According to Rosstat, in 11 months of 2020, retail trade turnover in Russia decreased by 4.1% (to 30 trillion rubles). Non-food retail turnover decreased by 5.5% to $ 15.3 trillion. rubles. The crisis affected sales of non-food retail, but on a limited scale: these values generally correlate with a decrease in real incomes of the population (estimated by 4.9-7%).
At the same time, within the retail market itself, the e-commerce sector behaves countercyclically. According to the latest estimates by Fashion Consulting Group, the total turnover of the fashion market in Russia amounted to 1.7 trillion rubles (a third less than in 2019). At the same time, the volume of online trade in clothing, footwear and accessories over the past year has grown by an estimated 11.9%. It is unlikely to completely cover the losses due to the growth of online sales in the current realities, but in the near future the volume of the fashion retail market on the Internet will be large enough to act as an independent sales direction.
Assessment of the fashion retail market in Russia (as of November 2020). Source: Kommersant, Fashion Consulting Group
Much has been said about the reasons for the growth of the online sector in the fashion sector: the growth of e-commerce was ensured by purchases during self-isolation, an increase in the frequency of purchases of people already familiar with e-commerce, and the involvement of new buyers in purchasing goods on the Internet. The pandemic helped to overcome the “glass ceiling” for online businesses, and the current customer service will help the business grow further: according to Yandex, the share of Russians aged 16–55 who buy something online at least twice a year in 2020 was 50. 2%. This figure is still likely to grow, as well as the values of the regularity of online purchases.
The good news for companies starting out in the Russian e-commerce market is that there is no clear market monopolization compared to Western countries, especially America. The share of the largest online trading platforms operating in Russia does not even reach one fifth of the total market volume (Wildberries – 13%, AliExpress – 8%). For comparison, the share of online shopping Amazon in the US is 47%, in Europe – about 10%. In Russia, market development can proceed both according to the American scenario (with one dominant platform), and according to the scenario of the presence of many platforms.
Market share of major e-commerce platforms in Russia. Source: Bloomberg
In any case, the history of e-commerce is just beginning to develop, and now it is important not to lose sight of it, despite the narrowing (obviously temporary) of the fashion market as a whole. For manufacturing companies, an independent online presence will allow not only to launch their own sales channels over the Internet (that is, to maintain margins), but also to come up with joint solutions with other online platforms to ensure cross-network effects.
Author: Ilya Grigoriev