Deficits are an archaism that Muscovites have long forgotten
The trade and service sector is one of the most prominent branches of the Russian capital’s economy. Just over the past few years, over 5 million square meters of retail space have been erected in the capital and half a million jobs have been created in the trade and service sector. Alexey NEMERYUK, Head of the Moscow Department of Trade and Services, talked about the development of this sector in an exclusive interview with Capital Ideas.
Mr. Nemeryuk, how did import substitution initiatives impact the capital? Have there been food deficits? What does the current ratio of domestic versus imported products in Moscow stores look like?
I’ll say right off the bat that there are no food deficits in the capital, and there won’t be any in the foreseeable future. This popular word borrowed from the Soviet era has been forgotten by Muscovites completely. (Smiles) As a major city, Moscow consumes over 12 million tons of food products annually.
Right after the introduction of bans on the import of food products from a number of foreign countries, we started to work with the regions in the food sector. This cooperation takes places within the scope of intergovernmental agreements that Moscow currently has with just about all federal subjects of the Russian Federation. The point of these agreements is as follows. First, to create the conditions for the stable development of regional agricultural producers. Second, to sell these products in Moscow.
Today, food products in the capital come from over 50 regions in Russia. Thus, domestic producers cover almost all of the city’s grain, wheat, buckwheat, and egg needs. They also account for 90% of potato, 88% of sugar, and 85% of vegetable oil volumes (and all sunflower oil is produced domestically). We do import some fruits and vegetables. But this trend is waning, along with the share of imported meat and meat products on the Moscow market.
The agro-logistics infrastructure that is being developed in the city plays an important role when it comes to increasing supplies from domestic producers in the capital as well. In 2014, the first agricultural cluster called “Food City” opened in the Russian capital. The food sold here comes from 63 different Russian regions. There are 13 shopping centers from different regions featuring a wide range of products, including live fish, which has its own separate section. It has over 250 kinds of live, chilled, smoked, and frozen fish, as well as seafood from Murmansk, the Far East, Dagestan, Astrakhan, Belgorod, and the Crimea.
Food products in Moscow are sold not only in over 56,000 stationary enterprises, but also in agricultural markets (there are a total of 21 in the city). Not to mention the fact that the capital has a great tradition of holding all sorts of food markets, including weekend markets. Last year, 109,000 Russian producers took part in weekend markets and over 25,000 tons of agricultural products were sold. 2,974 weekend markets have already been held in 2017.
All of these events aimed at providing Moscow residents with domestic food products have helped us keep the city’s food product market stable, avoiding price fluctuations and deficits.
Moscow has a lot of major foreign chains: Metro, IKEA, Leroy Merlin… what is their share of the market in general?
In terms of foreign supermarket chains like Billa, Metro, Auchan, Selgros, and Globus on the Moscow market, their share is not very high. It amounts to about 4.5%.
The share of foreign chains outside of the food sector is significantly higher, about 47%. It’s worth pointing out that these are primarily major players that focus on construction materials (OBI, Leroy Merlin, Castorama), household appliances and electronics (Media Markt), home and interior design products (Ikea), as well as clothing and footwear from international brands.
Interestingly, the latest business trend has been shifting toward smaller spaces. Even major retail chains are gravitating toward this. Grocery stores have started to opt for areas about 150-200 square meters in size. The French chain Auchan, for example, is starting to create smaller stores under the brand name “My Auchan.” In August of this year, one of these stores opened its doors on Tverskaya after the street underwent reconstruction within the scope of the “My City” program. In terms of chains outside the food sector, an H&M opened on Tverskaya in 2017 and a NIKE and a Massimo Dutti popped up on Kuznetsky Most.
Russian grocery chains are also adjusting to customer behavior, and customers have started to shop at stores located closer to their homes more frequently. It’s convenient to drop by after work, spending as little time on shopping as possible. For example, Azbuka Vkusa and Perekrestok have bigger supermarkets along with smaller options (AB Daily and Perekrestok-Express). The expansion of pedestrian spaces in the center of Moscow is also a factor. There are more pedestrians here, according to expert assessments, which means the number of people shopping has also gone up. Of course, chain owners are expecting this kind of behavior, instead of shopping trips where families buy groceries for the whole week, which is what happens in stores located near MKAD.
Street food is, to put it mildly, not one of Moscow’s strong points compared to foreign cities. Why? Is this about climate, the economy, or maybe culture?
You know, it’s probably a combination of all of these things. There are over 10,000 cafes and restaurants currently operating in Moscow. And this figure is more or less stable. I say “more or less” because, for a number of reasons, these establishments open and close frequently. For example, last year 1,279 new cafes and restaurants opened while 726 closed.
But the number of summer cafes in the capital has doubled over the past five years. There were about 1,200 of them, and now there are 2,400. According to polls, 70% of Moscow residents and guests would prefer to sit outside as opposed to indoors. Thus, the improvements that are currently taking place in Moscow are giving a very clear signal to business: yes, summer terraces will be in demand in the near future.
City festival spaces within the scope of “Moscow Seasons” events definitely have a lot of street food options. The festival that took place in September, dedicated to City Day, had street food stands operating across 40 platforms. There was all kinds of street food: delicious pies with different fillings, kebab skewers, tender kulebyaka, the air-light “Bird’s Milk” cake, and so much more. No wonder that over ten million people visited the festival events. Both the comfortable city atmosphere throughout most of Moscow and great service, of course, had a lot to do with this.
In 2018, Moscow will be hosting the FIFA World Cup. The impressions foreign fans will have will depend not only on how well their team does, but also on how comfortable they are in the capital. That is, on the trade and services sector. Is the city preparing something special in this regard?
I am confident that not a single tourist who comes to visit us for the World Cup will be left hungry. There will be a wide range of food services, including dishes for all price ranges. There will be haute cuisine, affordable business lunches, family establishments with game rooms for kids, and more. It all depends on personal preferences of the visitors (location, prices, taste). There will be ways to find restaurants, book tables, or order delivery on special websites like Afisha and Menu.ru, as well as on search engines like Yandex, 2GIS, and others.