Couch analytics #23. What awaits the Russian electronics market - development scenarios

I did not plan the second issue of "Spikins" this week, but life decreed quite differently, the ruble on Tuesday, which was aptly dubbed black, broke through the psychological threshold of 1 to 100 against the euro. The dollar lagged behind in its strengthening quite a bit, and then the transformation of all consumer markets within Russia began. We have the opportunity to evaluate the impact of current events on the electronics market, as well as describe the scenarios by which it can develop in 2015. I advise you to read this text carefully and possibly several times if you are related to the electronics market. In it, I will try to answer the questions that many market participants have asked me in recent days and weeks, summarize my answers and give fairly general forecasts about the future of our market.

Background to the question and Black Tuesday sales in the electronics market

The weakening of the ruble over the past month has led to the fact that the inhabitants of Russia tried to keep their savings as much as possible. Everyone had their own strategy for this, which differed depending on the amount, the amount of money in the bank account and where the person lives https://cars45 .com.gh/3bF0RAPjLjEF1LsFitfLvO4Y. Conventionally, we can single out several classical approaches that we saw in previous crises on the Russian market.

Those who had sufficiently large deposits or accounts in rubles closed them and converted them into dollars or euros as soon as the ruble began to weaken. The majority took a conservative position and waited for the ruble to win back its fall, so they transferred funds at an already less favorable rate, partially provoking a further weakening of the ruble. But most of this conversion took place back in November 2014, by the end of the month, a few continued to believe in the ruble and keep their savings in it.

Many quite rightly decided that by converting rubles into another currency they would lose a significant part of their savings, and therefore they began to invest in the purchase of various goods - jewelry, watches, electronics, plumbing, furniture. Demand for luxury goods temporarily jumped in November, then returned to normal levels. Almost did not notice the growth in demand retail chains selling optics, glasses, and clothing. The food market also did not notice any excitement, with the exception of the rise in prices for buckwheat, which once again turned out to be an indicator product, a promoted brand that all residents of the country, without exception, are guided by. There were problems and rush demand with buckwheat, although there was nothing like that for all other positions.

In principle, we can say that this crisis is very different from the previous ones in that there is a sanctions regime that directly affects the food market, there was a noticeable import substitution, but it affected such goods as meat and dairy products, cereals, but did not affect the consumption of the average resident of the country - the price increase, which is linked to sanctions, is rather secondary. But we can say that in December there was no boom in the food markets, unlike the electronics market, which showed unprecedented growth rates and made the average monthly turnover of December in just a few days.

For me, this is the fourth crisis in the recent history of Russia, and I can say that it is very different from the previous ones in terms of the structure of demand. In the 90s, people invested their savings in food, clothing, and essentials. In the 2000s, demand shifted from this area to the purchase of cars, furniture, and partly electronics. The crisis of 2014 is fundamentally different from all previous ones in terms of the availability and need for certain goods. Investments in real estate, cars, furniture, repairs or something like that remained, but for the first time, electronics became the most massive product of the crisis.

The reason for this should not be sought at all in the fact that suddenly many people became fans of electronic devices, realized their necessity or importance in their lives. Not at all. Electronics in Russia has become the most easily accessible product with a minimum price change compared to the pre-crisis level.

Suffice it to recall that major consumer electronics chains, as well as phone and tablet sellers, have a total of more than 15,000 stores across the country, from small tents near the subway or transport stops to electronics hypermarkets. Walking distance and convenient location made their choice preferable. People didn't prioritize electronics per se, but they thought they would save time and money, get goods faster in electronics stores because of their availability. Remember this word - availability, it played the biggest role in today's conditions market.

In November and December, until Black Tuesday, December 16, sales in electronics chains gradually increased. In November, the chains recorded growth from 20 to 65 percent in sales, both in monetary and unit terms. The market has become multidirectional - some companies have sharply raised prices, for example, Apple did, setting prices at plus 27 percent of the old ones, and some companies have even reduced prices for key models, like Samsung did. We partially discussed this point in Sofa Analytics #20.

