New Economic Realities and Consumer Behavior in Russia

Transcription

1 1 New Economic Realities and Consumer Behavior in Russia Marina Tevlina, Qualitative Research Director, GfK-Rus

2 2 1 SOCIAL ECONOMIC INDICES

3 GROSS DOMESTIC PRODUCT, in nominal prices GDP in Source: Rosstat, GfK Rus 3 1Q2003 2Q2003 3Q2003 4Q2003 1Q2004 2Q2004 3Q2004 4Q2004 1Q2005 2Q2005 3Q2005 4Q2005 1Q2006 2Q2006 3Q2006 4Q2006 1Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 2Q2009 3Q2009 4Q2009 billion rubles GDP in GDP in GDP in GDP in GDP in forecast (-8.7%) GDP in Quarters GDP GDP forecast

4 INDUSTRIAL OUTPUT INDEX, % vs. same period last year 115 Average annual index in Average annual index in Average annual index in Average annual index in Average annual index in forecast Source: Rosstat, GfK Rus 4 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05 Sep'05 Oct'05 Nov'05 Dec'05 Jan'06 Feb'06 Mar'06 Apr'06 May'06 Jun'06 Jul'06 Aug'06 Sep'06 Oct'06 Nov'06 Dec'06 Jan'07 Feb'07 Mar'07 Apr'07 May'07 Jun'07 Jul'07 Aug'07 Sep'07 Oct'07 Nov'07 Dec'07 Jan'08 Feb'08 Mar'08 Apr'08 May'08 Jun'08 Jul'08 Aug'08 Sep'08 Oct'08 Nov'08 Dec'08 Jan'09 Feb'09 Mar'09 Apr'09 May'09 Jun'09 Jul'09 Aug'09 Sep'09 Oct'09 Nov'09 Dec'09 Industrial Output Index Forecast Months Percent

5 RETAIL TRADE VOLUME Trade in (forecast) Source: Rosstat, GfK Rus 5 Jan'05 Feb'05 Mar'05 Apr'05 May'05 Jun'05 Jul'05 Aug'05 Sep'05 Oct'05 Nov'05 Dec'05 Jan'06 Feb'06 Mar'06 Apr'06 May'06 Jun'06 Jul'06 Aug'06 Sep'06 Oct'06 Nov'06 Dec'06 Jan'07 Feb'07 Mar'07 Apr'07 May'07 Jun'07 Jul'07 Aug'07 Sep'07 Oct'07 Nov'07 Dec'07 Jan'08 Feb'08 Mar'08 Apr'08 May'08 Jun'08 Jul'08 Aug'08 Sep'08 Oct'08 Nov'08 Dec'08 Jan'09 Feb'09 Mar'09 Apr'09 May'09 Jun'09 Jul'09 Aug'09 Sep'09 Oct'09 Nov'09 Dec'09 billion rubles Trade in Trade in Trade in Trade in Actual retail trade volume Forecast retail trade volume Months

6 PROGRESSIVE TOTAL INFLATION 180 Inflation in % ( forecast ) Inflation in % Inflation in % 130 Inflation in % 120 Inflation in % Source: Rosstat, GfK Rus 6 Jan.05 Feb.05 Mar.05 Apr.05 May.05 Jun.05 Jul.05 Aug.05 Sep.05 Oct.05 Nov.05 Dec.05 Jan.06 Feb.06 Mar.06 Apr.06 May.06 Jun.06 Jul.06 Aug.06 Sep.06 Oct.06 Nov.06 Dec.06 Jan.07 Feb.07 Mar.07 Apr.07 May.07 Jun.07 Jul.07 Aug.07 Sep.07 Oct.07 Nov.07 Dec.07 Jan.08 Feb.08 Mar.08 Apr.08 May.08 Jun.08 Jul.08 Aug.08 Sep.08 Oct.08 Nov.08 Dec.08 Jan.09 Feb.09 Mar.09 Apr.09 May.09 Jun.09 Jul.09 Aug.09 Sep.09 Oct.09 Nov.09 Dec.09 Inflation forecast Inflation cumulative (December 2004 =100 %) Months Percent

7 Attitudes to crisis: Russia waiting for improvement GfK Rus RUSSIAN CONSUMER PROFILE Moscow, Crisis behavior What do you think of the crisis in Russia? Crisis has already began Crisis will No crisis and come next year there won t be any No answer Source: GfK Rus Omnibus, Dec Mar'09 Jun'09 Sep' Crisis does exist and it will grow stronger Crisis does exist and the situation is not changing Crisis does exist, but soon it will abate Crisis hasn t started yet, but it will come No crisis and there won t be any What do you think of the crisis in Russia? Source: GfK Rus Omnibus

8 Attitudes to crisis: the worst is over Has the crisis affected you or your family? No, not yet Yes, the salaries are delayed Yes, the salaries are reduced Yes, I had to take an unpaid leave for a while Yes, I was fired / dismissed Other Dec'08 Mar'09 Jun'09 Sep'09 Source: GfK Rus Omnibus

