Retail Industry Ukraine

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Growth supported by domestic demand

The peak of the global economic crisis and also Ukrainian financial crisis in 2009 saw growth rates slow dramatically in Ukraine. In 2010 and 2011, sales gradually recovered. Consumer confidence strengthened as the economy performed well, with GDP rising by 5% in 2010 and 2011. Ukraine’s total retail turnover grew by 15,9% y-o-y in real terms in 2012, reflecting buoyant domestic demand and rising wages. Moreover, organized retail trade represented by hypermarkets, supermarkets, discounters and other modern formats, increased by 13,7% y-o-y.

Based on statistics, the average per capita food spending is $380-390 monthly. However, Ukraine still lags behind global markets on this measure, being six times lower than the average of $2380 (in 2011) observed across major retail markets. Relatively low per capita spending and underdeveloped market provide for substantial growth potential for the country in the long term.

Food retail accounted for 40,5% of total organized turnover in 2012 and reached 325.75 billion UAH in value terms[1]. It’s expected that with further income growth, the share of food in total organized retail trade will start to decline gradually (in 2012 it is more than 50% of total income) (Appendix A). However, consumers are expected to increase purchases of more expensive foodstuffs, thereby contributing to food retail market growth in value terms.

The population purchasing power is much higher than officially reported, as official retail statistics in Ukraine do not show the true picture due to the country’s large shadow economy. The household consumption data may provide a better basis for calculating food retail trade turnover as Ukrainian companies are known to understate sales to minimize taxes.

Household final consumption expenditures value was last computed in 2010[2] and amounted to $87,35 bn, with 51,6% attributable to foodstuffs, implying food retail turnover of $45,07 bn. Retail foodstuff...
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