Refrigerators crammed into Russia

Manufacturers and suppliers of household appliances talk about a significant surplus of these products in the Russian market as a result of the rush demand for them in 2022. Then distributors began bulk purchases, and domestic manufacturers increased the volume of contract manufacturing, fearing that Chinese factories would refuse to cooperate. But problems with logistics led to the fact that the batches ordered in spring and summer arrived in Russia only now. Meanwhile, demand has fallen: in real terms, sales, according to market participants, have decreased by 30%, and in 2023 they may decrease by another 10-30%. At the same time, it is not worth waiting for a fall in prices, experts believe, rather, suppliers will reduce the volume of orders until they sell stocks.

Distributors and manufacturers of household appliances have formed large stocks of products in warehouses, Kommersant was told in one of the companies. The reason they call the rush demand for equipment in the spring of 2022 after the outbreak of hostilities in Ukraine. Then suppliers and Russian brands began to actively order new batches of equipment, fearing the closure of supply channels and shortages:

“Most of all in the warehouses are products of Russian brands that produce equipment in China. Companies were afraid that because of the sanctions, Chinese partners would refuse to cooperate with them.”

Gleb Mishin, head of the representative office of the Candy-Hoover Group household appliance manufacturer in Russia (produces household appliances, is part of the Chinese Haier Group), confirmed the trend: “The fact is that last year, manufacturers and suppliers of electronics began to actively order large quantities of equipment that arrived in Russia just now. The interlocutor of Kommersant on the market clarified that the overstocking was formed due to the refusal of the largest sea carrier Maersk to cooperate with the Russian Federation (see Kommersant dated March 2, 2022). According to him, after the rush demand, suppliers ordered a large batch of equipment last summer, but due to the refusal of large container lines to transport products to the Russian Federation, it arrived in the country only by the new year.

Indeed, there is an “accumulation of household appliances” on the market, says Dmitry Levin, managing director of the Marvel Distribution profile direction: “Someone has more of it in warehouses, someone has less, but this is primarily due to a drop in sales.” There are indeed surpluses for some brands, but for some, on the contrary, there is a shortage, as Turkish and Chinese factories cannot cope with the volume of orders, Alexey Pogudalov, commercial director of Holodilnik.ru, says, without specifying the brand names.

In Citilink, overstocking in large household appliances is not observed: “The glut is now only in summer climate control equipment, it is purchased in advance for the season.” M.Video-Eldorado also reported that the network has an “optimum inventory” of household appliances.

According to the representative of RATEK (includes M.Video-Eldorado, DNS, Citilink, Samsung, etc.) Anton Guskov, large chains of electronics stores do not feel an oversupply of goods: “As a rule, large companies clearly and scrupulously relate to the purchase of goods while using a serious analytical approach.

Mr. Guskov also suggests that the amount of purchased equipment and electronics “is being adjusted, as the system of payment for goods has changed: if earlier it was more often a commodity loan, now they work mainly on prepayment, which makes market participants be even more attentive to purchases.”

Meanwhile, a similar situation has developed in the consumer electronics market, where, against the backdrop of rush demand in 2022 and the introduction of parallel imports, players note a surplus of laptops (see “Kommersant” dated February 13).

According to Holodilnik.ru, at the end of 2022, the household appliances market in money terms grew slightly, amounting to 445 billion rubles. (according to the results of 2021, the indicator was at the level of 418 billion rubles). “The growth was formed due to abnormal demand in February-March 2022. At the end of 2023, a decline of 10% is expected, in the first seven weeks, sales have already decreased by 17.3% year-on-year in money across all categories,” says Mr. Pogudalov.

Dmitry Shashkin, CEO of household appliances manufacturer Kuppersberg, notes that in 2022, the household appliances market shrank by 30% in physical terms. He believes that by the end of 2023, due to consumer savings, the market may fall by another 10% in pieces.

To date, importers have restored the broken supply chains, the goods are available, but consumer demand continues to fall, confirms Dmitry Levin: “So far, no prerequisites for restoration are foreseen. According to our forecast, 2023 for the Russian home appliances market will be even less successful than the previous one. We expect a fall of 5-10%. According to Mr. Mishin, due to a decrease in demand, the market will fall by 30% in physical terms by the end of the year: “Candy appliances are growing less than expected, and in some segments, for example, washing machines, they are falling along with the entire market.”

Market participants are not going to stimulate demand by lowering prices, but they do not plan to increase them either, despite the fall in the value of the ruble, Kommersant’s interlocutor from household appliances manufacturers notes: “Prices will remain until distributors sell out all stock.” Mr. Shashkin confirms that companies facing overstocking won’t cut production costs: “They’ll just cut orders from Chinese factories.”

Timofey Kornev