E-commerce and shopping centers in Russia 2013

RUSSIAN RETAILE-COMMERCEANDSHOPPING CENTERS MONTH DAY, YEAR (12PT, ALL CAPS)

GLOBAL ONLINE MARKET4% of total retail trade

2CUSHMAN & WAKEFIELD

RETAIL IN RUSSIAE-COMMERCE VS.

SHOPPING CENTERSGROWTH IN THE GLOBAL MARKETOnline powers ahead

• Online retailing has been growing at an average of over 18% pa globally over the last three years compared to sales through other channels at just 1.3% pa.

• Online market share has risen to 4% from 2.2% five years ago.

• What’s more, this has been a global phenomenon, with all corners of the world increasingly wired for sales.

• Market share is highest in North America (6%) and Western Europe (4.7%) followed by Asia Pacific (3.6%).

• Recent growth (2009-12) has been strongest in Asia (33.3%), Latin America (21%) and Eastern Europe (17%).

0,0%0,5%1,0%1,5%2,0%2,5%3,0%3,5%4,0%4,5%

0%

10%

20%

30%

40%

50%

60%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Mar

ket S

hare

Ann

ual G

row

th

Global Online Retail Sales Growth

Internet sales growthShare of total sales

0%

5%

10%

15%

20%

25%

0%1%2%3%4%5%6%7%

Mar

ket S

hare

(201

2)

Ann

ual G

row

th (2

009

to 2

012

pa)

Regional TrendsRecent Growth

Source: Cushman & Wakefield, Euromonitor

RUSSIAN MARKET€10 000 000 000Annual volume of online transactions

2% of total retail trade



SHOPPING CENTERS

Online sales by marketMARKET SIZE

Online Sales per Capita

€0

€100

€200

€300

€400

€500

€600

€700

€800

Nor

way

Finl

and

UK

Den

mar

kU

SAIre

land

Sout

h K

orea

Switz

erla

ndSw

eden

Luxe

mbo

urg

Fran

ceJa

pan

Ger

man

yA

ustr

iaN

ethe

rland

sBe

lgiu

mA

ustr

alia

Cze

ch R

epN

ew Z

eala

ndC

anad

aTa

iwan

Sing

apor

eH

ong

Kon

gSl

ovak

iaPo

land

Italy

Hun

gary

Russ

iaA

rgen

tina

Chi

leIsr

ael

Braz

ilPo

rtug

alSp

ain

Chi

na

Onl

ine

sale

s pe

r ca

pita

, Eur

o 20

12

• Average Russian citizen spends EUR70 per year online

• Active online shoppers spend up to $4000 per year




SHOPPING CENTERS

0%

2%

4%

6%

8%

10%

12%

14%

Sout

h K

orea UK

Finl

and

Irela

ndD

enm

ark

USA

Nor

way

Cze

ch R

epG

erm

any

Fran

cePo

land

Swed

enN

ethe

rland

sC

hina

Slov

akia

Japa

nSw

itzer

land

Aus

tria

Taiw

anBr

azil

Belg

ium

Sing

apor

eLu

xem

bour

gH

unga

ryA

rgen

tina

Russ

iaC

hile

Aus

tral

iaN

ew Z

eala

ndH

ong

Kon

gIsr

ael

Can

ada

Italy

Port

ugal

Spai

n

,

Share of online retail in total sales

ONLINE MARKET PENETRATION

• Online retail sales in Russia grow at rate 20-30% per year

• Online market penetration is expected to grow from 2 in 2012 to 4.5 in 2015


CONSUMERS22 millionOnline Shoppers

30% Annual growth



SHOPPING CENTERS

Content and tickets

40%

Electronics26%

Clothing and footwear

8%Auto parts

6%

Furniture and houseware

4%Kid's goods

3%

Cosmetics2%

Books and CDs2%

Food2%

Other7%

Other60%

2012 online sales structureMARKET STRUCTURE

• Average Russian citizen spends EUR70 per year online

• Active online shoppers spend up to $4000 per year

Source: Cushman and Wakefield, DataInsight



SHOPPING CENTERS

RestrictionsPAYMENT METHODS

Primary means of payment • Russian economy is still cash based

• 74% of Russians possess bank cards

• Only 40% of those use bank cards for retail purchases

58

49

32

23

12

11

Cash on Delivery

Web money

Bank card

Bank transfer

SMS payment

Terminal

Source: Morgan Stanley research, DataInsight



SHOPPING CENTERS

RestrictionsDELIVERY MEANS

• Cross region deliveries are limited because of poor postal service

• Own courier delivery is the most common practicу for online stores of all sizes

• Share of pick up points and store pick up is increasing.

