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. Last Updated: 07/27/2016

Body Shop to Open in Moscow

bloombergRussia's growing middle class is increasingly interested in branded products.
Skin-care giant The Body Shop is planning to open its first Russian store by the end of the year, the company said Wednesday.

Riding the wave of three years of strong consumer sector growth, the British retailer is set to move into the lucrative markets of China, the Middle East and European countries such as Russia, the company said.

"We believe there are significant market opportunities in Russia, with a rapidly developing retail environment and a growing middle class seeking branded products," said Bill Eyres, a spokesman for The Body Shop.

Eyres declined to give further details, saying only that The Body Shop's "standard business partnership model" included entering foreign markets through franchisees. "Circa 40 markets are currently based on this model," he said.

One of the biggest skin-care brands in the world, The Body Shop operates more than 1,900 outlets in some 50 countries. The company prides itself on its use of natural products and a strong stance against animal testing.

In April, the company said in its 2005 annual report that Russia presents "significant new-market opportunities" and that "we are close to signing an agreement with a business partner and anticipate opening our first store in September."

Once in Russia, The Body Shop will find itself sandwiched between lower-priced chains, such as Dlya Dusha i Dushi, or For the Shower and Soul, and upscale brands, such as France's L'Occitane.

Analysts are divided over the prospects of the British retail giant.

The British skin care company is bound for success, said Maria Vakatova, a spokeswoman for the Comcon research company. Moscow is "awash with petrodollars, and people [here] don't count money," she said.

Moscow alone presents an opportunity for at least "10 to 20 outlets before you start looking further," said Matthew Stych, a retail analyst with Britain's Euromonitor consultancy.

Yelena Borodenko, a retail analyst with Alfa Bank, said that the skin- and body-care market in Russia was forecast to grow at an annual rate of 10.8 percent until 2010.

But per capita spending on skin-care products remains low, analysts say. This year it is expected to be about $60, or $5 a month, Borodenko said.

Body Shop shampoo currently sells on the store's web site for $3.50 to $12, while shower gel costs from $10 to $18.