Watcom index: Shopping in the cold summer of 2017

Watcom index: Shopping in the cold summer of 2017
Russian shoppers continue to stay at home / bne IntelliNews
By bne IntelliNews July 31, 2017

The Watcom shopping index continued to underperform as 2017 turns out of be the worst shopping season in the last four years and was behind the 2016 average by 7-10% due to the bad weather in May, Watcom reports.

The Watcom shopping index ended 2016 on a strong note with footfall in Moscow’s leading shopping malls increasing to just below the 2015 levels. But the index got off to its worst start in three years in the first weeks of 2017, as bne IntelliNews reported earlier this year.

The Watcom index is the most immediate and direct measure of retail activity in Russia as it measures the number of shoppers and their spend in real time using 3D camera technology placed in Moscow’s leading malls.

The index was still below the previous three years in the last month, hovering around the 480 market, but fell in weeks 28 and 29 to 465 and 463 respectively. That is well below the previous high of just under 500 for the same weeks in 2014 and 481 for the 29th week last year.

“The behavior was caused by abnormal cold and rain,” according to Watcom group. “To smooth the effect of weather and low spirits, people visited the cinema and entertainment zones more often.”

Retailers in the top malls in both Moscow and St Petersburg are trying to main traffic by cutting prices and laying on more extravagant entertainment in their malls, Watcom reports.

Managing company Stolitsa Management general director Olga Letuitina, representing small format of shopping centers, believes: “This trend didn’t touch the network Stolitsa, data shows quite typical metrics for the second half of the month. At the same time, there was a decline by 8-10% during the hurricanes and flooding in Moscow [in May].”

The tactics that many major malls have rolled out have mitigated the pain. The commercial director of the Crocus Group, one of the very largest malls in Moscow, Olga Antonova, said: “We fixed footfall growth on weeks 24th- 25th in Vegas Kashirskoe shosse. In Vegas Crocus City growth there was only growth in the 25th weak. But this was probably due to the impact of the introduction of discounts.”

The marketing director of Afimall City, another major mall in the heart of the Moscow City complex, Marina Vaganova, said tha: “Afimall City also fixed the traffic growth. Due to abnormally cold weather people visited movie theatres, restaurants more often. The sales season motivated visitors to make purchases. But these were helped by non-stop marketing activities, the circulating circus Aquamarine, and creating a festive atmosphere that office workers need so much.”

The managers of malls are simply trying to muddle through what is clearly a difficult patch.

Roman Skorokhodov, Watcom Group President, concluded: “The marketing activities changed due to the changes in the purchasing behavior model. The main task now is to maintain traffic and make maximum possible effort to attract your target audience.”

Still, the outlook for the leading malls is improving. Retail sales turnover is back in the black and more importantly the real disposable incomes (inflation adjusted nominal incomes minus food and utilities payments) is also back in the black after several years of decline, leading analysts to say that consumption should improve in the second half of this year

 

Data

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