Courier

Russian Post

Pick up pointsPick up at storeOther

Source: Morgan Stanley research, DataInsight



SHOPPING CENTERS

Restrictions and opportunitiesRUSSIAN SPECIFIC

• 40% of online shoppers line in Moscow and St. Petersburg

• 10% of total online purchases are cross board transactions

• Travel Tickets is the largest online retail segment

• Each year several million people make their first online transaction

• Major growth comes from regions

ONLINE RETAIL SCENE

25 000Online Stores



SHOPPING CENTERS

Top 10 online retailers cover 20% of whole marketRUSSIAN ONLINE RETAIL SCENE

• 10% of online purchases are done abroad

• In the USA top 10 online retailers cover 52% of the market

2012 Sales, million EURO

292

277

235

182

144

130

129

118

115

113

102

85

Ulmart.ru

Exist.ru

Svyaznoy.ru

Ozon.ru

Kupivip.ru

Holodilnik.ru

Wildberries.ru

Sotamarket.ru

Biglion.ru

Mvideo.ru

Utkonos.ru

Citylink.ru

Source: DigitalGuru

E-COMMERCE ANDSHOPPING CENTERSTop performing sectorsIt took decades to create decent offline retail infrastructure. Online has a long way to go



SHOPPING CENTERSSHOPPING CENTERSMarket share

12%

14%

16%

17%

19%

21%

23%

26%

26%

27%

30%

31%

33%

35%

Russia

Belgium

Germany

Italy

Netherlands

Czech Republic

United Kingdom

Finland

Sweeden

Spain

France

Ireland

Poland

Slovakia

Share of shopping centers sales in total sales in country

• In Russia shopping centers still play weak role in country’s retail scene

• By 2015 market share will reach 15%

• By 2020 shopping centers may cover ¼ of the total retail market.

Source: Cushman and Wakefield, ICSC



SHOPPING CENTERSSHOPPING CENTERSMarket share

• Russia is the biggest retail market in Europe

• Both shopping centers and online retail has significant upside

• We expect shopping center and E-commerce business to double within this decade.

0 50 100 150 200 250 300 350 400 450 500

Russia

France

Germany

United …

Italy

Spain

Netherlands

Poland

Belgium

Sweeden

Finland

Czech …

Ireland

Slovakia

Shopping centres sales, bn EUR 2012 Online sales, bn Eur Conventional sales

Retail market size and structure in Europe, billion EUR

Source: Cushman and Wakefield, ICSC, GFK



SHOPPING CENTERSSHOPPING CENTERS VS. E-COMMERCEOutlook

• E-commerce and shopping centers will be fastest growing sectors in Russian retail

• While in the short term online sector will outperform all other forms in growth rate it will most likely hit the glass ceiling within 3-5 years.

• In the longer term shopping centers business has very strong potential.

• Multi channel retail will be the key to success by bringing together best of both worlds.

Shopping centers and E-commerce markets volumes forecast

0

100

200

300

400

500

600

2012 F 2015 F 2020

Shopping centers sales, bn EUR

Online sales,bn EUR

Conventional Retail, bn EUR



SHOPPING CENTERSLOGISTICS FOR E-COMMERCEInfrastructure

• Moscow will remain a major logistics hub in Russia

• Conventional and multy channel retailers will dominate on warehouse market

• Share of internet shops in warehouse space will be similar to their share in retail turnover

Warehouse are occupied by retailers and internet shops

Actuals Forecast

0

2 000 000

4 000 000

6 000 000

8 000 000

10 000 000

12 000 000

14 000 000

16 000 000

18 000 000

20 000 000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Moscow - Retail Regions - Retail

Moscow - E-commerce Regions - E-Commerce

Moscow - Other Regions - Other



SHOPPING CENTERS

STORE NETWORKS:• Despite the growth of online, current trends continue to

highlight the importance of property to retailers where it is in the right location and of the right size, quality and price.

• Poor infrastructure will limit growth of online retail, leading to slowdown of growth rate. It is unlikely that online trade share in Russia will reach 10% before 2020.

• Retailers may have to reshape their strategies in order to benefit from higher growth in online.

