B1 Group has explored changes in consumer sentiment across Russia over the past six months to see whether consumers have adapted to new conditions.
"Consumer sentiment is an important factor for any business. We’ve surveyed respondents in Russia to understand how they perceive and adapt to change and found that local consumers are generally flexible in embracing current realities," says Marchello Gelashvili, B1 Group Acting Managing Partner.
The survey, entitled "Consumers are cooling on brands: myth or reality?", was conducted in August 2022 through a questionnaire circulated among 1,164 active Internet users in Russia. One month later, in early October, we surveyed another group of 400 users to see how the events of late September had affected consumer sentiment.
Russian consumers are successfully adapting to recent changes. While 63% of respondents are concerned about fewer opportunities to make a purchase, Russians either do not care much about not being able to access some product groups or find alternative ways to do so, albeit at a higher cost. Russian consumers are quite positive about domestically produced goods and are willing to choose them. As an alternative, they prefer either local products (69%) or well-known international brands available on the domestic market (62%). One-third of respondents would also consider buying goods made in Southeast Asia, Turkey, India and Iran.
Import substitution cannot for now completely fill the void left by imported goods that are no longer available in Russia. Despite all efforts by local manufacturers and distributors, only 28% of consumers claim that local goods can be an adequate substitute for their regular brands. Forty percent of respondents are unable to find a suitable alternative locally, while 32% are not happy about the quality or price of local products. Our October survey found that sentiment has changed somewhat over the past month as consumers better adapt to existing offerings: 34% of respondents say there is now a wider choice of local substitutes for imported goods, up from 28% in August.
For some product categories, however, consumers are reluctant to veer away from their preferred brands or change their habits. When asked why they would pay a premium for certain branded products, 40% of respondents say because these products are hard to replace, while 33% point to the high quality they are after. These product categories include electronic devices and gadgets (7%), home appliances (7%), athletic footwear (6%), fashion accessories (6%), household repair tools and supplies (5%) and musical instruments (4%).
Consumers in Russia are also concerned about what the future holds. Having experienced several crises in the past, Russians are now prepared for any turn of events, so many of them expect even tighter access to goods and growing quality issues. Fifty-one percent of respondents say there will be fewer goods on offer, 37% anticipate no changes and only 12% expect a wider offering of goods and services. Russian consumers continue to spend mostly on food, non-food essentials and everyday clothes.
"Over the past two and a half decades, the Russian economy has become fairly well integrated with the world’s financial system, while owing to the international division of labor and globalization Russian consumers have gained access to imported goods and acquired specific purchasing habits. The suspension of certain imports to Russia hasn’t yet been compensated by alternative sources, such as production localization, parallel imports or buying from other producers," says Ilya Ananyev, B1 Partner, Retail and Consumer Products, Agribusiness and Life Sciences Leader.
Only 40% percent of respondents have requisite means to plan their spending well ahead, while entrepreneurs are much more keen on planning: 61% of respondents who run their own business make plans for more than one month ahead.
About B1 Group
B1 Group offers a full range of professional services, covering assurance, strategy, technology and business consulting, transactions, tax, law and business support.
In over 30 years in Russia, we have assembled a strong team of professionals with broad expertise and a wealth of experience in delivering the most challenging projects. B1 Group is based in nine cities: Moscow, Ekaterinburg, Kazan, Krasnodar, Novosibirsk, Rostov-on-Don, St. Petersburg, Togliatti and Vladivostok.
We help clients find new solutions, grow, transform and operate their business as well as strengthen their financial and human capital.