Goods that Russians stopped buying: trade in Russia is curtailing

Trade, according to a popular saying dating back to the 19th century, is the engine of progress. If this is so, then with progress we are not doing very well. Retail trade in Russia in the outgoing 2022 showed, to put it mildly, not the best results. Moreover, when compared with other types of economic detail, the monthly drop of about 9% in recent months looks clearly a failure.

Trade, according to a popular saying dating back to the 19th century, is the engine of progress. If this is so, then with progress we are not doing very well. Retail trade in Russia in the outgoing 2022 showed, to put it mildly, not the best results. Moreover, when compared with other types of economic detail, the monthly drop of about 9% in recent months looks clearly a failure.

But this did not cause much concern, since it is known how much retail sales of the same cars have fallen. Hundreds of billions of rubles annually were spent on their purchase at the best of times. In January-September 2022, the retail turnover of passenger cars collapsed, according to Rosstat, by almost 40% compared to the corresponding period of 2021. However, in recent months, there has been clearly more negative in trade, and this is far from being associated only with the sale of cars.

Special attention should be paid to food sales. After all, we think, and not without reason: a crisis is not a crisis, but you always want to eat. Therefore, in any circumstances, people have bought, are buying and will continue to buy food. And it is right to think so. However, if there is an obvious crisis in the economy, if the standard of living falls, then people begin to buy less even food products. Something has to be abandoned altogether, and in some ways they switch to cheaper food. Let’s not forget that when it comes to saving on food, people remember the stocks, eating up (excuse the expression!) them. You can save money on this too.

Now let’s see what we have with retail sales of food products. According to the latest available data from Rosstat, food retail turnover fell by 4.3% in October 2022 compared to the corresponding period last year. In September 2022, the decline in retail turnover was 3.5%. Such falling sales figures for food products are a lot. Previously, monthly indicators of sales decline were at the level of 1-2%. A negative trend is obtained, as the drop in sales is growing.

An interesting picture is given by information about what is happening with sales of basic food products. Here are the statistics for January-September 2022 from the same Rosstat compared to the corresponding period in 2022: sugar sales fell by 6.5%; cereals – by 4.4%; fish — by 3.5%; fresh fruit — by 3.3%; salt – by 3.2% …

If someone, without really thinking, paying attention to sugar, says that here, they say, everything is clear, now is not the season for making jam, then I will disappoint: all these comparisons are made on an annual basis, plus the period January-September is taken. So such a calming argument is clearly not good.

Decreasing sales figures for individual food products support the assumption that people have either begun to actively spend their stocks (sugar, cereals, salt) or have become clearly saving (fish, fresh fruits). And you can, however, do both: both spend stocks and save. In any case, these are indicators of growing trouble.

Now let’s see what’s happening in the non-food group. The drop in sales in this segment in October 2022 was 14.3% compared to the corresponding period last year. The leaders of the fall are passenger cars, as mentioned earlier. Also, in January-September 2022, sales fell sharply in annual terms: watches – by 23.9%; mobile phones – by 18.1%; jewelry – by 17.7%; photographic equipment – by 17.5% … As we can see, here too the gaps are very, very large. Let’s also take into account the fact that all these indicators for January-September 2022 were “improved” by the statistics of the first quarter, when the picture was the opposite. Of course, this also applies to cars. It turns out that the statistics only for the II and III quarters of 2022 worsened the overall indicators since the beginning of the year so significantly.

It is also interesting that there are groups of goods whose sales are even growing. Thus, in January-September 2022, the retail turnover of medicines increased by 8.3% in annual terms. Here, in general, everything is clear: the consequences of the pandemic, new viruses, fears about the disappearance of imported drugs from sale in the wake of sanctions…

It is important to note that there is a fundamental difference between the reasons due to which there is a drop in retail turnover for food products and for non-food products. Since the spring of 2022, the world’s largest automakers have curtailed production in Russia and refused to supply their products to the country. As for other products – jewelry, watches, mobile phones – the sanctions also played a negative role here. Of course, it also mattered that the economic crisis affected the Russian middle class, which buys these products to a significant extent. Hence the natural desire to save money, to postpone the purchase of something optional until better times. The result is a drop in sales.

The drop in retail turnover is not only proof that the country is currently in an economic crisis. What is happening is forcing us to assess the economic prospects for the near future much more restrainedly. Activation of consumer demand is rightly considered the driver of economic recovery. If people are ready to buy more and more, this means an increase in demand for products, the production of which requires raw materials and materials, the provision of relevant services. Growing demand generates new investment, production expands, the economy grows, and people’s incomes also increase.

On the contrary, when demand falls, everything shrinks. People’s incomes are declining, as is their standard of living. Therefore, this is a very important indicator of what is happening in retail. It is important not to forget that stimulating consumer demand is a traditional mechanism for economic recovery in times of crisis. Alas, today, as statistics show, it does not work. This means that traditional mechanisms for overcoming the crisis do not help. Consequently, the crisis is dragging on, the uncertainty is growing.

By the way, in January-September 2022, sales of games and toys increased by 3.7% compared to the corresponding period last year, according to Rosstat. It is clear with medicines, this has already been said. But the toys…

I invite you to think about what it is and why. The first thing that comes to mind as a possible version: in a crisis, more than ever, you want to please children, so that at least they feel good and have fun. But there are probably other reasons (for example: toys were not sanctioned). Alas, this is an exception to the general picture. But still, it’s good that this exception applies to children.