Extensive hypermarket chains may be curbed

Development of small town trading in jeopardy
By Anna Semiletova

The wonderful hypermarkets which initially sprung up in Minsk and across regional centres are now opening in smaller district centres. Of course, customers are delighted to be given more choice but the move will undoubtedly impact on small local shops, which cannot compete on selection or price (being unable to negotiate volume discounts). Discussing the issue at a press conference, President Alexander Lukashenko has instructed the Government to study the impact of chain stores.

No legislation currently controls chain stores, although Vyacheslav Dragun, Deputy Minister for Trade, tells us that a draft law on state regulation of trade and public catering sites ‘limits the presence of chains where their market share exceeds 30 percent’.

The world model encourages free competition but the Deputy Minister tells us that authorities are keeping an eye on the spread of chain retailers, to ensure that a monopoly does not occur. According to Trade Ministry data, large retail chains’ current share does not exceed 20 percent, with variation depending on an area’s infrastructure. Some chains claim just 4-5 percent of the local market, while others boast a worrying 27 percent.

More powerful players seek entry to the market, with investment proposals submitted from the world’s major trading companies. However, according to Mr. Dragun, 2013 won’t see many new branches opening, since each costs around $100m to set up: a significant figure in these hard times.

He admits that placing such hypermarkets on the edges of settlements is preferable, as seen in Minsk. However, the Deputy Minister for Trade sees no harm in each city suburb having its own branch. “Not all Minsk residents have cars to allow them to reach such shops for weekly purchases,” he notes, adding that if the opening of large chain stores leads to the closure of smaller shops, the Ministry for trade will respond, without waiting for the law. It seems that the issue remains open-ended.
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