The business opportunities that are prevalent in Russia
It must be noted that Russia does offer immense opportunities to those wishing to engage in business. However, there is a negative perception that can be attributed to misinformation about Russia’s economic environment. Actually, it can be argued that undeveloped and untapped business environment provides a very easy way for penetrating in the market (Lieberman 189).
In this regard, it must be appreciated that the most appropriate industry to get into is the apparel industry because there is a need to provide western style clothing to the citizens of Russia. A concept that is quickly gaining popularity in Russia is the malls providing the means for the consumers to fulfill all their shopping needs under one roof. It must also be pointed out that Russia does not have a lot of department stores that are very instrumental in boosting the sales of the apparel.
An entrepreneur who wishes to venture in this market must strive to provide a bigger store that offers a wide variety of apparel. This is because large stores are very attractive to the Russians. Consequently, large department stores have a high chance to become successful in Russia as they are a relatively new concept. Competition is not very well developed in Russia, and it has been put that competition is what will propel Russia from being an emerging economy to a leading economy.
According to Blaszczyk (10), the only departmental store in Russia, TSUM, targets the high-end market. This signals the need for the market to have stores that target the growing middle-class in Russia. It has been pointed out that the Russians are yearning for shopping facilities that provide a one-stop shop.
Another issue that is likely to work in favor of the entrepreneur is the fact that the number of consumers in Russia is set to increase considerably over the next few years. One of the strengths of this market is that the Russians spend a bigger chunk of their income on apparel as compared to the consumers in other countries such as Poland, Hungary, China, Germany and the USA.
The apparel market in Russia
According to Makarova (1), the apparel market is not very saturated in Russia. To support this assertion it has been adduced that the apparel market grew by about 32.5% in the period between 2006 and 2010.
For this reason, the sector attracts a lot of investors who may wish to venture in Russia. Most of the sales made in this market are out of the imports made into the country since Russia does not produce enough fabric to satisfy the local market. Because of this deficit in the production of textile, it is expected that the amount of imports will keep on increasing in order to meet the needs of the local market.
Therefore, it can be seen that the investors who may wish to venture in Russia apparel industry would have to import their wares in order to meet the local demand for apparel and textiles. Additionally, it must be noted that the foreign brands are very popular in Russia.
One of the reasons as to why Russians prefer to import their apparel is the diminishing stock of cotton that has been as a result of reduced production. This has the effect of increasing the cost of cotton. Consequently, the cost of apparel produced in Russia ends up being very costly. What this portends for the apparel industry in Russia is that there has been an increase in the production of synthetic fibers. This in effect implies that the natural fibers will become the preserve of the customers in the high-end market.
In 2009, the prospects for the apparel industry were not very encouraging. However, when the local currency strengthened the volume of sales in the industry, it went up considerably. Another aspect that needs to be appreciated revolves around the issue of sportswear. It has been postulated that the popularity for healthy lifestyle in Russia has risen in the past few years. As a result, there has been an increase in the sales of sports gear. This in effect signals to the traders that they should start stocking more sportswear in order to enhance their sales.
The challenges which are prevalent in Russia business environment
It has been suggested that Russia economy is likely to experience a slow down in the coming years. This will have an adverse effect on the ability of the Russians to purchase imports and they will instead prefer the local products. However, it must also be appreciated that despite that challenge there is a very great likelihood that the incomes for the Russians are set to increase.
This implies that their disposable income is likely to increase as well. According to Barrow and Molian (233) these forecasts on growth are pegged on the postulates that the country will continue to enjoy the economic and political stability that has existed for a very long time.
It has also been said that apparel is one of the most important commodities that are purchased in Russia. For this reason, it can be pointed out that the purchase of apparel is directly dependent on income, economic conditions and living standards.
According to Charlton (134) the Russian apparel market is growing. This shows the great potential of the apparel industry. It must also be appreciated that women apparel make up about 60% of the entire apparel market. This implies that the largest growth potential can only be found by selling women apparel.
On the other hand, the segment that has the least growth prospects is the underwear. It has also been said that outdoor markets are taken to be the most popular apparel distribution channel accounting for about 75% of all the apparel sales. Nonetheless, when it comes to urban centers 11-22% prefers to shop in single brand boutiques while 45% prefer to purchase apparel from the shopping malls (Bohdanowicz and Clamp 47).
A research that has been carried out shows those sales from the traditional type of apparel outlets are likely to decline significantly over time. This is because there is likely to be an influx of traders who are likely to come up with modern stores that are modeled along the western apparel stores. Another hurdle that the new entrants in the market are likely to face concerns the outdoor marketing. This is because a law has been enacted restricting the activities of foreign nationals in the outdoors markets.
The cities that provide the most opportunities when it comes to the sales of apparel are Moscow and St Petersburg. In fact, it has been said that 40% of the sales of apparel are made in these two cities. Moscow, for instance, has pursued a policy that is meant to push away the traditional types of retail outlets while encouraging the introduction of modern types of stores. This move has largely been said to be successful (Bohdanowicz and Clamp 47).
This implies that the traders who still embrace the traditional outlets are moving away from the city centers, and into those regions where the traditional outlets are still preferred over the modern ones. Another possible method that has been found to be instrumental in the promoting of the sale of apparel is internet marketing. It is expected that by 2020 the sales made over the intent will have doubled to 20%. This implies that internet marketing is the next frontier through which the apparel traders can increase their sales prospects in Russia.
Conclusion
Despite the fact that very little information on business opportunities in Russia is readily available, there are a lot of opportunities that are available. This can largely be due to the fact that there is a lot of untapped potential in the Russian business environment. Secondly, it has been noted that Russians nowadays prefer malls whereby they can purchase all that they need within the same complex.
This can be very instrumental in promoting a culture of consumption, which effect would be to enhance the sales of apparel. It must also be appreciated that women apparel accounts for the largest percentage of the sales made. Therefore, the traders should always make a point of stocking women apparel in order to boost their sales.
Works Cited
Barrow, Colin and Molian David. Enterprise Development: The Challenges of Starting, Growing and Selling businesses, London, United Kingdom: Cengage Learning, 2005. Print.
Blaszczyk, Regina. Producing Fashion: Commerce, Culture, and Consumers. Philadelphia, Pennsylvania: University of Pennsylvania Press, 2008. Print.
Bohdanowicz, Janet and Clamp, Liz. Fashion Marketing. New York, NY: Routledge, 1994. Print.
Charlton, Angela. Frommer’s Moscow and St. Petersburg, Hoboken, NJ: John Wiley And Sons, 2012. Print.
Lieberman, Ira. Russia: Creating Private Enterprises and Efficient Markets. Washington, DC: World Bank, 1995. Print.
Makarova, Liudmila, Export Clothes and Apparels or Textiles to Russia. Web.