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Russia has been sanctioned for 5 years, consumers are more careful


In March five years ago, the United States and the European Union imposed the first round of sanctions on Russia after the Ukraine crisis. Russia’s international rejection, what impact does it have on local consumers? Compared with consumers in regions less affected by the boycott, how do the current Russians evaluate themselves? The answer can basically be in Nielsen, a market research organization in New York Found in the newly published “Consumer Wealth Dynamics Research Report” (Consumer Wealth Dynamics Research Report). Some of them are generally expected, but some are unexpected.

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Nielsen’s survey results show that 38% of Russian respondents believe that their current economic situation is worse than five years ago. Although 34% of people think that life is better now, only 3% of respondents think that they are truly in a state of economic stability.

Taking a closer look at these data, 34% of Russians believe that they lead a moderately prosperous life, and 63% claim that they can only afford the most basic daily necessities. In general, these statistics portray a social picture: The daily life standards and expectations of most local consumers seem to be a little bit worse than the global average.

Compared with 2014, how do Russian consumers now allocate their discretionary spending? The survey results show considerable changes. Most interviewees said that they now spend more on daily necessities than in the days before sanctions. At the same time, 64% of the respondents said that the cost of natural gas, electricity, etc., now accounted for a higher proportion of overall expenditures than five years ago, and 70% said that food expenditures accounted for a significant increase in income.

Other areas where the proportion of spending has increased include non-food consumer goods (47% of respondents spend more on such goods), electronic products and information technology products (36%), and clothing (35%). With the increase in expenditures in these areas, budgets in other areas will inevitably be cut.

Travel is the biggest victim. About 50% of respondents said that family travel is no longer considered, and this percentage of respondents is three times that of other Central European/Eastern European consumer reports. In addition to tourism, the other most affected area is entertainment/dining out, and 28% of respondents have drastically reduced their spending in this area.

The changes in consumer behavior over the past five years have had a significant impact on the overall nature and pattern of the Russian retail industry. However, contrary to expectations, the survey results show that even if the level of discretionary income declines and consumer confidence weakens, consumer expectations are rising, and overall they become more mature and particular.

It has been five years since the implementation of the first round of sanctions. Although the economic environment of general Russian consumers has deteriorated, they pay more attention to quality and social well-being when shopping, and are more willing to take responsibility for environmental protection. At the same time, Russian consumers also expect fast and efficient services, and demand good value for money, high quality and reliability.

The above factors have promoted the development of the Russian e-commerce industry, and e-commerce platforms have emerged one after another. This has forced many traditional retailers to develop their own online retail business, hoping to compete with e-commerce players through faster delivery times or offering special products that are difficult to find.

Consumers’ financial considerations are often a key factor in determining which retail businesses can thrive. The mandatory austerity policy in the past five years has greatly promoted the development of chain discount stores in the country. However, not every discount store is thriving.

Due to changes in consumer preferences, discount stores that specialize in clothing, household appliances, and various staple foods (including meat, seafood, tea and coffee) have performed well. In contrast, for discount stores that mainly sell non-alcoholic carbonated beverages, frozen foods, and bottled mineral water, operating these days is more difficult.

As for the factors that influence purchasing decisions, the survey also shows that 33% of Russian consumers are mainly affected by word-of-mouth recommendations from friends and family. Only 6% of Russians said that TV advertising would affect their shopping choices, while the proportion of respondents who were influenced by outdoor advertising dropped to 3%, which was a blow to traditional media.

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