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How Russians Are Rolling With the Punches and Adjusting to the Sanctions

Weighing the pros & cons of buying food, luxury goods, designer clothes, overseas vacations, wedding parties, etc.

This post first appeared on Russia Insider

The difficult  economy influences our purses: prices are rising, but salaries are taking their time. Russians are used to that: we face crises every 5-7 years. The smartest learned to save long ago.

Food products: Cheaper, according to plan

According to social scientists, almost every second Russian began saving on food last year. First of all, imported delicacies and high bracket products. And there are a few strategies for saving.

According to Romir Research Holding, men over 45 minimize expenses by buying low-priced brand goods. Women have a different approach. The fair sex shops according to a plan. The experts say that shopping lists save a lot. One in three women use them.

At the same time, financially disadvantaged citizens (often pensioners) prefer stocking up. One in six admitted to buying more goods with a long shelf life, especially, in small towns and rural areas.

But that’s not all. Recently marketing experts see a new group of customers, so called bargain hunters. 28% of respondents try to check out several stores. For Russia, this is a significant indicator: usually we hardly believe in special offers, especially relating to food products. But by now, most people have changed their consumer habits.

Big purchases: The TV as luxury

It’s becoming easier to refuse things that previously were purchased on credit. According to the Association of European Businesses in Russia, car sales decreased by 35% in 2015. This is not surprising: over the last year, the average car price rose by 20%, according to the Autostat Agency, and this is an average. It’s 40-60% for foreign cars, while domestic cars dropped by 15-18%. For a Russian person this is another reason to hesitate: ‘Buy a new car or rather patch up the old one?’ So dealers have no illusions. As the President of the Russian Automobile Dealers Association, Vladimir Mozhenkov said, car sales will drop by 15-20% or more in 2016.

Besides cars, Russians also save on housing. The real estate market is having a hard time. Only 2% of Russians are planning to buy real estate.

Sales of large domestic appliances dropped sharply over the last year, by about 20%. And while we are still buying small appliances, TV sales dropped by 40%, fridges and washing machines dropped by 30%. This is also borne out by the International Center of E-commerce Allbiz. The number of inquiries for appliances on the Internet decreased by 22.5% at the beginning of 2016, compared to the same period of the previous year — and for electronics, by 43%.

But as the experts say, there’s no need to draw catastrophic conclusions. They compare the data to 2014, when there was a huge rush on big purchases. The ruble dropped sharply and everyone wanted to buy goods for the old price: apartments, cars, and electronics. Crowds of people bought TV-sets and microwave ovens, emptying store shelves. Of course, if you compare any year to such a boom, there will be a drop.

Clothing: Straight from China and second hand

You can’t save much money on purchases. Besides, it’s easier to refuse oneself new clothes than food, and prices on non-food goods increased by 85-90% over the last two years. The statistics of the “I am a consumer” project show this, and it’s due to the devaluation of the ruble, raising prices for imports.

A new trend is becoming popular among students. Young people with modest incomes don’t hesitate to buy cut-price clothes as a sort of challenge to society. Purchases from Chinese online shops have also grown.  

Finally, the crisis is a good reason to give up bad habits - at least 15% of Russians think so, spending spend less on alcohol and cigarettes. However, Russians are into gadgets. Only 8% of respondents reduced their expenses on mobile phones and computers.

Tourism and Relaxation: We don’t need an exotic coast  

Russians refuse to save money on foreign travel. Only over the last year have expenses on trips abroad dropped by 30%. According to the United Nations World Tourism Organization, in 2015 Russian tourists spent $35 billion on foreign vacations, 50% higher than this year, for obvious reasons.   

First, the ruble exchange rate doesn’t allow Russians to have fun as before. Now they have to save for almost a year, and even then, can hardly afford a five-star hotel on an average Russian salary. They have to count every single kopeck and choose their destination carefully. There is another problem. The most popular destinations among Russians (and also the cheapest ones) – Egypt and Turkey – have recently become closed for us. Cyprus and India still welcome sunbathers but at different prices, not to mention the Cote d’Azur or Italian resorts. According to Rostat, 31% fewer Russians traveled abroad in 2015. But we still need places to relax. That’s why the resorts of the Crimea and the Krasnodar region as well as tourist itineraries in neighboring regions and former Soviet Republics are growing more popular.

Weddings and birthdays became more budget-wise

Russians chose modest entertainments as the next way to save, carefully planning birthdays, weddings and other events.

As the founder of the Keylinkagency Agency, Denis Ryzhov reports, people started to reduce spending in 2014. This was related to the drop in the ruble exchange rate and overall tension. Now, it’s a different thing: people don’t deny themselves having a vacation but plan it more carefully.

For example, proms. Every third parent spent more than 10,000 rubles on this event and every fourth, more than 5,000 rubles. The prom is almost as important as their children’s weddings, according to the Head of the National Parents’ Committee Irina Volynets. Despite rising inflation they spare no expense.

Russians do save on everyday leisure activities. More people go in for outdoor sports, there are free exhibits, excursions, etc in most cities, and they attract more people. Why do we need to pay, if we can get free events?

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