A business development strategy in the retail sector depends on where and how consumers spend money, their attitudes toward different technologies, and what they value when interacting with brands. Here, we present the key findings from one of the largest international studies of consumer behavior, The Future Shopper Report 2023, and analyze how relevant they are for the Russian market and what Russian retail companies should pay attention to.
The global report, The Future Shopper Report 2023, is based on a survey of more than 31,000 consumers from 18 countries around the world. Russia was not among them, but several participating countries have similar market characteristics in terms of shopping experience and overall economic development. This is one of the largest annual retail market studies conducted by Wunderman Thompson. Let’s try to adapt the main findings of the report to Russian realities.
Trend 1. Online retail continues to grow
The Covid-19 pandemic and related restrictions led to explosive growth in e-commerce. In 2022, consumers spent an average of 58% of their shopping budget online—one percentage point higher than in 2021 (57%). According to respondents, in 10 years, online purchases will account for 64% of their spending, meaning the share will keep growing, but by less than one percentage point per year. The growth rate of the Russian online retail market is also slowing down. According to Data Insight, in 2021 the number of online orders increased by 104% (to 1.7 billion), and the market size in rubles grew by 52% (to 4.1 trillion rubles). The share of online sales reached 12% overall (+3 pp) and 26% in non-food retail (+5 pp). Growth continued in 2022, but at a more moderate pace: the number of online orders rose by 65% (to 2.8 billion) and the market size in rubles increased by 38% (to 5.7 trillion rubles). The share of online sales reached 15% of total retail and 30% in the non-food segment.
Trend 2. Physical stores remain in demand Sixty percent of shoppers worldwide prefer to buy from retailers or brands that have both online and physical stores. Online retail will not fully replace brick-and-mortar stores, because people are social by nature. Moreover, online shopping and physical store visits often serve different purposes. People tend to buy familiar products online, while for items that need to be tried on, they prefer to shop in person. Retail business strategies should therefore be multichannel and well-balanced—advice that is highly relevant for the Russian market as well.
Trend 3. Mobile first
Globally, 32% of online spending comes from mobile phones, followed by laptops (17%) and desktop computers (16%). However, if you combine the last two, desktop devices still hold the leading share worldwide. In Russia, things are different: according to a study by Yandex and GfK, the share of purchases made via smartphones and tablets exceeded 67% in 2022. Only about a third of online orders are placed from computers and laptops. Wunderman Thompson analysts recommend that retailers pay equal attention to developing both mobile apps and desktop versions of their websites. However, for Russia, the age of mobile first has arrived sooner than elsewhere—the proportion of purchases made through mobile devices is growing rapidly.
Trend 4. Marketplaces will continue to dominate e-commerce
Marketplaces remain the number one online channel: 35% of online purchases globally are made on such platforms. In Russia, in the second half of 2022, marketplaces accounted for 73% of all orders, and their sales volume represented nearly half of the e-commerce market (2.7 trillion rubles). This is happening because other e-commerce players in Russia are noticeably lagging behind. According to a Wunderman Thompson survey, consumers are willing to expand the range of goods and services they buy on marketplaces: 51% of respondents have no objection to purchasing electricity, water, and utilities via platforms like Amazon, Tmall, and others. While these segments are less promising for the Russian market due to regulatory specifics, the fact that marketplaces are becoming a one-stop shop for a wide variety of goods and services is an obvious trend.
Trend 5. Multichannel
It is important for retailers and manufacturers to develop sales both on third-party online platforms (marketplaces, delivery services) and on their own. In 2022, 14% of online purchases were made through brand websites (D2C model), up from just 7% the previous year. Moreover, 58% of buyers said they like shopping directly from brands. This trend is also reflected in Russian reality. Another sales channel mentioned in the Wunderman Thompson report is more controversial: experts point to the great potential of social commerce—sales via social networks. For example, 67% of shoppers worldwide have already made purchases via social media platforms. In Russia, however, social commerce is still underdeveloped.
Trend 6. Price is the decisive factor in purchases
Online shoppers are price-sensitive—56% of surveyed consumers said price is the key factor when choosing a product. In fact, 46% are willing to switch retailers if they find the same item cheaper elsewhere. In Russia, price is the main factor for 89% of shoppers when making a purchase decision, according to a Nielsen report. 61% of Russian consumers choose stores with low prices, while 41% actively search for cheaper products. Additionally, 48% of Russian consumers believe they can order FMCG goods online at a lower price than in offline stores. In Russia, brand and company loyalty is low; consumers switch between them quickly and easily. That’s why competitive analysis in general—and price monitoring in particular—are essential for retailers who want to maintain and grow their audience.
Most global trends are relevant to Russia—they deserve attention right now. It is important to continue developing a variety of online channels, improve delivery and return services, and manage prices in real time based on market analytics. Our market has its own peculiarities: a high penetration of mobile phones, the presence of several major marketplaces, and low brand and company loyalty. These specifics should be taken into account when adjusting your business strategy and searching for new growth opportunities.