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Thrifty Russian Consumers Step Down Annual Footwear Purchases

High-end and sports shoe sectors suffer most as purchasers opt for robust, multi-purpose footwear.

Photo: Ralf Ringer: Restricting range and promoting last season’s styles.
Ralf Ringer: Restricting range and promoting last season's styles.
Photo: Ralf Ringer: Restricting range and promoting last season’s styles.
Ralf Ringer: Restricting range and promoting last season's styles.

Russia's footwear market is set to undergo a radical transformation according to a number of industry insiders. Given, the prevailing economic conditions, the country's consumers are now committed to spending less per pair of shoes and to buy on fewer occasions. The upside of this is that, with more expensive global brands being eschewed, there will be increased opportunities both for local manufacturers and for mainland footwear companies offering cheaper alternatives.

Overall, a crisis mentality has set in among many Russian consumers, with even the relatively well-off developing a propensity for thrift. Aside from footwear, this phenomenon has had a negative impact on sales in a number of other sectors, notably cars, furniture and white goods. This has seen all of these sectors seeking to reinvent themselves in line with these changed expectations.

For the footwear market, the sector first became becalmed in the autumn of 2014, with many of the major players privately expecting the situation to remain the same until at least the end of 2016. On average now, a Russian consumer invests in 2.5 pairs of shoes per annum, a bare minimum given the challenging environment and the need for separate winter and summer footwear.

Examining the sector more closely, however, reveals a more complex picture. Overall, the low-end segment is the most stable with a pretty much guaranteed purchase of two pairs per person per year. In the medium price sector, three pairs is more the norm, rising to 4-6 pairs in the upper medium price band. Historically, this latter segment has been more prone to impulse purchases, making it the most vulnerable to the current more frugal approach of many consumers.

The current quest for greater for value money and enhanced ubiquity has ushered in a far greater focus on practicality than seen in the past. Typically, the bestselling footwear items are now suitable for both office and leisure time usage, matching both jeans and business suits.

Inevitably, then, dedicated sports shoes and the more stylish footwear suitable for an evening out have lost out to more durable, multi-purposes and less ostentatious models. This has seen a steep decline in the purchase of a number of premium imported footwear brands, notably Rieker (Switzerland) and Gabor (UK).

These concerns have also had an impact on domestic manufacturers and distributors. Westfalika, Ralf Ringer and Econika, three of Russia's most well-known footwear manufacturers and distributors, have cut the range they stock from 1,200 styles to just 800. At the same time, R&D into new models has been put on hold, while staff have been briefed to sell last season's remainders. Historically, remaindered items from previous seasons accounted for no more than 30% of stock, but now it is believed to represent a far higher proportion.

It is also expected that the use of synthetic materials will usurp the traditional role of leather in the medium price segment. Previously, such material had only been used in as little as 5% of incoming spring-summer collections. Traditionally, synthetic materials were only a feature of footwear sold through Russia's discount stores and hypermarkets. Historically, Russians have believed that only good quality leather shoes could withstand the country's seven-month long winters, although many are now being forced to compromise with synthetic alternatives.

At present, a number of footwear chains have looked to counter this cynicism with regard to synthetic products by opting to stock footwear made using high-tech artificial material said to be more robust and hygienic. Unfortunately, many of these high tech items are more expensive than their leather counterparts, somewhat undermining their appeal to cost-constrained consumers.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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