Russian fashion market projected to grow 5-7% in next five years

MOSCOW. Dec 22 (Interfax) - Russia's clothing and footwear market could grow by 5-7% in the next five years, Yakov & Partners forecast in a report on the future of the country's fashion market.

This forecast is projected in the "baseline positive scenario" for the sector, which assumes consumer demand will recover to the level of pre-crisis 2021; production chains and costs will be optimized; new foreign players will enter the Russian market; and tourist traffic from friendly countries will grow.

Russia's fashion market saw average annual growth of 3.5% in 2018-2022, but in this period it only grew in 2021, by 9% to 2.2 trillion rubles on the back of deferred post-pandemic demand. The market contracted by 8% to 2 trillion rubles in 2022.

"In 2022, losses were suffered by retailers who sold foreign brands that left the market, while players who kept western brands on shelves, as well as niche Russian brands accelerated growth," the report said.

Leading foreign fashion retailers' share of the Russian market shrank to 8% in 2022 from 13% in 2021, while the share of large domestic ones grew to 35% from 28%. The share of the budget segment, meanwhile, grew to 72% in 2022 from 66% in 2021.

The report does not give a forecast for the size and growth of Russia's fashion market in 2023.

In the next five years, according to the baseline positive scenario, the landscape of Russia's fashion market will shift in favour of retailers in the low- and mid-price segments who build the most efficient production chains, the report said.

One of the factors in the future development of the market could be marketplaces, the report said. The share of online sales on Russia's fashion market grew by an annual average of 35% in 2018-2022 and this figure could increase by more than 10 percentage points in the next five years, the report said.

The report lays out four scenarios for the fashion market's development, the most pessimistic of which sees the market shrinking by 10-15% in the next five years, while the most optimistic sees it growing by 20-25%.