Tatarstan residents begin to spend more on food and catering
However, the non-food sector has not yet recovered from Western sanctions
In the first months of 2023, the consumer market of Tatarstan showed a revival. The turnover of food retail trade increased by 7,3%, to 114,1 billion rubles, the turnover of catering — by 19%, to 15,6 billion rubles. The number of cafes and restaurants, as well as service facilities have also increased. However, it is too early to talk about the full recovery of consumer market. Trade in non-food products fell by 6,2%, and the number of trade enterprises decreased by more than a thousand. What factors influence consumer sentiment today, and whether the market will return to pre-crisis levels — in the review of the analytical service of Realnoe Vremya.
In the first quarter of 2023, retail trade turnover in Tatarstan reached 304,7 billion rubles, in comparable prices it decreased by 0,3% compared to the same period last year. At the same time, the turnover of retail trade in food products in comparable prices increased by 7,3% to 114,1 billion rubles, and the turnover of retail trade in non-food products fell by 6,2% and amounted to 160,6 billion rubles.
In absolute terms, the turnover of the consumer market in 2023 increased — for example, per capita in the first quarter in Tatarstan it increased from 47,161 to 76,145 rubles.
The non-food segment has not yet recovered from the withdrawal of popular international brands. The sales of phones, according to the Infoline news agency, in the first quarter of 2023 decreased by 21% year-on-year, sales of televisions — by 27%, washing machines — by 26%, refrigerators — by 32%.
The sales in the car market also affect statistics. For 4 months of 2023, according to Autostat, almost 247 thousand new cars were sold in Russia, which is by 15,4% less than in 2022. Here only domestic Lada cars and manufacturers from China have positive dynamics, Korean Kia, Hyundai and Japanese Toyota are showing a drop (in the range of 67-68%).
In relation to the first quarter of 2022, the number of trade enterprises in Tatarstan decreased by 1,177 units — to 16,304, the number of markets by 1 — to 22. At the same time, the availability of retail space per 1 thousand residents increased from 891,9 square metres — up to 905,3 square metres.
Services and catering are showing growth in 2023. The number of catering establishments increased by 422 — to 5,530, and the number of consumer services facilities increased by 924 — to 7,457.
The volume of public catering turnover in the republic increased by 19% to 15,6 billion rubles. In Januar-March 2022, there were 11,8 billion rubles.
The turnover of household services to the population increased to 14,6 billion rubles. In the first quarter of 2022, it amounted to 12,5 billion rubles.
Economic activity in Russia is growing faster than expected, the Central Bank explains. As the head of the Central Bank, Elvira Nabiullina, said at the end of April at a meeting on the rate, Russians are increasingly spending and taking loans. “An important factor in accelerating inflation is the revival of consumer demand," the head of the Central Bank said at the time. “This can be judged by the operational data of household expenditures, primarily in the segment of services, as well as by the increase in demand for loans.”
According to analysts at NielsenIQ research company, the share of consumers confident in their prospects and ready to spend exceeded the number of pessimistic ones in the first quarter. The consumer optimism index in the first quarter of 2023 increased by 4 percentage points compared to the fourth quarter of last year.
Sanctions turned out to be not fatal
Uncertainty about the future remains, but it is not as acute as a year ago, the expert believes. “Moreover, many fears have been dispelled. In any case, the economy has not been torn to shreds. Parallel imports began to work, import substitution processes of products and services of withdrawn Western companies began, sanctions turned out not to be fatal," he lists.
Rationally, people evaluate all this by moving from a savings to consumer model of behaviour. Hence, in his opinion, a growth of consumer spending and the improvement of consumer sentiment. “The sharp inflation of some consumer durable goods, for example, cars, is now preventing consumers from spending more," says Bikbov. “Here, price bubbles will be regulated naturally, namely by increasing supply and adjusting prices to new, lower levels corresponding to the current state of demand.”
