The Taste for Shopping Returns
Russians are gradually moving away from a savings-oriented model of behavior and are increasing their consumption. The food sector has seen a surge in demand across several product groups. Moreover, people are willingly investing in the purchase of ‘smart’ electronics, gadgets for work, and products for freelancers. Experts concur that the consumer market is anticipating a gradual recovery.
Apply your card
According to the findings of a NielsenIQ study, in 2023, the FMCG (fast-moving consumer goods) industry stabilized, and the gradual revival of consumer sentiments became even more apparent. Sales dynamics vividly illustrate that the industry saw an 8.5% growth in June alone. Currently, there is also an increase in natural sales and a deceleration of inflation, reaching deflation in the FMCG market.
The resurgence in demand is most noticeable in the food product group, specifically in cold drinks, confectionery, snacks, and several others. Among food products, these categories have become some of the fastest-growing in monetary terms. However, the key drivers were energy drinks and raw meat.
There’s positive momentum in the non-food product segment as well. Consumers are actively purchasing shampoos, body care products, and personal hygiene items. Premium and mid-price segment products show sustained growth. There’s an increasing demand for own-label products as well.
“It’s noteworthy that the share of own-label products in the FMCG category has surpassed 10%. We can confidently assert that such purchases are a new trend in consumer preferences,” noted Elena Melnik, the founder of the marketing and branding agency, Elena Melnik Studio.
According to her, own-label products from retail chains are now advantageously occupying positions left by departed companies and are building trust through the values of domestic branding. Priority areas of demand remain mass consumer goods and essential services—housing and utilities, health, and the pharmacy segment.
The recovery in demand is most noticeable in the produce group
Digital Technologies
Ekaterina Bushmina, an expert in foreign economic activity and strategic procurement from China, and the founder of Income company, highlighted that mobile phones and their accessories continue to lead in sales. This trend stems from the fact that the phone has become a pivotal tool for many professionals, including freelancers. Cameras, chargers, laptops, microphones, and ‘smart’ electronics also enjoy considerable demand as they are perceived as investments in work processes.
“In the era of marketplaces, where the human consulting factor has diminished, and now the online business card ‘sells,’ consumer behavior has changed. People now economize on everything, purchasing only where they perceive added value. Price ‘sells,’ a loophole exploited by unscrupulous suppliers,” explained Ekaterina Bushmina.
The crux is that in offline stores, a buyer wasn’t confronted with a choice of 300 mixer options – there were usually 10-20 models on display, strictly categorized by price range: cheap, mid-range, expensive. The actual selection boiled down to about five models, elucidated the expert. Presently, marketplaces offer an immense array of choices. Buyers get lost and often can’t thoroughly analyze all the quality characteristics. Frequently, decisions are made based on price/reviews filtering.
“If the price is lower and the reviews are good, the buyer will opt for the cheaper product because all products have a one-year warranty and a return option. This factor determines demand for specific niches of products both in the past and the present year,” pointed out Ekaterina Bushmina.
Anastasia Komarova, a marketer and entrepreneur, highlighted a new trend – the emergence of a specific class of compatriots (mainly late millennials and early zoomers) who evaluate the cost of acquiring clothing items based on the ‘cost per wear’ rather than the price. When selecting food products, they meticulously evaluate composition and verify the place of origin. For this consumer class, the eco-friendliness of production and packaging, as well as service and purchasing convenience, hold paramount importance.
Mobile phones and accessories remain the best sellers
Green Light for New Brands
As foreign cosmetic companies, which once held a significant market share, depart, a substantial demand remains unmet, as stated by Ekaterina Bushmina. Many buyers were unwilling to compromise on quality cosmetics, and parallel imports failed to entirely fill the gap.
“Now more than ever, it’s easier to create your own brand and swiftly enter the market,” emphasized the expert in foreign trade.
Regarding consumer trust, at present, Russians are more inclined to try new brands – manufacturers don’t need to expend massive budgets on advertising and promotions.
“The concept of savings boils down to the question, ‘Why pay for the name?’ There are new, ‘unspoiled’ suppliers striving to produce quality goods to secure their place in the market,” explained Ekaterina Bushmina.
According to her, the present moment is the most opportune time to enter marketplaces. Currently, approximately 70% of companies on such platforms are newly established brands and newcomers.
At the moment, Russians are more willing to try new brands – manufacturers do not need to spend huge budgets on advertising and promotion
Quality versus Price
In the coming years, experts forecast a rising percentage of zoomers and late millennials in the economically active population. This, they predict, will lead to the emergence of several different consumer classes: from the so-called ‘Soviet citizens’ (likely to lead in numbers), prioritizing price, paying scant attention to quality and composition, considering comfort and service as superfluous, to ‘zoomers’ who prioritize quality and purchase comfort, highlighted Anastasia Komarova.
“Home delivery or pickup point purchases will increasingly prevail over the customary shopping format. Dark stores will begin to overshadow familiar offline stores. The number of players on marketplaces in the coming years will continue to increase, leading to price wars and a decline in product quality in pursuit of lower prices,” pointed out Anastasia Komarova.
However, Elena Melnik believes that the trend towards mindful consumption and thoughtful decisions will persist. Those termed ‘value leaders,’ who, at equal cost to competitors, provide more benefits and services, will be successful.
“Categories like cosmetics, pet supplies, fashion, health foods, and organic household chemicals will remain at the top of consumer demands. This is explained by the sustained trends in wellness, preventive medicine, creating comfort, a mentally tranquil atmosphere, and inner peace,” concluded Elena Melnik.
In turn, NielsenIQ analysts expect that more consumers in the coming year will gradually move away from a savings-oriented behavior model and increase spending. This deduction is based on the emotional component: nearly half of the respondents (45%) in the middle of last year described their current psycho-emotional state as ‘absolutely calm’ and ‘calm.’
By Vera Kozubova