 percent, than in Russia.

However, Rostov retailer considers the Crimean market is still promising. Although the company’s stores show a margin of “around zero”.

How to be

The Ministry of industry and trade of Kazakhstan, commenting on the situation with the sharp decline in the region of Rostov stores retailer, said that “the trade network of the Republic of Crimea has more than 11 thousands of stationary trade objects with total area of 1.2 million square meters. The provision of retail space in 1,6 times exceeds the norm.”

It should be noted that under the category of “stationary retail facility” in accordance with the definition of the term (building, structure or part thereof, permanently attached to the Foundation with the ground and connected to the networks engineering and technical support) are not only large shopping malls but also small pavilions.

“Even if a trading network “Allsorts” finally decides to close all of its stores, it will not affect the provision of food and the price situation as a whole. Competition in the market is quite high and if withdrawal of any network from the territory of the Republic, in its place opens a new”, – concluded the Deputy Minister of industry and trade of RK Yan Latyshev.

According to him, the regional government has sent an appeal to heads of Federal retail networks “Perekrestok”, “Magnet”, “Tape”, “Pyaterochka” with a proposal to consider the possibility of opening supermarkets in the region.

“The main reason that hinder the arrival of new retailers in the territory of the Republic is the fear of sanctions”, – concluded the Agency.