Consumer market continues to stagnate
Head of R-Invest company, economist, Candidate of Economics Rustem Shayakhmetov notes that it is premature to talk about improving the situation in the consumer market of Russia in the current conditions.
Inflation also forms negative trends in the consumer market. An increase in prices in Tatarstan in March 2023 compared to March 2022 was the following: for public catering — 9,5%; for utilities services provided to the population — 13,2%; for heating — 15,2%; for passenger transport services — 18%.
“In Tatarstan, the cost of a minimum set of food products in March 2023 increased by 3,4% compared to December 2022, in Russia the price increase was 2,2%. The increase in the cost of a minimum set of food products in Tatarstan is more than 1,5 times higher than the average in Russia, which is rapidly worsening the situation of poor citizens," Rustem Shayakhmetov notes.
Payments to the mobilised for the special military operation have had an impact on the real incomes of the population, but only slightly, he believes.
According to a study by the Institute for Integrated Strategic Studies, now the real disposable incomes of Russians are below the level of the first quarter of pre-crisis 2013 by about 8%. The purchasing power of wages for food products for the specified period decreased by 10-15%.
The expenses of Russians in the first quarter of this year exceeded their incomes by 762 billion rubles, Shayakhmetov cited as an example. Because of this, the creditworthiness of the population is growing. In Tatarstan, the share of overdue debts of the population to banks as of March 1, 2023, according to him, amounted to 3,2%, it increased 1,1 times over the year. Besides, the growing budget deficit limits the possibility of wage growth for public sector workers.
“In the near future, the consumer market will stagnate, since the effective demand of the population will not increase in the foreseeable future," the expert is sure.
The population began to spend savings
“The results of the consumer market in Tatarstan are good against the background of all-Russian statistics," says Olga Belenkaya, the head of the Macroeconomic Analysis Department at Finam. “According to Rosstat, in the first quarter of 2023, retail trade turnover in Russia decreased by 7,3%, while the decline in food products was 3,3%, and in non-food products — 10,6%.”
Despite the negative dynamics compared to the high base of the first quarter of 2022, consumer demand is gradually recovering, which is facilitated by income growth, a decrease in the savings rate, and the revival of consumer lending, she notes. In general, according to the Ministry of Economic Development, the total turnover of retail trade, catering, and paid services to the population was 2,2% lower than last year.
“The demand in retail trade is recovering less clearly, more clearly in services (primarily domestic tourism) and public catering," Belenkaya comments. “According to Rosstat data, in the first quarter of 2023, the population began spending accumulated savings for the first time since last year.” Consumer lending is also coming to life — data from the Central Bank of the Russian Federation showed a significant acceleration in its growth in March.
The risks for further consumption dynamics are related to the sanctions policy — the tightening of Western countries' control over the transit and re-export of sanctioned goods to Russia, the threat of secondary sanctions against countries and counterparties accused of preventing the circumvention of sanctions may have a negative impact. “This may lead to a reduction in the supply of imported goods, and to an increase in logistics costs for their import," Olga Belenkaya does not exclude.
Retail turnover is not going to recover to the level of 2021
The market of non-food products in the country, after the withdrawal of many foreign companies, is slowly recovering. Nevertheless, the decline in the number of consumers themselves and their real monetary incomes continues to put pressure on trade, the expert notes. For example, in 2022, the real monetary incomes of the population as a whole across the country showed a decrease of 1,4% yoy, while only 14 regions showed positive dynamics, including the Republic of Tatarstan (102,1%).
“Despite the negative dynamics of consumer activity, the goods market is undergoing a recovery process. Some of the companies are returning to the market under other brands, import substitution is taking place, including in the automotive industry," Dilara Isakov cites as an example. “According to Expert RA forecasts, against the background of the high base of 2022, inflation in 2023 may decrease to 6,5%, which, together with an increase in the minimum wage, will lead to an increase in real monetary incomes of the population to +3% to the level of 2022. Consumer activity of the population will follow real incomes, but retail trade turnover is unlikely to recover to the level of 2021.”