• Some retailers are opting for fewer but larger stores while others are seeking more but smaller stores and there is as yet no right answer on the optimum store network or units.

IMPLICATIONS IN THE REAL ESTATE WORLDOnline sales by market



SHOPPING CENTERS

COST IMPLICATIONS:• Online trading will add to retailer costs, putting

downward pressure on other areas of cost such as real estate.

• With a major role for stores to play for brands, luxury retail and flagships, the value proposition for the best space will rise.

• The growth of “click and collect” and “showrooming” also underlines the ongoing importance of physical stores, but the increasing emphasis on logistics highlights how “value” is changing along the supply chain.

• This will be reflected in property demand and pricing and while in-demand locations will see rents rise, weaker locations, serving more as collection and storage nodes, will see rents fall.

IMPLICATIONS IN THE REAL ESTATE WORLD



SHOPPING CENTERS

PROPERTY IN A MULTICHANNEL WORLD:• The successful combination of on and off line

worlds will be a powerful source of competitive advantage to the best retailers and retailing centres.

• The online world will provide the intelligence to support changes such as personalization and greater customer service while real estate will provide accessibility, as usual, but will also contribute more to brand profile and the ability to deliver a real experience – a factor which can’t easily be replicated online.

POTENTIAL REAL ESTATE WINNERS



SHOPPING CENTERS

DOMINANT DESTINATIONS:• Hence, although the growth of online retail will be

negative for parts of the property market, large regional shopping centres and core in-town markets have considerable potential to emerge as winners from multi-channel retailing.

• They tend to be areas of high traffic, with a confluence of transport links and parking and are a key hub for consumers to meet, enjoy a richer experience and access supporting uses such as leisure and food.

• There is also scope for managers to offer new services such as delivery and hence shopping centres should be a vital part of the e-tail infrastructure platform.

POTENTIAL REAL ESTATE WINNERS

POOR INFRASTRUCTURE

Restricts online retail development in Russia



SHOPPING CENTERS

• Just as the internet has transformed how we communicate and share, it is now transforming how we work, how we play and how we shop.

• Whether a retailer or property owner, this is a clear threat to those who cannot adapt but it is also a source of opportunity, opening up new markets and speeding the globalization of retail.

• While a worldwide phenomenon, online retail is not the same in all areas however. Local, cultural, regulatory and infrastructure issues impact on both physical and online retailing.

• According to our analysis the UK is the most developed online market, followed by the USA, Germany, France, the Netherlands, South Korea, Japan, Switzerland and the Nordic markets.

• While currently dominated by mature markets, thanks to differing cultural and technology drivers, online retailing will change the global geography of retail with some emerging markets set to advance more rapidly, particularly in Asia.

THE LEADING ONLINE RETAIL MARKETS-A C&W Ranking of Scale & Potential

(1 is best) Market Size Infrastructure OverallUnited Kingdom 2 9 1USA 1 15 2Germany 4 14 3France 3 16 4Netherlands 9 5 5Korea 7 12 6Japan 5 17 7Switzerland 14 4 8Finland 20 3 9Sweden 16 6 10Denmark 15 7 11Canada 13 10 12Norway 18 11 13Australia 12 19 14Belgium 19 20 15Taiwan 25 13 16Hong Kong 35 2 17China 6 31 18Singapore 40 1 19Austria 26 18 20Brazil 11 27 21Italy 10 28 22Ireland 23 23 23Luxembourg 37 8 24New Zealand 30 21 25

Russia 8 41 26Turkey 21 33 27Poland 17 37 28Spain 27 29 29Chile 31 26 30

www.cushmanwakefield.com

MAXIM KARBASSNIKOFFPartner, Head of Retail Department+7 495 799 9888 ext. [email protected]

DENIS SOKOLOVPartner, Head of DepartmentResearch+7 495 799 9888 ext. 599891 [email protected]

EKATERINA ZEMSKAYAPartner, Head of Retail Agency, Retail Department+7 495 799 9888 ext. [email protected]

LADA BELAICHUKAssociate Director, Deputy HeadResearch+7 495 799 9888 ext. [email protected]

ANDREY SHUVALOVAssociate, Retail Department+7 495 799 9888 ext. [email protected]

EVGENY POPOVAssociate, Head of Department Development Consultancy+7 495 799 9888 ext. [email protected]

E-commerce and shopping centers in Russia 2013

Travel

Transcript of E-commerce and shopping centers in Russia 2013