Retailers in Russia see profits, sales decline, business confidence falling - economists
MOSCOW. Sept 24 (Interfax) - Russia's retail sector has seen a decline in demand and sales, slump in profits, staff downsizing and an increase in prices for food goods in the third quarter of 2014.
Businesses are pessimistic about the fourth quarter, a study of retailers conducted by the business trends research center at the Institute for Statistical Studies of the National Research University Higher School of Economics shows.
The business confidence index in the retail sector fell to a three-year low of plus 4% in the third quarter.
"Room for a possible corrective industry maneuver is shrinking in front of our eyes, leaving ever less chances of retail closing 2014 in its usual clear status as an economic driver," the HSE said in a statement, citing the head of the business trends research center, Georgy Ostapkovich. Respondents' expectations for demand, sales and profits are at their lowest point since the pre-crisis period of 2008.
The survey showed that 28% of retail company managers have seen a drop in sales volumes compared to the second quarter and about 35% have seen a decline in turnover. More than 25 reported a contraction of staff at their companies. At the height of the summer-fall season, this trend points to a maximum expansion of budget optimization measures, the HSE said. Almost a third of managers reported a slump in profits.
Some 60% of managers reported rising prices in the food segment, and about 50% intend to hike prices in the fourth quarter.
"The ban on imports of a number of imported food goods into Russia and the second round of sanctions will accelerate the growth of prices by the end of the year and, possibly, even lay the foundation for a new price model for 2015," the economists said.
However, price increases with a massive regional scope should not be expected for the year because the ban affected primarily "expensive, high quality products" carried primarily by stores in large cities, the economists reckon.
