GfK: Russian market declined in the first three quarters of 2014


Acording to GfK Temax, the technical consumer goods market in Russia declined slightly in the first three quarters of 2014, compared to the same period last year. However, three of the seven sectors reported positive performances, with one of them – telecommunications – growing at a double-digit rate. On the other hand, the remaining four sectors (photography, Information technology, office equipment and consumables and consumer electronics) declined, affecting the general trend.

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Consumer electronics: all products reported declining sales
The Russian CE sector reported a fall of around 4% in monetary value as consumers tend to spend less during periods of political uncertainty. The Panel TVs segment remained flat, compared to the previous year’s results. The third quarter of 2014 was notable for the growth in demand for loudspeakers and set-top-boxes with a 30% increase, both in value and in units. However, this result did not compensate for the decline in sales of DVD/Blu-ray disc players and camcorders.

Photography: decline in the largest segment
The photography sector ended 30% lower in Q3 2014 compared to the same period of 2013, with sales of Rub9,820 million. The compact digital cameras segment was the area which most influenced the negative trend for the sector when compared to the first three quarters of 2013.

Major domestic appliances: slight growth still registered
The MDA sector grew by 4.3% between Q1 and Q3 2014, compared with 2013, reaching Rub173,766 million. However, not all products saw increases in sales. While the volume of cooling products and built-in products grew by 2-3%, demand for washing machines was stable, and sales of microwave ovens were below those for the same period in 2013.

Small domestic appliances: stable growth provided by online sales
The SDA market sales value (excluding multicookers) remained stable with 1% growth in Q3 2014, compared to Q3 2013. The sales value of household appliances grew by more than 5% in Q3 2014, mostly through online sales, while the kitchen appliances market was less positive – falling by 5% in value. Hot beverage makers supported the sector with sales value growth of over 20%.

Information technology: fragile balance
The IT sector was driven by contradictory factors in Q3 2014, resulting in Rub83,460 million – a fall of 10.9%, compared to Q3 2013. While some customers felt the effects of lower income and postponed their purchases of IT goods, others tended to buy computers as an investment in anticipation of price increases. The major drivers in this sector were some cheaper goods, including increasing sales of inexpensive 7-inch mediatablets and entry-level notebooks. The mobile computers segment clearly won the consumers’ preferences in the 10-12 inch computing device niche. Sales of computing tablets continued to increase and almost reached the level of 2013, despite the decline in the overall computing market.

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Telecommunications: low-priced competition
The growth rate in sales of smartphones accounted for almost 50% in this sector, while in value it only reached nearly 25%. The average market price keeps shrinking due to the increased popularity of “budget” smartphones, priced up to RUB3,000. Competition will ensure that more sophisticated devices will be offered in a low-price range to blur the line between so-called premium and B-C brands even further. The market share of “two-SIM cards” mobile phones and smartphones has reached nearly 60%, helping to support overall demand.

Office equipment and consumables: temporary boost
Continuous currency depreciation forced consumers to hasten their purchases, drastically altering the market trends for printing devices. Q3 2014 sales emerged as 3-5% better than expected for printers and multifunctional devices. The boost in sales is clearly of a temporary nature, foreshadowing a contraction in demand. The consumables market is also suffering from the consumers’ cost optimization. The share of original cartridges declined in Q3 2014, resulting in a growing preference toward compatible cartridges and refill services.