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. Last Updated: 07/27/2016

No. 1 Retailer Opens Moscow Outlet

A new, major player entered the Moscow retail scene Thursday, when the world's most prolific chain, Spar International, opened its first Moscow supermarket.

Called Eurospar, the 1,800-square-meter, $3 million supermarket at 146 Varshavskoye Shosse in the city's south is just stage one in the Dutch retail giant's ambitious plan.

"The opening of the first store is just a beginning, and I don't see any insuperable problems for Spar to expand in Russia," said Dmitry Maslov, general director of Spar Retail.

In its first phase of expansion into the Russian market, Spar plans to invest $50 million over the next 2 1/2 years to open 30 outlets across the country.

"Strategically Russia became interesting 1 1/2 years ago as average personal incomes reached the necessary level for developing supermarkets," Maslov said.

The new supermarket offers 30,000 items, including 300 Spar brand-name products — for which the retailer is looking for a local producer.

Spar has 17,000 supermarkets in 31 countries and is the world's largest retailer by number of outlets.

The major investor behind Spar in Russia is Delta Capital Management Inc., a for-profit lending institution fully funded — though not owned — by the U.S. government via The U.S.-Russia Investment Fund. The ownership structure was not disclosed as Spar Retail is a private company, said Paul Price, vice president of Delta Capital Management.

Although its main focus is on Moscow and the Moscow region, Spar is to become the first international retail chain to expand into Russia's regions. By the end of this year, it intends to open a Spar in Nizhny Novgorod, and it is negotiating with four other regions to open stores next year, according to Price.

Spar's foray into Russia comes as a number of foreign chains are setting their sights on the market.

In recent months, Germany's Metro AG, the world's third-largest wholesale and retail chain, and another German retailer, AVA, laid the cornerstones of their first complexes here. Turkish retailer Ramenka has said it will open a fourth Ramstore hypermarket in October, and French retailer Auchan has chosen two plots in Moscow and two in the Moscow region for construction of its stores.

"It's a good time to come to the Moscow retail market now as it is steadily growing," said Yefim Rybalov, deputy head of the Moscow city government's food department.

In the first half of this year, retail sales in Moscow grew 7 percent compared to the same period last year and reached 475 billion rubles ($16.2 billion), Rybalov said.

Russian retailers, meanwhile, have been forming alliances to fight the foreign competitors.

"The retail chain business in Russia just came into being, we still don't have a national retail chain, so if Western chains have serious plans, we almost have no chances to fight against them," said Anton Laptev, executive director of the National Trade Association, which plans to create the Consortium of Russian Retailers by September.

Alexei Krivoshapko, retail analyst at United Financial Group, said within seven years Western chains would fully occupy the Russian market.

"The access to cheap capital and the best world experience are the advantages Western retailers have," Krivoshapko said.