Russian Consumer Confidence Crisis?
Since the beginning of September retail consumer spending seems to be down anywhere between 30-50%. The evidence:
Since the beginning of September retail consumer spending seems to be down anywhere between 30-50%. The evidence:
- A high-to-mid end consumer electronics distributor (-30% versus forecast) who are pleased with themselves because they are still outperforming their competitors. They are no longer serving one of the larger retailers who they believe will soon fail.
- A direct marketing organization. Again 20-30% down against forecast (up to August they were both outperforming against plan)
- A residential real estate company which says that to the extent that deals are being done at all prices are down 50% since pre-summer.
- An advertising agency which reports that car sales have stalled - "there are no cars being sold" since the summer
- another advertising agency which reports that its staff are unhappy because their pay is $ -indexed and inflation is Rbl-indexed. The Agency is considering billing in Rbls and having to lift prices in line with inflation.
There are two more sources, both from the FMCG world, which concur but which I am not even allowed to hint at.
At the end of September people believed that it was due to Breslan, and that the stoic Russian spender would be back in full spend mode by at least November. With November just about done it looks like it will be worse than September, and November should be a good month. If the December 12th holiday weekend does not see foot-traffic back in the malls the BRIC story may become a tired much chewed BIC. Ikea are due to open Mega2 (large malls alongside their ubiquitous stores) that weekend. Mega1 was a blowout affair with km's of traffic jams in a blizzard. Mega2 may well be an opening flop.
Which pretty much leaves us with a shift from $s to Euros as a quick 20% price rise along with another 20+% of Rbl inflation in core purchases (food etc) whilst the Rbl/$ exchange rate has gone from close to Rbl30:$1 to Rbl28:$1. The last data point above comes from my wife's BTL agency business. Her staff, predominantly young & female are feeling poor and it is becoming increasingly difficult to hire event staff (job description; young, female, good looking, ability to stand up) at the $-indexed price they have been offering. She reports that this is predominantly a Moscow phenomenon; the Regions usually take a while to catch on.
I guess that it will take another quarter before the Central Bank starts to pay attention. Whither the Rbl? To 30 or even more aggressive?
Is this Russia's version of the Dutch disease? Given that there is shockingly little domestic manufacturing maybe its the consumer who will take the smacking instead. Not that the super-Rich care.
Update: Confirmed by a foreign car manufacturer
At the end of September people believed that it was due to Breslan, and that the stoic Russian spender would be back in full spend mode by at least November. With November just about done it looks like it will be worse than September, and November should be a good month. If the December 12th holiday weekend does not see foot-traffic back in the malls the BRIC story may become a tired much chewed BIC. Ikea are due to open Mega2 (large malls alongside their ubiquitous stores) that weekend. Mega1 was a blowout affair with km's of traffic jams in a blizzard. Mega2 may well be an opening flop.
Which pretty much leaves us with a shift from $s to Euros as a quick 20% price rise along with another 20+% of Rbl inflation in core purchases (food etc) whilst the Rbl/$ exchange rate has gone from close to Rbl30:$1 to Rbl28:$1. The last data point above comes from my wife's BTL agency business. Her staff, predominantly young & female are feeling poor and it is becoming increasingly difficult to hire event staff (job description; young, female, good looking, ability to stand up) at the $-indexed price they have been offering. She reports that this is predominantly a Moscow phenomenon; the Regions usually take a while to catch on.
I guess that it will take another quarter before the Central Bank starts to pay attention. Whither the Rbl? To 30 or even more aggressive?
Is this Russia's version of the Dutch disease? Given that there is shockingly little domestic manufacturing maybe its the consumer who will take the smacking instead. Not that the super-Rich care.
Update: Confirmed by a foreign car manufacturer
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