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Russians go to “low-price stores” and online: how the record drop in demand affected trade

Date: March 26, 2023 Time: 12:36:35

Rosstat found that Russians began to shop more frequently at “low-price stores”

Photo: Mikhail FROLOV

Our retail business has been struggling with declining sales for ten months in a row. This is clear from the Rosstat data. On average, in 2022, the drop in turnover was 6.7%, in January 2023 it is at the same level, minus 6.7% in January 2022.

Russians save mainly on non-food items. Here the fall is stronger: 11.1% in 2022, 10.4% in January 2023 against January 2022. This is in rubles and, according to INFOLine analysts, in physical volume, the non-food sector sank a 14.3% in 2022. Sales of household appliances and electronic products contracted the most, almost a third, as well as clothing and footwear, around 20%.

The main reasons are clear: the savings regime and the withdrawal from the market of a number of popular and familiar foreign brands. At the same time, our trade has managed to do good business on these trends. More precisely, the most enduring part of it. According to INFOline-analytics, the turnover of the top 10 Russian retailers in 2022 grew by almost 16%. And taking into account the Wildberries and Ozon marketplaces, by 25%.

With the markets, through which most of the trade is carried out at a distance, everything is clear. It is there that almost the entire world is now supplied with low-cost industrial consumer goods.

What happens with the rest? Svetofor’s revenue increased by 40% in 2022. This is a hard discount store network: stores with very low prices (this is achieved by saving on “stocking” goods on the trading floor, which is more like a warehouse ). X5 Retail Group (which includes Pyaterochka and Perekrestok) and Magnit also opened their own discount stores. X5 Retail’s Chizhik low-price stores increased sales 12 times during the year (year-over-year). And Magnit, in addition to the My Price discount store, announced the opening of another with even more super cheap prices: First Choice.

– This is a fairly standard adjustment to the saving model of the behavior of citizens, – explains TeleTrade analyst Alexei Fedorov. – Such frugality will continue at least until 2024, based on the experience of the last sanctions crisis in 2015. What and why retail does and will do is also more or less clear from the experience of past crises. Retail chains that sell products “for the rich” especially do not lose anything: the consumption of their customers, even in a crisis, is slightly reduced. The same applies to large multi-brand chains and economy class stores and discount stores. The former simply increase the share of cheaper products in the assortment, while the latter receive an influx of customers due to the impoverished middle class. The main blow – to shops which served the consumer with the average income. They find it difficult to maintain the previous price level and buyers start looking for similar products in other cheaper places. Or stores have to sacrifice the usual quality for the middle class. Difficulties also apply to mono-brand retail chains (selling, for example, electronics of a particular brand – Ed.). They will most likely be forced to close some of their outlets, if they haven’t already.

Photo: VALIULIN nail


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Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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