As the Russian Economy Stabilizes, Consumers Have Grown More Pragmatic, but Are Ready to Spend More on Fresh Foods, Health Care, Education, and Other Products That Promote Wellness, Says BCG Study
MOSCOW, May 17, 2018 (GLOBE NEWSWIRE) — As the Russian economy continues to stabilize after several years of financial crisis, many of the nation’s consumers are ready to spend more on goods and services that matter most to them, such as fresh foods, education, and travel, according to a new report by The Boston Consulting Group (BCG). The report, Russian Consumers and the New Economic Reality, was released today.
To succeed in Russia, the research found, companies will have to adapt their products and marketing strategies to noticeable shifts in consumer sentiment. According to the findings, which are based on a survey of nearly 4,000 Russians of different ages and income levels in 2017 by BCG’s Center for Customer Insight, consumers have grown more cautious, pragmatic, and value-conscious since BCG conducted a similar survey in 2013. They are more prone to buy low-cost generic drugs than branded medications, for example, and to take shorter vacation trips closer to home.
“Russia remains a critical emerging market for global companies that understand the nuances and needs of this complex consumer economy,” said Ivan Kotov, a BCG partner who leads the firm’s Consumer practice in Russia. “Companies that align their strategies with the desires and budgets of Russian households will find significant growth opportunities.”
The study found evidence that Russian consumers are adapting to the new reality that the economy is unlikely to soon return to the booming growth it once enjoyed when oil prices were high and the ruble was strong. After several years in which inflation far outstripped GDP growth, the buying power of average households has declined—especially for imported goods and foreign travel.
Among the key findings:
- Fifty-five percent of consumers say they are hopeful about the future, a sharp decline since 2013, but that is comparable to the levels of many advanced economies, such as Canada, Germany, and the US, and higher than in Japan and the UK. While 72% of consumers say they worry about that future, that percentage was higher in 2013.
- While most Russians are cutting back on goods they perceive as nonessential, such as alcohol and ready-to-eat foods, nearly half say they intend to spend more in product categories they regard as important for their well-being. Asked what they value most, an overwhelming majority of 83% cited “family and home,” while 78% cited “health” as a top priority.
- Russia’s once-strong devotion to famous brands is fading. Only 24% say that brands reflect on themselves and their values. But consumers still think brands are important in categories such as digital media and electronics.
Russia’s health care sector illustrates how shifting consumer attitudes and behavior present opportunities—as well as challenges—for foreign companies. Soaring prices for imported drugs are forcing consumers to make hard choices. Sixty-six percent say they try to save money on medications and 78% on medical services; 33% report that they sometimes don’t buy prescribed drugs at all because they are unaffordable. The study also found that many Russian consumers are dissatisfied with the quality of health care services available.
“These findings suggest there is high demand for affordable, high-quality medical services in Russia that’s not being fully met by public programs,” said Stefan Tushchen, a BCG partner who leads the firm’s Health Care practice in Russia. “They will increasingly be met by private investors.”
A number of foreign providers, including the Italian medical holding company GVM and Macedonia’s Acibadem Sistina, are investing in Russian clinics. Others are becoming partners in the Moscow International Medical Cluster, an initiative that aims to improve access to global treatment methods. Israel’s Hadassah Medical Center, for example, will open a clinical diagnostic center and oncology therapy center.
The study also indicates that Russia will remain a dynamic travel and tourism market for companies that bring the right value proposition. Cost leadership and customer centricity will be among the key sources of advantage for travel companies seeking to capture the Russian growth opportunity,” said Nicolas Boutin, a BCG partner and global leader of the firm’s Travel and Tourism practice. “To win in Russia, companies should use the current economic reset to seize competitive advantage.”
A copy of the report can be downloaded here.
To arrange an interview with one of the authors, please contact Eric Gregoire
at +1 617 850 3783 or firstname.lastname@example.org.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with offices in more than 90 cities in 50 countries. For more information, please visit bcg.com.
About BCG’s Center for Customer Insight
The Boston Consulting Group’s Center for Customer Insight (CCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG’s various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCI is sponsored by BCG’s Marketing & Sales and Global Advantage practices. For more information, please visit http://www.bcg.com/expertise/institutes/center-customer-insight.
The Boston Consulting Group
Global Media Relations Manager
Tel +1 617 850 3783
Fax +1 617 850 3701