RBC Market Research: “A Positive Forecast for the Fashion Market - Reducing the Rate of Fall”
On the eve of the Fashion Retail 2017 conference, which will be held in Moscow on May 18, RBC Market Research analysts presented the abstracts of their report on the development of Russian fashion retail. In particular, experts state: in 2016, the volume of footwear sales in Russia decreased by 11,2%.
Hard time for everyone
According to RBC Market Research, last year turned out to be difficult for every second fashion retailer: 51% of the network players represented on the domestic clothing market were forced to close some stores, reducing their retail. In general, over the period from February 2016 to February 2017, over 1 stores of 230 leading network operators in the market closed. The decline in retail was a natural result of the decline in sales: over the two crisis years, the volume of the Russian clothing market fell by 547%. The drop in sales in 22 was 2015%, and in 9,7 it reached 2016%.
The fall in consumer demand hit primarily the middle price segment: some customers began to be purchased in less expensive stores. Along with affordable brands, children's goods retailers are doing well. For example, in February 2016 of the year - February of 2017 of the year, Detsky Mir opened more than 100 stores in Russia. Today, the retailer is one of the leaders in the domestic clothing market: about 25% of the network’s sales are in the fashion category.
Large network projects are less affected by the crisis. They have a lot of experience, professional employees and a pool of loyal consumers. So, if the market at the end of the 2016 year in nominal terms fell by 6%, then the network fashion retailers showed an increase of 5,9%.
Fig. 1. Comparison of the dynamics of the development of network clothing retail and the Russian clothing market,% (nominal growth is given) *
Source: RBC Market Research, update date is March 2017 of the year, * - statistics on revenue growth of network operators is calculated based on the analysis of financial indicators of 60 of the largest companies in the industry.
Positive trends
The market is showing signs of recovery. So, foreign brands have again shown interest in the Russian market. 11 of new brands entered the domestic market over the year (February to February), including French Aigle, English Barbour, German Jil Sander Navy and others.
RBC survey results Market research is also encouraging. Buyers managed to adapt to the market situation: they are no longer so inclined to refuse purchases. Compared to March of 2016, in March this year, the share of consumers who plan to buy women's, men's and children's clothes less often by an average of 11% decreased. At the same time, the share of those who plan to purchase clothes in the same volume as in the 20 year increased markedly (on average by 2016%). Moreover, this trend is characteristic both for buyers of children's and teenage clothes, as well as for buyers of men and women. The percentage of buyers of clothes of cheaper brands is also declining.
Moreover, the most positive forecast for the market for this year is a reduction in the rate of market decline. It's too early to count on growth.
Fig. 2. Dynamics of the volume of the Russian clothing market in 2009 - 2016, billion rubles,%
Source: RBC Market Research, Rosstat, update date - March 2017 of the year
But for the shoe market, the situation remains crisis. Over the past two years, the consumer habits of Russians have significantly changed: now they often prefer to buy one universal classic model of running colors. Rationalization of demand for shoes and a decrease in the share of emotional purchases affect the average bill. Retailers strive to adapt to new conditions, but still lose in sales: in 2016, shoe sales in Russia fell by 11,2%.
Growth drivers
One of the drivers for the development of fashion retail this year is deferred demand. Also, experts hope to maintain current exchange rates, which already today have a positive effect on business margins. The forecast of the Ministry of Economic Development of the Russian Federation is also encouraging: the Russian economy will show signs of recovery. At the end of 2017, the country's GDP will grow by 0,6%, population incomes will also grow - albeit by a modest 0,2%.
Figure: 3. Plans of Russians for future purchases of clothing, March 2015 - March 2017,% of surveyed buyers of the corresponding types of clothing
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