Ukraine rated among world's most attractive retail markets

International retail giants continue to seek expansion opportunities in Ukraine, ranked as one of the most promising retail markets worldwide.

In a report published last month, Chicago-based consulting company A.T. Kearny ranked Ukraine for the second consecutive year among the five most prospective retail markets worldwide, along with China, India, Russia and Vietnam.

Ukraine, ranked as the third most attractive emerging retail market last year, dropped one spot down to fourth place this year, a respectable standing alongside the booming Asian markets, where the population runs into billions.

Although Ukraine's retail market remains underdeveloped, the country's shear size (a population of 47 million), surging domestic consumption and huge growth potentials offer superb expansion opportunities for leading international retailers.

The retail business in Ukraine has grown in double digit rates in recent years. Growth rates are tapering off, but remain high. Ukraine's State Statistic Committee reported some $17 billion in nationwide retail turnover in the first nine months of this year, a 25 percent increase year-on-year. Faster growth rates have been posted in big cities with populations in excess of 1 million including the capital Kyiv, Donetsk, Kharkiv and Odessa.

Several large retailers and wholesalers, such as Germany's Metro Group, entered the market years ago and continue to expand their presence.

Others, such as French retailer Auchan Group, which is eyeing the opportunity of developing hypermarkets in Ukraine, are knocking on the door. Italy's King Cross, specializing in the development and management of multi-functional shopping centers in Europe, has already been let in, having recently approved development plans for a retail shopping center.

Chairman of King Cross Group Giancarlo Steydea said his company hopes to build "at least" three retail centers in Kyiv, Lviv and Odessa by 2010.

King Cross plans to mark its presence in Ukraine by developing a brand new shopping center in Lviv, construction on which is expected to start next May and to be completed in 2008.

Plans envision that the 90,000 square meter Leopolis shopping center planned for Lviv will include a hypermarket, a cinema, a bowling alley and an ice-skating rink.

Steyde said his company expects to invest approximately 60 million euros [$76 million] into the Lviv center and is seeking to develop projects of similar size in other Ukrainian cities.

Steyde said King Cross is currently seeking to acquire land plots in Ukraine, adding that the country is a priority market for his company's customers and retailers as a whole.

"Many customers of ours keep on asking us for retail in shopping centers in Ukraine," Steyde said.

Leading international retailers are "sure" that Ukraine offers strong growth opportunities, he added.

King Cross has developed 10 shopping centers in Italy and Central European countries in the past decade.

Auchan, which posted more than 33 billion euros [$42 million] in revenues last year at more than 300 hypermarkets and 600 supermarkets in Europe, Asia, and the Middle East, is seeking land rights in Ukraine's capital for a hypermarket, insiders said.

Auchan officials, however, have remained tight-lipped regarding their expansion plans in Ukraine.

The newcomers are trying to repeat the rapid 200 million euro expansion into Ukraine by METRO Cash and Carry Ukraine, the local subsidiary of Germany's METRO Group.

The German retail company has expanded with lightening speed, opening twelve wholesale stores across Ukraine within three years. A thirteenth store is expected to open its doors by the end of this year.

Metro proved that Ukraine's retail business can be fruitful for international chains. Turnover in Ukraine for the German group surged to more than 300 million euros [$383 million] last year, with about eight stores operational for most of the year. Judging by the group's growth rates in Ukraine, turnover this year in Ukraine could reach 600 million [$766 million] euros.

by Vlad Lavrov, Kyiv Post Staff Writer
Nov 09 2006