Thrifty Russians find new ways to save
February is the time of buying because of Valentine’s and Defender of Fatherland Day
Not even Russia’s “Valentine’s Day for men” could rouse consumers from a slumber that’s stretching into a third year.
February is usually a time of impulse buying because the actual Valentine’s Day is followed by a holiday for veterans and people serving in the military — which dates to Soviet times and doubles as a celebration for men as a whole. But gloom has descended this time around, keeping consumption down even as broader economic growth gains traction.
The Watcom shopping index for Moscow, which surveyed activity at about 150 malls in the capital, plunged 8 per cent from a year earlier in the days preceding the February 23 holiday known as Defender of the Fatherland Day. The gauge deteriorated further during a period before International Women’s Day on March 8.
Data due to be released yesterday would likely show that retail sales last month extended a record stretch of declines, once again bucking gains in real wages and disposable incomes, according to economists surveyed by Bloomberg.
“Instead of a pre-holiday splash, there’s a decline,” said Maria Vakatova, partner at Watcom Group, the Moscow retail consultancy that compiles the shopping index. “The share of emotional purchases is falling, which is the main change in consumer behaviour.”
The Russian consumer is increasingly going from mainstay to bystander as a post-recession economy takes shape. While stabilising, the unremitting decline in retail sales shows it’s been largely immune to growth in earnings, a precipitous decline in inflation and a rally in the rouble.
The reasons vary. A hole blown in household finances by the crisis will take years to patch up. S&P Global Ratings estimates gross domestic product per capita in 2020 — while growing from this year — will still be almost 30 per cent below its 2013 level.
Buyers also remain sensitive to prices and discounts, according to Watcom. That’s also borne out by Sberbank CIB’s survey of the typical shopper, which found that the share of those trading down to cheaper options rose last quarter to 71 per cent from 68 per cent in the previous three months.