The Ukraine is fast becoming one of the premier retail battlegrounds in the former Soviet Union
The Ukraine is fast becoming one of the premier retail battlegrounds in the former Soviet Union as international and domestic players are lured to the region with opportunity for easy pickings.

Russiansupermarketand hypermarket retailer Perekriostok acquired the five-strong Kiev Spar chain last week for an estimated US$7 million (£3.7 million) to establish a beachhead. It is aiming for Ukrainian market leadership with plans to pour between US$200 million and US$300 million (£105.8 million to£158.6 million) into opening stores.

The Mayor of Kiev is reported to have set aside land for development by Swedish furniture giant Ikea, which has said it will invest E500 million (£343 million) in the Ukraine. German retailers Rewe and Metro, as well as French group Auchan, are already in the country.

Perekriostokdeputychief financial officer Alexander Panas told the Adam Smith Russian Retail Conference in Moscow last week: 'Perekriostok is going to the Ukraine and staying there.'

The investment profile of the Ukraine, which is the second largest economy in the CIS after Russia, has risen in recent months following the orange revolution and the swearing in of President Viktor Yushchenko in January.

It is also smaller than its sprawling neighbour, so is seen as being logistically more manageable.

Roman Lunin, chairman of local player Kvisa-Trade, which runs the Velyka Kyshenia supermarket and restaurant chains, said the Ukrainian retail market was worth about US$20 billion (£10.58 billion) last year. The average salary is US$110 (£58 )a month.

The economy stagnated following the collapse of the Soviet Union and until 1999 was contracting. However, Lunin expected the retail market to grow by 20 per cent this year. GDP is expected to rise 6 per cent in the same period.

Lunin said he planned to open 25 supermarkets this year and launch a store card with a US$200 (£106) credit limit. Gross sales doubled to US$130 million (£68.7 million) last year and he predicted they would reach US$250 million (£132.2 million) this year.

Kiev accounts for 15 per cent of the retail market. Sales through organised retail formats in the city, such as hypermarkets and supermarkets, have rocketed from 5 per cent in 2000 to more than 50 per cent. In the regions, the percentage is much lower standing at up to 20 per cent.