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Today, with the recent economic crisis still fresh in the minds of many Russians, the declining foreign-exchange value of the rouble is a major concern for many. During the last two years, the dollar fluctuated wildly. A dollar was worth RUB30.5 at the beginning of 2013, but in early December 2014, this figure briefly rose to more than RUB70, before stabilising in the high RUB50s late in the month. Fears of a rouble crash created panic among consumers, with many exchanging their depreciating roubles into everything from apartments and cars to appliances and furniture. As a result, the excessive demand for major consumer appliances in December 2014 turned to a sharp decrease in sales during 2015.
Believe it or not, the story is repeating itself in January 2016. The dollar has jumped up to RUB84 towards the end of January 2016, bringing back the shopping panic which is excessively affecting consumer appliances and electronics sales. Just this time, Russian consumers don’t have enough savings to make new purchases and are being forced to use point of sale credit offered by retailers to buy new electronics and appliances. The leading banks involved in retail point of sale consumer credit in Russia reported a sharp increase in demand for retail point of sale credit in January 2016, compared to November 2015.
The reason why Russians choose consumer electronics and appliances as their priority purchases during currency fluctuations, is that these products are strongly dependent on imports. Even domestic companies and those multinationals that have production facilities in Russia are heavily dependent on imported components and materials from abroad. Imported products are very sensitive to local currency fluctuations and are a subject to unit price increase. As a result, Russians are rushing to catch an offer before the prices go up again.
We expect this to be a short-lived trend which will not last throughout the year. The second half of 2016 is set to see a sharp decrease in consumer electronics and appliance sales following the excessive demand seen in the beginning of the year. The pessimistic forecast for the economic situation in Russia leaves no doubt about negative market performance for 2016 in Russia.