The first results of Apple's price increase can already be assessed, despite the shortage that existed before, sales of models supplied at the new prices fell by about 30 percent, buyers were not ready for a new price level. But the main problem for Apple was that other players, primarily Samsung, did not raise prices, but even lowered them. In the first two weeks of December, sales of the Galaxy S5 at a new price of 24,000 rubles increased by 86 percent, Galaxy S5 Mini - by 392 percent, Galaxy Alpha - by 5 percent (for this model, the price change was minimal). But the sales of all models of the line also increased proportionally, as their prices did not change. In the first two weeks of December alone, Samsung was able to increase its market share by 2.7 percent in Russia, and at the moment this growth continues.

During a crisis, the multidirectional efforts of players create different conditions, and buyers choose the most advantageous offer - from their point of view, these are prices that are as close as possible to pre-crisis prices. In addition to Samsung, such companies as Sony, HTC, in Canon photo equipment, Philips, Sony, Samsung, and LG TVs turned out to be winners. In November and December, buyers showed reasonableness in choosing goods, guided by prices, as for them it was an opportunity to realize their pent-up demand, for example, to buy a good TV, washing machine, or something else. In most cases, they invested their money in buying goods for their own use.

In early December, the customs tightened the screws a little, which affected the growth in prices for smartphones and tablets of a number of companies, we also discussed this in detail in a separate article. This was an appendage to the market situation on the part of the state.

But the difference in offers continued to persist, in fact, most players decided to keep prices at the pre-crisis level as much as possible, index only the most popular, scarce goods and enter the new year with the most empty warehouses in order to start the game in 2015 from new price levels and volumes sales. This is a balanced and understandable strategy for most players. Let me remind you that 80 percent of the goods in warehouses were purchased for the holiday period at the old prices and the fluctuations in exchange rates did not affect them in any way.

Now let's see what happened on Black Tuesday. The sharp, unprecedented depreciation of the ruble immediately caused panic and hysteria in society. In exchange offices, the euro exchange rate rose by 100 rubles, the currency was sold at both 120 and 150. In Moscow, one could observe people lining up at exchange offices to buy currency, as if tomorrow would no longer exist and it was necessary to take it only today . Usually these are not very wealthy people who do not have large reserves and do not understand what is happening. On average, they exchanged 200-300 euros/dollars, losing their ruble savings. The difference between the buying and selling rates reached 40-50 rubles, these were clearly speculative offers. The most insecure people tried to save up for a rainy day, succumbing to general psychosis.

But despite the record sales in the first half of December, people still had noticeable ruble amounts, which began to depreciate right before their eyes. And the attractiveness of electronics instantly grew, in terms of the new exchange rate of 100 euros, most of the goods in stores began to cost half as much. The benefit is imaginary, but warming the soul of many buyers. And they didn’t have much choice how to save money. If on December 13 there was no influx of buyers in stores, then on Black Tuesday, traffic and sales began to grow from lunch, and the average bill increased by almost 1.6 times in large stores. The excitement was such that almost everything was swept off the shelves in stores. Look at the photo of the queue in MediaMarkt before closing, about a hundred people are standing with various equipment, this is the last attempt to jump on the departing train.

The reasons why people were able to go to stores and buy appliances again are very different, let's highlight the main ones:

  • For the sake of saving their savings/salary. Most of the money was spent by those who received a salary, bonus or some money that had not yet been spent. This also includes those who, by coincidence, are furnishing their apartments or houses right now.
  • For resale - small market players, single traders and shops. It's no secret that in January the same goods will cost 30-50 percent more. In the wholesale and retail channels, prices will change, so many have formed their stocks. Given that the big wholesalers had limited sales at the old prices, this was the only way to quickly and painlessly replenish their stocks. It also makes it possible to invest working ruble capital and "live through" January-February.
  • For re-export - foreigners bought for their own use, as the prices are surprisingly low, differ by 2-3 times from those in other countries. But just as massively goods were bought by shuttle traders from Belarus, Kazakhstan and a number of other countries. This is also a small private business, which was the first to orient itself and fill its warehouses. They exported such goods in suitcases, that is, it almost did not concern large household appliances.
  • Private investment - the scheme used by resellers is not at all new, and many private buyers, very far from the electronics market, considered it a good opportunity to "make money". Basically, they tried to buy an iPhone, MacBook or similar equipment, which, they believe, will be in guaranteed demand at the new prices. At the same time, they are ready to sell it after a price change by 10-12 percent cheaper, which will give them at least 10-12 percent profit.

