The head of X5 Retail Group, Russia’s second-largest retailer, criticised the government’s proposed limits on supplier payments, saying it’s “not the best thing to do” to counter rising consumer prices.
The planned legislation caps the average bonus suppliers pay retailers to three per cent of the goods’ value versus the current 10 per cent. The bill, which aims to keep prices in check and ease access to store shelves for local producers, was passed by Russia’s lower house of parliament in May.
“There is a number of instruments between suppliers and retailers,” X5 Chief Executive Officer Stephan DuCharme said in a Thursday interview on Bloomberg Television at the St. Petersburg International Economic Forum. “We aren’t sure that trying to regulate one part of this relationship will create the overall best effect for customers.”
The Russian government blamed retailers for food price inflation after banning certain imports from the European Union and the US last year. Russia’s chief prosecutor has ordered probes of the country’s largest retailers, checking whether markup levels are justified and if banned food is still offered.
Regulating the payments “will not necessarily safeguard consumers,” said Mikhail Krasnoperov, an analyst at Sberbank CIB in Moscow. “If bonus payments from suppliers get limited, retailers may need to boost prices on shelves to make up for losses.”
Countries like Turkey, Serbia, Morocco and Egypt “did a good job” in making up for the lost EU imports, X5’s DuCharme said. Belarus is also processing some EU food and bringing it to Russia, which isn’t illegal, DuCharme also said.
News by Bloomberg, edited by ESM
