Russian Duty Free Industry

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Association of Duty Free and Travel Retail
BORT Russia

Moscow, 2011

Table of content
1. 2. Executive summary Russian Duty Free Market overview 2.1. Current market size 2.2. Key drivers for market growth 2.3. SWOT analysis “BORT” Overview 3.1. At a glance 3.2. Our goals and objective 3.3. Our structure “BORT” Russia partners (State bodies, National Russian and International organizations)

3.

4.

5. 6. 7.

“BORT” Membership benefits “BORT” working program for the year 2011-2012 “BORT” membership fees

Executive Summary
WHY RUSSIA?
Strong economic growth fuelled by High Oil Prices and modernisation of the economy Rapid development of airport terminal industry reinforced by Global events in Russia within the period 2012-2020 Recent “National Frontier trade development program” initiated by Russian State Over 300 crossing points within Russian border for the launch of new business provides one-window approach to the Russian market through Access to key decision makers and market regulators at the Russian State bodies Access to 100% of landlords Access to shelves of 100% of DutyFree operators within Russia Access to information on legislative initiatives, statistic and market research data Access to key Russian business media

CHALLENGES!
High barriers for the market entrance for newcomers Redundant administrative barriers caused by noncoordinated activities of state bodies and bureaucracy Inconsistencies in legal framework regulating Russian Duty Free market Special agreements in doing business in Russia Lack of transparency and industry data

High spent culture of Russians while traveling

Russian market overview I.
Russian market overview 1988-2011

1988
Market growth

1998

2008

2011

Current market size is over 1 billion euro

•The first Duty-Free shop opened at international Moscow airport SVO 2 by joint company of Aer Rianta and Aeroflot •New local operators enter the market. New shops opened at SVO 2 and DME. DuFry enters Russian market. Total number of operators: around 15

1988 1998

Number of Duty-Free operators more than 100

•Duty Free industry expands to key regional cities of 2008 Russia. G.Heinemann enters Russian market. Total number of operators: around 60 •Duty Free industry expands to border lines and sea 2011 ports. Number of operators: more than 100

Key drivers for Russian Duty-Free market growth in 2012-2020 Top Global events to drive future Duty Free growth
•Rapid growth of passenger traffic in number and spending power •Russia becomes the playground for the brightest global events. Around 30 global events will take place within 2012-2020 •Implementation of large-scale State programs aimed at development of travel and transport infrastructure in Russia

2010 2020 2012 2020 2011 2015

2011 •Implementation and development of modern business practice in Duty-Free shops such as “walk 2013 thru ”, “Espace Voyageur”, etc.

Russian market overview II.
STRENGTHS
• • • High consumer spending culture and huge desire of Russians to travel and spend money; Loyalty to Duty-Free goods perceived by Russian consumers as goods of the higher quality in comparison with goods on the domestic market ; Over 300 border crossing points that allow expansion and launch of new Duty-Free shops;

WEAKNESSES
• • • • • Lack of transparency therefore unfair competition ; High entrance barriers to the market for newcomers; Redundant administrative barriers caused by non-coordinated activities of State bodies and bureaucracy; Poor legal framework regulating Duty-Free industry; Undeveloped model of cooperation with landlords and State regulators;

OPPORTUNITIES
• Rapid development of airport terminal industry reinforced by Global events that will take place in Russia within 2012-2020; Implementation of large-scale State programs aimed at development of travel and transport industries Development of new business formats in Duty-Free industry; Strengthening of Russian...
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