Despite various disputes, the middle class has always been and remains the economic support of any state, and Russia is no exception. It is the representatives of the middle class who form the most significant part of consumer demand and have significant purchasing power for the market. StartUp specialists talk about the shoe preferences of consumers belonging to this class of the population, and how they perceive the quality of shoes, how much they are willing to spend on it and what service they need.
Who are all these people
The Russian middle class is largely composed of those who, thanks to their professional qualities, a high level of education and an internal desire to improve their lives, were able to adapt to the conditions of the modern market economy and provide themselves and their families with an adequate lifestyle. It is extremely difficult to objectively evaluate the share of the middle class in the population of Russia because there are simply no clear criteria for belonging to it. In its studies, StartUp takes into account the general level of family income, a certain property threshold, level of education, lifestyle, as well as self-esteem of respondents regarding the economic class.
Despite a wide range of indicators, the level of income is a key factor: the minimum threshold for entering the middle class in Russia is an income of at least $ 12 thousand per year per household, which is significantly below Western standards. Based on the self-assessment of respondents in terms of income in 2012, the population in the middle class was 38% of the population of the entire country. It is also worth noting that in large cities - especially in the capital - the standard of living and profitability are much higher, therefore, the figures that are acceptable in the regions cannot be an indicator for the capital, the respondents from which stand out in a separate group in the studies. The “entrance ticket” to the middle class in Moscow is the total family income of at least $ 30 per year. In general, 18% of the country's population has this level of income.
The percentage ratio of the middle class to the rest of the country's population, as you can see, is not too large. So why are its representatives considered to determine consumer demand? The fact is that the cost structure of a middle-class family differs significantly from the cost structure of other social groups, which have a large share in the total population of the country. For example, a middle-class family spends no more than 35% of total income on food, while representatives of less affluent social-income groups spend about 70% of income on food. In addition, the middle class is actively spending money on culture and entertainment, and is also especially committed to brands and can save money in order to purchase expensive goods and services.
The engine of progress. Market!
Along with the development of the middle class and the growth of its income, the active demand for clothes and shoes is changing. Moreover, the clothing segment is growing much more slowly than the shoe segment. In 2012, the number of pairs of shoes per representative of the middle class was 6,6, and compared with last year's 5,1 pairs of shoes a year, this is a very impressive indicator. The growth potential of the shoe market in Russia is huge, since no other consumer market is notable for such a high dynamics of consumption. It is clear that we have something to strive for, also because similar indicators in European countries exceed our shoe consumption indicator by 2,5 times.
The Russian shoe market has huge growth potential, not only in terms of consumption, but, as we can see, the development of large chain stores, as demand creates supply. Competition in the market has been aggravated to the limit: over the past three years, volumes of Russian production have increased significantly, and many international brands have entered the market. Both of them are actively expanding their own and franchised retail chains in order to consolidate their position in the market. For successful development and operation, as well as increasing competitiveness, it is worthwhile to pay special attention to stores of the middle and higher price segment to consumers with the greatest purchasing power. Namely, the middle class. Networks should concentrate on meeting the demands of this particular category, and not only producing high quality shoes and actively supporting their brand with advertising, but also improving the quality of service in stores and adopting the principles of Western management.
The psychological portrait of a middle-class consumer is very interesting. Its features are compiled by a high level of education and a significant position: the majority of the middle class are middle and senior managers in Russian and international companies. The consumer of this class forms the main demand for cultural and entertainment services, and when choosing products, he relies on the quality and reputation of the brand. The level of requirements and inquiries of the middle class can be described as “European”. It is an order of magnitude higher than that of the majority of the country's population.
What, where and when they spend on shoes
Based on what criteria do middle-class representatives choose shoes? A key factor is the idea of quality, indicated by 36% of respondents. In second place is the convenience of the shoe model (19%), followed by brand awareness (17%) and design conformity with world fashion trends (14%). The price for a couple is the least significant factor for the middle class; only 12% of respondents noted it. However, it is worth explaining that the selection criteria are quite subjective in this case. For example, when talking about “brand awareness”, respondents do not necessarily mean a luxury segment brand. Each representative of this social group has a completely personal understanding of the brand’s fame: for some consumers, these are exclusively luxury brands, while for others they are mass-market chain stores. The quality of shoes also has a subjective assessment, but middle-class consumers still associate it with value. With regard to price indicators, the minimum cost threshold for high-quality shoes in the minds of respondents is 112 $ per pair, and in the winter season this indicator rises to 167 $ per pair.
Consumers from the middle class prefer shoes related to the middle, medium-high and high (luxury) price segment. Interestingly, while they mostly choose clothes in the segments "medium" and "medium-minus." If we consider the total number of pairs and the amount of funds spent by middle-class representatives in Russia on shoes for the 2012 year, you can see how much their preference for segments occupies. Budget shoes (up to 100 $ per pair) occupy 8% of the turnover, mid-price shoes (100-250 $ per pair) - 56%, mid-plus shoes (250-600 $ per pair) —16%, luxury (from 600 $) - 20%. Compared to the previous year, the values have not changed, but two years ago budget shoes occupied almost 14% of the total turnover. From this we can conclude that the low price segment is actively inferior to the higher. This is the main stagnant factor that prevents mass shoe market chain stores from developing at the same rapid pace as in the 2008-2010 year.
As for the quality of shoes as understood by the middle class, the majority of respondents (57%) evaluate it on the basis of the materials used, preferring natural ones. More than 20% of buyers associate the quality of a product solely with its price. Such characteristics as wear resistance and service life are of key importance for 17% of respondents, and 5% of respondents prefer exclusively “healthy” shoes, which include “breathable” and orthopedic.
Middle-class consumers prefer to buy shoes in branded chain stores of clothes and shoes (56% of consumers). 22% of respondents choose multi-brand stores and shoe hypermarkets, while 15% of respondents prefer shopping in online stores, including foreign ones. Only 6% of middle-class buyers are willing to buy shoes in the markets. It is worth noting that these indicators have not changed much in recent years, except that the number of adherents of market trade is slightly reduced and the number of those who prefer to shop via the Internet is increasing.
Middle-class buyers adequately assess the quality of goods and services, are aware of their value and make high demands on the accompanying environment. This is evidenced by the fact that the vast majority (89%) of respondents are ready to refuse to buy the goods they like if the service and environment are unsatisfactory. If we study the atmosphere surrounding the purchase in more detail, it turns out that the level of customer service is important for most representatives of the middle class: 41% of respondents noted it as the main requirement for the service. Too intrusive, or vice versa, the seller’s disinterested attitude frightens off the potential buyer and significantly reduces the likelihood of a purchase, although 13% of consumers admitted that they prefer to choose shoes on their own without resorting to the help of consultants. In second place, buyers identified the requirement for the appearance of the store: 47% of consumers prefer stores with a large area and a large selection of products, stating that small stores do not attract them. At the same time, 35% of consumers report that they prefer to constantly visit the same shops that have proven their worth, and for 17% of those surveyed, the appearance and atmosphere of the store do not matter.
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