9 How much do you approve or disapprove of the current measures aimed to overcome crisis in Russia by? Approve or rather approve 9 49 President D. Medvedev Prime Minister V. Putin Government in general Leaders of political parties The State Duma Regional authorities Management of the company you work for Dec'08 Mar'09 Jun'09 Sep'09 Source: GfK Rus Omnibus

10 10 2 CONSUMER ATTITUDES

11 Social and consumer attitudes Economic situation in the country in the next 12 months Index of the national economy development expectations in the next year May'08 Dec'08 Mar'09 Jun'09 Sep'09 0 Favorable Neither favorable, nor unfavorable Unfavorable No answer Index *The indexes are calculated as the percentage difference between the positive and negative answers plus 100. The indexes variation range is 0-200; values over 100 domination of positive answers; values under 100 domination of negative answers. Source: GfK Rus Omnibus

12 Social and consumer attitudes Changes in financial situation during last 12 months Index of the current personal financial situation May'08 Dec'08 Mar'09 Jun'09 Sep'09 Improved Stayed the same Deteriorated Index 0 *The indexes are calculated as the percentage difference between the positive and negative answers plus 100. The indexes variation range is 0-200; values over 100 domination of positive answers; values under 100 domination of negative answers. Source: GfK Rus Omnibus

13 Consumer attitudes: consumer attitude indexes May 08 Dec 08 Mar 09 June 09 Sep. 09 Russia Urban population Rural population Moscow From May 2008 to March 2009, the consumer attitude index dropped by 48 points, which is lower than that of the late 90s. In fact, the index does not exceed the borderline between positive and negative attitudes (100 points) in all reported social groups i.e. negative attitudes dominate in all social groups. YET since June 2009 the situation has been improving Source: GfK Rus Omnibus

14 KEY CHANGES 14 BASIC MANIFESTATIONS OF CRISIS: delayed and cut-down salaries (few respondents mention drastic changes (e.g. being fired)) price growth difficulties in finding a job (after several years of labor market boom) changes in comp any's HR policy (reduced benefits, b usiness trip allocations, payments for mobile communications, lunches, etc.), lesser participation of parttimers. fewer opportunities in the future

15 KEY TRENDS: HOW CONSUMERS RESPOND 15 Developed a relative confidence in the future Pragmatism and planning Looking for needed products at lowest prices Quality as the guarantee of optimal investment Spending and shopping plans

16 PRAGMATISM AND PLANNING 16 Choose a new shopping strategy «to buy on demand» Cut down large purchases (car, apartment renovation, furniture, etc) Spend for most essential items (do not indulge oneself) Change hobbie s instead costly (theater, clubs, photograp hy) affordable ones (TV, books, getting together with friends at home not in café). Change vacation patterns (a car trip in Russia instead of traveling overseas) Abstain from loans / credits Modify spendi ng patter ns: r igorous accoun ting (even spontaneous analysis, selection of best option retail formats purchases), pri ce

17 Effective measures to save up personal funds 17 Do nothing, crisis is no concern of mine Keep all the money with oneself Buy realty (apartment, house, land lot) Open or keep deposit with a bank Withdraw money from bank deposit Exchange rubles to currency Buy durables / large appliances Pay up loan early Buy jewelry Buy food in reserve before price growth Pay up children s or one s own education Buy clothes and footwear before price growth Buy small appliances / electronics Buy FMCG in reserve before price growth Exchange currency to rubles Pay up medical service before price growth Dec'08 Mar'09 Jun'09 Sep'09 Source: GfK Rus Omnibus

18 AFFECTED SEGMENTS 18 SEGMENTS MOST AFFECTED BY CRISIS IN TERMS OF CONSUMPTION CHANGES Tourism (changed traveling patterns) Credit segment (all types of credits including credit cards) Automotive segment (postponing planned purchase of a car) Realty (despite the price cutting consumers are not willing to risk their money) Clothes / footwear (kinds of shopping people can save up on) Leisure / spare time SEGMENTS LEAST AFFECTED BY CRISIS: Healthcare Foods Children's products

19 Expense items people can turn down (to be continued) 19 Furniture and household items Jewelry, watches Interior renovation, construction of house / country house Home appliances, electronics, communication devices (including mobile phones) Attending bars, restaurants, etc Traveling (during vacation / holidays) Hobby expenditures Entertainments (movies, theater, sport events, etc) Buying a car Accounts with a bank (deposits, fixed deposits) Attending beauty parlors Clothes, footwear. accessories Buying real estate Gifts to friends and relatives Cosmetics and perfumery Mar'09 Jun'09 Sep'09 Source: GfK Rus Omnibus

20 Expense items people can turn down (continued) 20 Cosmetics and perfumery Books, magazines, papers Sport products Sport exercises Car maintenance and repair Insurance (life, property, car, medical) Mobile communication and Internet expenses Transport expenses (gasoline) Products for children, toys and games Pet expenses Education and training Loan / credit payments Foods and fast moving consumer goods Medications, optical products and healthcare Public utilities expenses Mar'09 Jun'09 Sep'09 Source: GfK Rus Omnibus