We can stop here, since the main motives are described, and sales of only one day of Black Tuesday can be described as a record for the entire history of the Russian electronics market. It will take some more time to calculate the revenue, but we can already say that these were sales for at least the entire previous week, or even 8 days, which were also at a record high level. But this is only the first step towards the market that we will see in 2015. Let's look at the direct implications of Black Tuesday for the electronics market.

Black Tuesday - empty warehouses, empty shelves

The rush demand for electronics has led to the fact that stocks in retail chains and large distributors have been reduced to the minimum for most positions. Deliveries of goods do not stop, but for the first time, logistics does not have time to deliver goods on time, and the ambiguity with the ruble exchange rate imposes its own limitations. Someone limits supplies artificially, someone cannot cope with demand and ships the maximum amount of goods.

Apple once again closed its online store for product repricing, it is assumed that the new prices will be available for the entire lineup, they will grow by 25-30 percent (a couple of weeks ago they already rose by 27 percent). Considering that Apple is not a defining player for the market, it plays in its own niche, this does not affect the mood of other companies in any way.

Only for Apple it is important what the new prices will be, the company will obviously set them at the level of the euro in order to avoid re-exporting its products to Europe. The main re-export that has taken place in recent weeks has been for Apple products. It simply did not stay on the Russian market, even the first activations went outside the Russian Federation, if we talk about the iPhone. But the goods quickly ended, and Apple again began to solve their problem in the usual way. At the new price level, sales of all Apple technology will freeze for a while, it will be inaccessible to most consumers due to the fact that their ruble salaries will not grow so quickly.

But if we look at the market of electronics and household appliances in general, subtracting from it Apple, which has a special account and plays in its niche without much influence on other players, both in plus and minus, we get an interesting picture . Stocks have been depleted, new purchases will be at new prices for most players, and what they manage to bring into the country at old or conditionally old prices before the New Year will be enough for several days of trading, even with the decline in demand in the days after Black Tuesday.

The shortage of goods in most positions has led to the fact that most retail chains are faced with the choice of entering New Year's sales with completely empty shelves or raising prices for those goods that are in the biggest deficit. Retail chose the latter.

For example, in Samsung branded retail prices for the most popular models have increased significantly. So, the Galaxy S5 Duos began to cost not 27,990 rubles, but already 36,990 rubles, the usual S5 at 24,990 disappeared from sale, it simply does not exist. At the same time, as before, you can buy a set of a tablet and S5 for 27,990 rubles, the promotion runs until January 12, but the amount of goods is scanty, there is almost none. There is a possibility that the goods will end faster than the action will end, in new deliveries it is clearly not enough. Another example - the price of the Galaxy Note 4 is now not 39,990 rubles (on Tuesday the price was increased from 36,990 rubles), but 53,990 rubles. Why such a level of cost? The answer is that the model is almost non-existent after Black Tuesday, there are single devices, no stock.

It is interesting that Samsung did not change prices in any way and did not influence them, the purchase price for all partners for Wednesday evening remained exactly the same, Arkady Graf, head of the Samsung mobile direction in Russia, told me about this. It is possible that the price will change in the near future, but the changes in retail are directly related to what happened on Tuesday. There is no product on the shelves, it just ran out. And it no longer matters how and how much to sell it, it is almost absent.

It doesn't matter who changed prices, Samsung or partners, now it will snowball, and since Samsung is an indicator for the market, most companies will follow suit. In principle, we already see in the regions that the cost of many devices from other manufacturers has begun to grow. Manufacturers also did not change prices, but they went up at the request of retailers, who see no other way out - they need to sell something. In large networks, they keep prices for those goods that are still available, but gradually begin to raise prices for the most popular positions, as this gives additional profit.

