The Global Economic Crisis: The Impact On Consumer Attitudes & Behaviors In Russia

Table of Contents

OVERVIEW

• Catalyst
• Summary

THE FUTURE DECODED

• INTRODUCTION: Understanding how ‘recessionary mindsets' influence Russian consumers' attitudes towards and actual consumption is vital
  • The ‘recessionary mindset' of Russian consumers is reflected by the widespread belief that they' re in a recession
  • The economic downturn has had an impact on the lifestyles of more than half of Russian consumers
  • Key takeouts and implications: a ‘recessionary mindset' has driven Russian consumers to adopt a pessimistic attitude to the wider economic situation and its impact on their lifestyles in 2009

• TREND: The downturn is making many Russians more pessimistic in the face of falling prosperity
  • Russians are generally more discontent with their lives than consumers in other countries
  • Key takeouts and implications: the mood towards the direction of Russian society has dampened in 2008 - 09, with less than a quarter expressing explicit satisfaction with their quality of life

• TREND: Russian consumers are pessimistic about their financial security and future economic prospects
  • Satisfaction with one' s financial situation is low among Russian consumers and has worsened in 2009
  • Perceptions about the economy, job security, financial status and the housing market in Russia are all pessimistic to varying degrees, with little optimism for the six months ahead
  • Russians are managing their finances more closely but adopt a less cautious approach to spending than other nations
  • Russians are making greater efforts to save and still aspire to be less reluctant on credit
  • Key takeouts and implications: Russians have lost satisfaction with their financial situation and there is only mild optimism of any improvement coming towards the end of 2009

• INSIGHT: The global economic crisis has had a negative impact on the emotional wellbeing of Russians with levels of stress up and personal happiness down
  • Self-reported stress levels among Russians have been negatively impacted during the financial downturn
  • Work-life balance has also worsened in combination with the deepening downturn
  • The happiness levels of Russian citizens have declined in line with the global economic crisis
  • Key takeouts and implications: recessionary consumers in Russia are in greater need of emotional and physical ‘pick-me-ups'

• INSIGHT: Russian consumers have become increasingly price and value conscious following the global economic downturn
  • Russian consumers are becoming more value conscious and are therefore looking to save money when buying groceries, though not necessarily through price promotions
  • Price and value consciousness heavily influences where Russian consumers do their grocery shopping and how they shop, but quality still matters too
  • Key takeouts and implications: the value consciousness of Russians has intensified and is reflected by how they determine where to shop

• INSIGHT: Brand loyalties are under increasing threat as Russian shoppers give up brands and increasingly embrace private label
  • Russian consumers are beginning to give up some of their favorite brands, as they make more ‘considered' choices
  • Private labels are becoming more attractive to Russian shoppers, especially in the downturn
  • Key takeouts and implications: the general value consciousness of Russians, combined with their current reflective consumption patterns, has the potential to create an optimal platform for private label growth

• INSIGHT: Russian consumers are embracing money saving tactics when it comes to food and non-alcoholic beverage purchases and preparation
  • Russian consumers are adopting various responses to cut back on food and beverage expenditures, particularly preparing more meals at home
  • Many Russian shoppers consider private label food and non-alcoholic beverages to be identical to famous branded equivalents
  • Key takeouts and implications: a resurging desire to cook more often at home has occurred, but increased competition in food and non-alcoholic beverages between private label and market leading brands has yet to fully materialize

• INSIGHT: The significant majority of Russian consumers' personal care regimes and related product choices have been ‘recession resistant'
  • Nearly three quarters of Russian consumers are committed to looking their best in day-to-day life
  • Price and value-conscious personal care/beauty shoppers in Russia have not made notable changes to their personal care shopping and usage in order to save money
  • Russians have a polarized attitude towards private label personal care products
  • Key takeouts and implications: Russian consumers' health and beauty regimes are influenced by a strong desire to look one' s best

• INSIGHT: Russian consumers' alcohol consumption patterns and preferences have not changed significantly during the downturn
  • Russian drinkers have not been making significant cut backs in the amount of alcohol they consume
  • Russian drinkers have not become significantly more value conscious in both their at-home and out-of-home alcoholic beverage choices in 2008 - 09
  • Private label alcohol is not as prevalent in Russia as in other countries, which results in uncertainty about comparative quality against branded equivalents
  • Russian drinkers are more concerned about the quality credentials of alcoholic beverage brands and are less concerned about brand image
  • Key takeouts and implications: there has been little to no change in the alcohol consumption patterns for many Russian drinkers suggesting that alcohol is largely ‘recession resistant'

