Merch rushes over Russia

The expenses of Russian companies on branded products are increasing by 10-15% per year, and the segment’s capacity has reached 70 billion rubles, calculated in SberShop. Among the new growth factors, analysts single out the exit of a number of fashion brands from Russia, emphasizing that when developing merch, companies often cooperate with well-known designers and produce high-quality goods. At the same time, participants note an increase in the cost of such products due to the complexity of logistics and the rise in prices for materials.

“Kommersant” got acquainted with the study of the branded products market, conducted by SberShop. The analysts estimated the volume of the segment at 70 billion rubles, the annual base growth is 10-15%. On average, the majority of Russian companies (61%) spend 5% of their annual marketing budget on product branding (merch). Such estimates follow from an analysis of sales of SberShop itself and a survey of marketing and brand directors of 57 large companies and agencies (customers of branded products with an advertising budget of more than 500 million rubles and a turnover of more than 2 billion rubles a year).

Half of the respondents said that they usually give branded products as gifts, 17% distribute them for a fee or give them out for points in loyalty programs, the rest order branded products for events where they distribute or sell them. Usually, merch costs make up a small percentage of the total advertising budget, says Ksenia Sergacheva, head of the MTS brand center: “Optimization often occurs due to the fact that many brands open their own merchandise store, partially covering the costs.” In addition to Sberbank, Yandex and VK have such stores, Ozon sells merchandise at points of issue of goods.

One of the new and interesting growth factors for the segment is the trend noted by SberShop to replace products of specialized brands, including imported ones, against the backdrop of the latter leaving the country. The demand for merch has really grown, says Alla Aksenova, CEO of PR-development: “Companies are collaborating with fashion designers, and people are starting to wear such things in everyday life, because brand integration is minimal.” “While brands used to print dimensionless promotional T-shirts of low or medium quality with a logo, now there is a demand for high-quality merchandise, companies attract famous designers or cooperate with fashion brands,” confirms Vladimir Ivanov, managing partner of A&A Sports.

But to a greater extent, market participants still use merch as a promotion tool. So, according to Alla Aksenova, the demand for branded goods in 2022 has grown especially noticeably, “at least twice”, from developers. Vice-President of Strana Development Group Alexander Gutorov confirms that merch is popular among developers: “We form a community among residents and employees, and merch creates a sense of belonging to the brand.” Ekaterina Movsesyan, CEO of the CROS communication group, says that the group increased its merchandise costs by 50% in 2022: “This is an internal communication tool and an element of corporate culture. Murch works to create an emotional connection with the company.” The X5 Group did not specify the numbers, but stated that they use merch as part of the motivation system: “We have an online rewards store where employees can exchange points accumulated in their personal profile on the corporate website for products with X5 symbols.” Interest in the tool is also growing among IT companies, fintech and ecosystems, says Ksenia Sergacheva.

At the same time, Ms. Sergacheva notes, expenses for the production of branded goods could increase in 2022 due to rising costs, including due to the complexity of supply chains. As a result, a number of players are reducing this cost item. “In the first half of last year, the business experienced a serious drying up of the budget, and merch was among the first to be optimized,” says Victoria Odintsova, Calltouch Marketing Director. If you need to cut costs, you can easily abandon branded products, as it has almost no effect on revenue growth, says Karina Ogandzhanyan, vice president of Twiga CG. However, for representatives of the creative industries and major players in the corporate market, the expert emphasizes, “merch is still an important addition to branding.”

Valeria Lebedeva, Alina Savitskaya