A combination of rising disposable income, the relaxation of property regulations and a low density of modern, organised outlets has created a mine of untapped potential in Belarus’s retail sector.
Retail turnover reached US $23.7 billion in 2008, but while the 19% year-on-year growth was impressive, Belarus still lags behind its neighbours. In Lithuania, for example, retail turnover per capita is US $3,850 a year, in Hungary it is US $3,250, and in Russia it is US $3,130. However, Belarus’s per capita figure was just US $2,450.
A major factor in this imbalance – and a great opportunity for foreign investment – is an undersupply of modern outlets. A third of retail spend takes place at street markets and bazaars, three times as high as in Poland and five times as much as Western Europe.
Demonstrating this, Minsk has the lowest level of modern shopping areas per resident of any capital city in central and eastern Europe.
To tackle this, Belarus has adopted a policy of actively encouraging the construction of modern shopping centres. Colliers International, a real estate consultancy, predicts that 170,000 square metres of retail space will be developed between 2008 and 2010, with much more in the planning stages.
As a result, annual turnover through shopping malls, hypermarkets and convenience stores is forecast to grow by 30-50% over the next decade.
Foreign interest is picking up, with UK retailer Mothercare opening a series of franchised stores in the republic, there are Porsche, BMW and Volkswagen dealerships, and designer stores such as Canali in Minsk.