• INSIGHT: Russians' household care buying preferences are heavily shaped by price consciousness irrespective of an economic downturn
  • Price-led value is still the most influential factor for Russians' household and laundry care purchases but preferences do reflect other important influences
  • The private label household care market in Russia is small but potentially lucrative given shoppers' desire for value
  • Key takeouts and implications: Russian consumers associate hygiene and cleanliness with wellbeing and this makes them somewhat quality conscious

ACTION POINTS

• ACTION: Adopt a relentless approach to delivering and communicating better value-for-money than the competition without just focusing on lower prices
  • Actively demonstrate value-for-money by re-appraising marketing initiatives, including slogans
  • Ensure that the value gains are instantaneous
  • Evaluate and adapt cost structures so that it is feasible to offer value-for-money solutions
  • Focus on quality to maintain differentiation and prove to consumers that quality really matters
  • Start planning for the longer-term by continually tracking Russian consumers as an economic recovery begins to become a reality

APPENDIX

• Methodology
• Further reading and references
• Ask the analyst
• Datamonitor consulting
• Disclaimer

TABLES

• Table: Consumer survey: level of satisfaction with “the general direction of how things are going” and “quality of life”, in Russia (compared with the global average), 2009
• Table: Consumer survey: satisfaction with current financial situation and importance attached to wealth/ income and having finances in good order, in Russia (compared with the global average), 2009
• Table: Consumer survey: perceptions of whether broader economic and personal conditions had improved or worsened in the six months previous, and how each might change in the proceeding six months, in Russia, 2009
• Table: Consumer survey: propensity to feel tense and the extent to which perceived levels of stress have changed in the last six months and are expected to change in the next six months, in Russia, 2008 - 09
• Table: Consumer survey: propensity to feel very tired and the extent to which perceived work-life balance has changed in the last six months and is expected to change in the next six months, in Russia, 2008 - 09
• Table: Consumer survey: happiness levels and the extent to which perceived happiness has changed in the last six months and are expected to change in the next six months, in Russia, 2008-09
• Table: Consumer survey: changing value-consciousness and desire to save money when buying groceries among Russian shoppers, 2009
• Table: Consumer survey: changing efforts are being made to use coupons, change grocery store choice to save money, embrace more disciplined shopping and gather and utilize store price information among Russian shoppers, April 2008 - April 2009
• Table: Consumer survey: the relative cost/value and quality consciousness of Russian and global consumers overall when purchasing food and beverage products in 2008
• Table: Consumer survey: the extent to which Russian consumers made an effort to save money by adopting various food and drinks consumption and preparation approaches, 2008-09
• Table: Consumer survey: perception about the relative superiority or inferiority of private labels versus well known or market leading famous brands in food, soft drinks and hot drinks, in Russia, 2009
• Table: Consumer survey: the importance attached to looking one' s best in day-to-day life, the pressure to look good, and satisfaction with physical attractiveness/appearance, among Russian consumers, 2008 and 2009
• Table: Consumer survey: the extent to which consumers are making an effort to save money by using spas or salons less often, in Russia, 2008 - 09
• Table: Consumer survey: attempts made by Russians to change their personal care/beauty habits in order to save money, by product category, 2008 - 09
• Table: Consumer survey: perception of private labels versus well known or market leading famous brands for grooming/ beauty products, and agreement that such products are good alternatives to well known or market leading famous brands, in Russia, 2009
• Table: Consumer survey: attentiveness towards the amount of money spent on alcohol and the degree to which alcoholic beverage consumers in Russia have cut down on the overall amount of alcohol bought/consumed in 2008 - 09
• Table: Consumer survey: the changing degree to which household and laundry care consumers in Russia made product choices with value or cost in mind, 2008
• Table: Consumer survey: attitudes towards doing housework in Russia and globally, 2008
• Table: Consumer survey: perception about the relative superiority or inferiority of private labels versus well known or market-leading famous brands for household cleaning/laundry products, and how often such products are purchased to save money, in Russia, 2009

