Russia’s booming e-commerce sector could account for 25% of warehouse space leases in 2019, Vedomosti reported on February 5.
Leading retail operator Ozon has leased 94,000sqm of new warehouse space in Moscow, with the option to increase it to 122,000sqm, the paper reported. The paper also cites sources saying that internet powerhouse Yandex.Market is in talks to lease up to 80,000sqm.
Russian e-commerce is eating into traditional retail sales and nine out ten Russians have now bought something online in the last decade. Increasingly e-commerce firms are investing into logistical support for their burgeoning businesses.
“Logistics capabilities are the backbone of retail, and large-scale leases by e-commerce operators point to a new wave of sector transformation. In Russia, there are 22mn sqm of modern logistics space, while the penetration significantly lags developed market peers (150sqm per 1,000 citizens vs. blended 2,650sqm per 1,000 citizens). The leading holders of logistics space are food retailers and, coupled with their truly national coverage, this is behind their strong negotiating stance vs suppliers. Magnit and X5 operate 1.64mn sqm and 1.1mn sqm, respectively, being the largest logistics companies. The average size of their DCs is 44,000sqm and 28,000sqm, respectively,” VTB Capital (VTBC) said in a note.
As the leading and most sophisticated retail sector, analysts say that the whole food retail business is on the verge of being transformed as it goes into the cloud.
“Forming alliances between IT companies, global retailers, and credit institutions hold potential for a material acceleration in the sector's digitalisation and creates a threat for traditional retail. However, emerging e-commerce players still require logistics and fulfilment platforms and we see the rollout of these on the three to five year horizon. According to the CBRE, online retailers could account for 25% of all deals in the warehouse sector in 2019, an increase of almost double,” VTBC said.