Consumers have adapted to the departure of Western retailers

After large Western brands left Russia, most consumers refocused on purchasing their products in the online segment or multi-brand stores, consulting company B1 (formerly E&Y in the Russian Federation) found out. The share of consumers suffering from the lack of familiar foreign brands has seriously decreased and is already less than a third. Consumer adaptation was facilitated not only by the development of online commerce, but also by parallel imports. As a result, contrary to the expectations of manufacturers who hoped to replace Western brands for Russians, competition in the market only intensified. The only segment where there is still a shortage and restrictions is luxury retail.

In the fall of 2023, only 28% of surveyed consumers had to look for analogues of Western brands that had left the Russian market in the non-food segment, while a year ago there were 44%. This follows from a study available to Kommersant from the B1 company (formerly the Russian division of E&Y), conducted on the basis of a survey of 1 thousand respondents. If last year 45% of respondents noted that they were forced to refuse to buy clothing from Western brands due to their shortage, then in the fall of 2023 this figure dropped to 32%. The share of consumers who say they were unable to completely circumvent the restrictions fell from 20% to 17% over the same period.

The results obtained confirm the adaptation of Russian consumers to new conditions, which was facilitated by the development of parallel imports, the transition of buyers to other, more affordable brands, as well as the expansion of online trading, B1 analysts note. Thus, more than 40% of respondents noted that they try to buy non-food products from familiar brands on the Internet.

Marketing Director of the BUYMI shopping service Mila Grosheva says that from December 2022 to December 2023, the number of orders from the service increased by 40%. “Buyers most often turn to the online segment because they are unable to find the things they need in Russia or because they do not want to overpay in offline stores,” she explains.

At the same time, more and more consumers, according to the survey, are talking about rising prices for products of departed brands. The share of such respondents over six months increased from 26% to 43%.

At the same time, over half of those surveyed are not willing to pay more for goods of familiar foreign brands, and for 27%, the amount of overpayment can be no more than 10%.

In addition, 63% of consumers paid attention to the disappearance of advertising of famous Western brands; against this background, 45% of respondents began to buy such products less often.

Managing partner of Vanchugov and Partners Alexey Vanchugov notes that many brands, including Inditex, H&M and Uniqlo, which announced their departure from Russia, are gradually returning through distributors and multi-brand retail. As a result, he said, there was “no significant market depression.” Moreover, the expert clarifies, Turkish retailers, who promised to replace brands that left the Russian Federation, are experiencing serious competition. This could lead to a slowdown in the rate at which new players enter the market, Mr. Vanchugov does not rule out.

At the same time, senior director of CORE.XP Marina Malakhatko notes that it was not possible to replenish the lost assortment in the luxury segment, where there are sanctions on the import of products into the Russian Federation from the EU and the USA that cost more than €300 and $300 per unit of goods. “It is still unprofitable to produce such goods within the country, mainly due to high costs and lack of high-quality raw materials,” explains the expert.

NielsenIQ Russia also notes that in most categories of fast-moving consumer goods (FMCG) there are practically no difficulties left; in particular, in the food segment, the assortment volume decreased by only 2% compared to 2022. At the same time, NielsenIQ Russia adds, retailers and manufacturers continue to work on the assortment, as its effectiveness is decreasing, and competition between individual brands is also increasing.

Alina Savitskaya