Benefits That the FIFA World Cup 2018 Will Bring To the Retail Sector in Russia
There is little doubt that hosting a mega-event such as a World Cup leads to a spike in sales and activity across many industries. Travel and retail are likely to be the most immediate benefactors in Russia from such an influx of football fans within such a concentrated window of time. From a conservative standpoint Euromonitor’s Travel Forecast Model forecasts 1.4% increase in the number of total arrivals to Russia in 2018, directly caused by hosting a major sporting event. However, the World Cup is in a league of its own when it comes to scale, and the opportunities span far beyond what this 1.4% may suggest.
Various sectors will seek to capitalise. For instance, Russia’s consumer foodservice industry is growing yet remains somewhat constrained by a less than favourable political climate. Russia is forecast to grow by US$1.8 billion in chained foodservice value (US$1.6 billion of this from chained fast food) from 2017-2022 and many operators within foodservice can look to the event to springboard and catalyse growth.
Major foodservice brands such as McDonald’s (McDonald’s Corp), Burger King (Restaurant Brands International Inc) and Subway (Yum! Brands Inc) will all utilise the tournament to drive value sales, and also aim to deliver sustainable growth moving forward based on the successful promotion of Russia as a tourist destination.
McDonald’s has been a long-time partner of the World Cup and is an expert when it comes to meaningful activations around the event. The World Cup in Russia will be no different, but it’s worth looking at the bigger picture. For instance, in Brazil (the host of the World Cup in 2014) McDonald’s is producing eight limited edition sandwiches that are a tribute to previous tournament champions – from the McBrazil sandwich to the McGermany sandwich. All snacks will be part of the Signature collection and will go on sale as of April 24 throughout local Brazilian chains. In the Brazilian market, McDonald’s has achieved 4% CAGR growth since the tournament was held there. Ensuring that growth is sustained after the tournament ends, will be a key goal of the company and we can expect that there will be a desire to emulate the performance in Brazil.
Total retailing turnover depends more on macroeconomic stability, which is forecasted to be positive in Russia during the next five years with Real GDP growth reaching 2% annually. Incoming tourists with planned over 1 million visits will naturally boost demand on FMCG products and foodservice, but in will be short-term during the month of the World Cup and have limited influence on annual Retailing performance. The event can be also beneficial for certain grocery and non-grocery product categories such as drinks, snacks or sportswear. Besides, it was announced about launch of tax-free system in Russia, it is available now in test regime in several mainly luxury outlets. Retailers will use football theme for their promotional campaigns.
While Russia specific activations are to be expected from all major partners, there will form just one strand of a global strategy designed to use the event to raise awareness globally.
Further insights are available in the webinar, ‘The Influence of the 2018 FIFA World Cup on Global Domestic Football Leagues’. To receive the complimentary recording, visit: https://bit.ly/2Jw9dyI