FIGURES

• Figure: Datamonitor' s Recession and Recovery portal will allow industry players to continually identify emerging opportunities and track what is happening in the Russian economy as it develops
• Figure: In April 2009, over three quarters of Russian consumers believed that their country was in recession
• Figure: More Russians believe that the recession has changed their lifestyles in 2009 than in 2008
• Figure: Generally Russian consumers are less satisfied with their lives than the global average
• Figure: The significant gains in positive Russian consumer sentiment towards the country' s economic situation plummeted in 2009
• Figure: More than half of Russian consumers are currently dissatisfied with their financial situation
• Figure: In 2009, Russians have adopted a more negative viewpoint about the economy than their own personal situation
• Figure: Russians are more pessimistic about the economic conditions of their country going forward than their personal finances
• Figure: The future-focused economic confidence of Russians is more positive than negative, but has nonetheless declined in 2009
• Figure: Russians are managing their finances more closely in light of the downturn, while more than a quarter of individuals report difficulties in paying all the bills
• Figure: Russian consumers are generally reluctant to sustain their reliance on credit and demonstrate a growing need to save money
• Figure: The economic downturn has also been accompanied by additional stress levels among Russians
• Figure: Russians are less prone to tiredness than global consumers but a similar proportion are of the impression that their work-life balance has worsened
• Figure: Two thirds of Russians said they felt happy only occasionally in the past month
• Figure: Many Russians are more value-conscious following the downturn, more so than their global counterparts
• Figure: Russian consumers attach considerable importance to quality in deciding where they do most of their shopping
• Figure: Russian grocery consumers have been making more effort to change where they shop and using a pre-determined shopping list in 2009
• Figure: As the global economic downturn has intensified, so too has the extent to which Russian consumers have been forced to sacrifice some of their favorite brands
• Figure: Being seen with the ' right brand' is of similar importance to both Russian and US consumers
• Figure: More than a third of Russian consumers look to private label brands as a key reason to shop in a particular store
• Figure: Less than a quarter of Russian shoppers are routinely buying private label/store branded products in an effort to save money
• Figure: The private label market is impacted by a broad range of drivers and inhibitors
• Figure: Russians became increasingly value conscious in their food and beverage choices in 2008, but that was not reflected by a substantial quality compromise
• Figure: The attributes deemed most influential in what food and beverages Russians buy highlight the importance of living well for less money
• Figure: Russian retail expenditure on food has grown significantly in the last decade
• Figure: Russians are adopting various responses to cut back on food and beverage expenditures, with the most significant emphasis being on cooking more from home
• Figure: Majorities of Russians cook an evening meal at home from scratch five times or more a week
• Figure: There has been a slight increase in the self-reported propensity for Russians to have a occasional takeaway meals at home
• Figure: Russians are less certain of the differences between private label and branded hot drinks than of other categories
• Figure: Russian consumers are highly appearance conscious and this makes them less willing to trade-down when making personal care choices
• Figure: Russian personal care/beauty shoppers became more price and value conscious in 2008 but showed little desire to sacrifice on quality
• Figure: Personal care/beauty shoppers in Russia and elsewhere are highly price conscious, although brand image is of considerable importance to Russians
• Figure: Only 22% of Russian consumers consider private label beauty products to be good alternatives to well known or market-leading brands
• Figure: Russian drinkers are careful about how much they spend on alcohol, but do not perceive that they have been making significant cut backs in the amount they consume in 2008 - 09
• Figure: Value consciousness among Russian drinkers has had more impact on at-home alcoholic drinks' consumption in 2008 - 09
• Figure: Russian drinkers, perhaps influenced by a sense of entitlement, are reluctant to opt for cheaper brands and formats of alcoholic beverages
• Figure: Nearly a third of Russian drinkers are highly influenced by alcohol beverage promotional offers
• Figure: Only a small proportion of Russian drinkers believe that private label alcoholic drinks are good alternatives to market-leading or famous brands
• Figure: Russian drinkers are less likely to be skeptical of private label beer compared to wine or spirits
• Figure: Russians are becoming more attached to their favorite alcoholic beverage brands as the global economic downturn intensifies
• Figure: Russians have a growing price consciousness that influences their household purchases
• Figure: In 2008, Russian household and laundry care choices were made with greater consideration for cost/value but consumers showed an ongoing desire for efficacy-led quality
• Figure: Russian consumers value cleanliness, somewhat dislike household tasks and seek to minimize the amount of time they spend on such tasks
• Figure: Nearly three quarters of Russian consumers are ' frequent' purchasers of household care products on the basis of value-for-money
• Figure: Less than a quarter of Russian consumers regularly purchase private label household care products to save money
• Figure: A small proportion of Russian consumers consider private label household and laundry products to be superior to branded equivalents
• Figure: Coles' ‘Feed Your Family for Under $10' campaign is similar to an approach adopted by Sainsbury' s in the UK
• Figure: Manufacturers and retailers looking to deliver value-for-money must in the provision of factors associated with the PPI, but while also offering consumers lower than expected prices
• Figure: Datamonitor' s Recession and Recovery portal will facilitate forward thinking planning for those leading companies that start planning for the longer-term