Russians are increasingly buying equipment on credit

Russians have become twice as likely to take out loans for smartphones, laptops, other electronics and household appliances, banks told Kommersant. But experts believe that the trend of increasing purchases on credit has almost exhausted itself: citizens are switching to a reasonable consumption model, and the majority in 2023 will realize the purchases postponed during the crisis of 2022. In addition, due to the increase in the key rate, some retailers have reduced the range of electronics available in installments.

From January to September 2023, Russians applied for the purchase of electronics using installment plans and POS loans 2.3 times more often than during the same period in 2022, the Tinkoff Credit Broker company said. They clarified that in September the number of applications for installment plans was at the level of February 2022. MTS Bank notes an increase in applications for the purchase of electronics over the eleven months by 25% year on year.

Sberbank reported that compared to 2021, the total volume of POS lending (point of sales) has more than doubled. Compared to 2022, the greatest growth was shown by the categories of loans for televisions (by 145%), smartphones (by 101%), laptops (by 87%), washing machines (by 81%), etc., the bank specified. “The dynamics of the POS lending market, including for electronics product categories, depends on several interrelated factors – inflation, the dollar exchange rate and the size of the key rate,” they noted.

However, the trend may soon change. A top manager of a large electronics chain says that due to an increase in the key rate, the chain has reduced the range of goods available for purchase in installments by 30%. “In this case, it is not profitable for us to sell electronics through installments, since the consumer does not pay interest, it goes to the retailer. Taking into account the increased key rate, the margin on this method of sales becomes minimal,” he notes. Another Kommersant source among top managers of the electronics chain explained that stores that “do not have a partner or their own financial organization” are forced to reduce the assortment available for purchase through installment plans.

M.Video-Eldorado told Kommersant that at the end of nine months, the share of credit sales in their network reached 15.8%, an increase of 6.1 percentage points compared to the same period in 2022. “The positive dynamics are facilitated by the high interest of buyers in updated credit products and programs, including for a period of up to 30 months, and the expansion of the range of equipment available for purchase under installment programs,” the network explained. The retailer’s representative added that the group sells all financial products offered to customers through its subsidiary Direct Credit.

Installment plans are unattractive for retailers, since they lose part of their profits by paying interest to the bank for lending, explains a representative of the Vsosmart retail chain. According to him, high-margin goods are sold in installments, for which the difference between purchase and retail prices is significant, so there is something to cover the interest from. “Otherwise, paying in installments becomes unprofitable, and stores refuse such a service,” explains a representative of the retailer. He, however, claims that “there is no general trend towards a reduction in the number of devices available for installment purchase.”

According to a representative of MTS Bank, next year “no significant growth in the commodity lending market is expected,” as buyers “are switching to a reasonable consumption model.” In addition, as follows from the Tinkoff Credit Broker study, in 2023, 85% of Russians partially or fully implemented plans to purchase household appliances and electronics that were postponed in 2022. Thus, every third Russian (30%) who decided to postpone the purchase of household appliances and electronics to 2023 has already purchased everything they need, analysts note.

Timofey Kornev