21 Consumer behavior Dynamics of essential goods expenditures,% Jan - Jun 2009 vs. Jan -Jun 2008 Foods +25.4% Personal care % Household chemicals % 21 - excl. pharmaceutical and textile categories - growth in %, value terms Source: GfK Rus, household panel

22 Consumer behavior Changes in sales of electric house appliances in Q vs. Q2 2008, % 22 Q vs. Q First six months 2009 vs. first six months /- % +/- % Audio & video -43.8% -20.7% Photo -38.8% -34.2% Large appliances -36.9% -31.0% Small appliances -28.8% -24.3% Computers -39.6% -31.1% Telecommunications -47.2% -43.8% Office appliances -66.7% -46.1% Household and digital appliances, total -43.1% -32.7% Source: GfK Temax, Technical Market Index

23 23 3 CONSUMER TYPOLOGY AND THEIR REACTION TO CRISIS

24 CONSUMER TYPOLOGY Based upon the consumer habits and behavior, GfK-Rus has developed the following typology of Russian consumers. Altogether, 7 consumer types were identified: - Innovators, -Upward, - Spontaneous, -Achieved, -Steady, - Traditionalists, -Frugal. 24

25 CONSUMER TYPOLOGY /Innovators (13%) High consumer potential. This type is aimed at everything new, appreciating reliability, quality of products, health care and active leisure. They keep on enjoying their life (visiting concerts, theaters, going in for sport) Keep on traveling to get vivid impressions and adventures Social status is an important factor, that s why they still prefer high-quality products by well-known manufacturers, their favorite and time-proven brands. Stay optimistic and self confident (48% of them are in the age under 30): I am sure I will always be able to feed my family 25

26 CONSUMER TYPOLOGY / Achieved (14%) High consumer potential. 26 Keep on achieving their consumer ambitions. Aimed at reliability, quality of products, health care. Following their needs of self-actualization, they keep on using traditional upscale products and don t chase after novelty. Most of all suffer from the changes in the psychological aspect regretting the break-up of established habits; Still c hoose pr oducts of wel l-known bra nds but i n the midprice segment; They are ready to visit a number of stores to find the best offering; discounts are an import ant factor. They try to avoid risks in their life and choose brands with established reputations.

27 CONSUMER TYPOLOGY / Steady (17%) 27 A group of people with the consumer potential a bit above the middle and with a traditional consumer behavior. They consider the reliability and quality of products, but prefer less expensive items. They are not interested in novelties rather inclined to well-known, time-proven products. Now they follow rigorous planning in shopping and leisure activities in order to retain the habitual life quality (favorite brands, natural products, healthy foods) Go shopping on demand only, avoid spontaneous purchases Appreciate simplicity and stability in brands

28 CONSUMER TYPOLOGY / Spontaneous (12%) A group of people with a middle consumer potential; they don t have clearly distinguished consumer predilections accordingly, their consumer behavior is spontaneous and impulsive. Unlike Innovators, they hardly ever altered their shopping schemes: as before time is the most valuable factor Some slight c hanges in th e vacation plans but no changes of the format (they prefer active leisure) They still consider special offers and advertising Unlikely to reject their favorite items (e.g. foods) for the sake of economy 28

29 CONSUMER TYPOLOGY / Upward (18%) 29 A group of people with a not very high consumer potential, yet aimed at a more prestigious consumption. Accordingly, they demonstrate a high striving for being innovative ideas of that lifestyle they received through advertising. They more care about prestige than reliability and quality of products. This group is dominat ed by upper middle income people / about 30 years of age / not married the people sure of their performance in the future and relying on their own Keep on buying advertised and new products Demonstrate moderate enthusiasm about leisure (theater, concerts) accordingly, can easily decrease the frequency of visits Typically, visit stores to find discounts (short of time) an d gladly buy at e-stores. Still unwilling to spend much time for that.

30 CONSUMER TYPOLOGY / Traditionalists (19%) 30 A group of people with a not high consumer potential, aimed at traditional values. Less affected by the changes. Still prefer traditional, time-proven products. Don t care about new and advertised products. These ar e loca l shoppers of the r emained Soviet retailing structures and discounters (e.g. Pyaterochka chain). They are m ore inclined t o b uying p roducts in reserve than to everyday shopping. They hav e moderat e / inex pensive hobbies / leisure activities. Typically, these are retired and low income people.

31 CONSUMER TYPOLOGY /Frugal (7%) 31 A group of people with the lowest consumer potential and the lowest income, aimed at buying products at the lowest prices. Other factors are not important. Basically, they reside in rural areas; their education level is not high. The least significant changes in psychological aspects (always being rational) they choose the price of a product and not its quality, novelty or brand. Change large-scale shop ping once or twice a month to open-air markets spe nding much time in stores trying to find cheaper products.

32 32 Thank you!