In some networks, for example, in Svyaznoy, when selling equipment, boxes are necessarily opened. This is done in order to reduce the secondary market at the beginning of the year, realizing that the same lower cost phones will compete with them.

Most of the market was expecting the new prices to be set in January, but it looks like we'll see them for many items in the coming week. Nevertheless, buyers still have the opportunity to relatively profitably find certain devices at conditionally old prices.

For the first time the crisis in Russia has led to an instant cleanup of warehouses for electronics and household appliances, and this leads to interesting short-term results.

Short-term prospects for the Russian market, resellers and officials

The exchange rate of the ruble remains an unclear factor that affects the entire market. It doesn't matter what the exchange rate of the ruble will be, it will affect the volume of the market, retail prices, but not how the market will change. Until the moment when the market is multidirectional, that is, the rate is not set at some level and does not keep around it, we will observe the same thing as in November and December - the simultaneous existence of high prices - for example, at Apple - as well as periodic their "fall" in terms of currency and the growth of sales for the export of devices to other countries. There will be "favorable" prices as well as new ones. Under these conditions, those producers who can supply the maximum amount of goods at conditionally old prices will win. But this is a temporary game, since it is impossible to assume that the rate will jump for a long time.

At the new price level, at any mark, the new rules of the game will become clear. But now it is not so much the exchange rate of the ruble that is decisive, but the new economic conditions within Russia. For the majority of suppliers and manufacturers, the cost of money inside Russia is growing, and those companies that have global financial instruments to mitigate these risks are beginning to win. These are manufacturers such as Samsung, HTC, Sony, LG, Huawei, Microsoft and others.

Let me give you an example - Microsoft hedged currency risks, like many other companies, at the level of 35 rubles per dollar. That is, at the moment the company can sell its products, including phones, at very low prices, raising their prices not as fast as other companies. It is said that this hedging may be valid until the end of spring. In theory, this gives Microsoft a good chance to increase its share, which the company, unfortunately, most likely does not implement in smartphones.

For Russian manufacturers, as well as small B-brands, the lack of available financial instruments, credit lines will make the value of money significantly higher than it was in 2014. The competition in the market will not change, there will be a rotation of names, but the number of players will remain excessive, although sales of each of them will decrease. As a result, the cost of products from B-brands will increase sharply, by at least 15-20 percent, and this is in addition to the new cost due to exchange rate differences. That is, under the new lending conditions, a conditional smartphone X, which cost $100 with delivery to Russia, will cost $115-120 (not in rubles, in dollars!).

And this will directly close the price gap between large companies and Chinese manufacturers. Chinese phones will become less attractive in the eyes of end consumers. Moreover, given the efforts of customs, it will become impossible to optimize the import of phones in large quantities, which will also affect the cost. It is not so important that the price of Chinese models will be 30-35 thousand rubles at the current exchange rate, it is important that the gap in prices with large companies will become noticeably smaller. And then users will start choosing those brands that they know.

On the other hand, the floor price will become the dominant factor in choosing devices in 2015, the market in the top segment, where Samsung / Apple and a number of other companies play, will shrink sharply. So it was in previous crises, so it will be now, it is difficult to expect anything else. Due to the weakening of the ruble, we may not see a drop in the average price of devices, but in general, there is no need to engage in sophistry, the market volume, both in units and in monetary terms, will sag a lot.

We at the Mobile Research Group have several scenarios for the development of the situation, I will give a few figures. The Russian market of smartphones and phones in 2014 is 45 million devices, the tablet market is 10 million devices. In 2015, we expect the phone market to reach 33-36 million units and tablets to 6.5 million units. The cheapest devices, such as carriers, will dominate if the latter maintain subsidies for them. The middle price segment, in which the same Chinese tried to earn the main money, will sink very strongly. The alternative in the form of buying goods abroad via the Internet may not be considered, since the margin on goods in Russia will fall, as a result, local prices will be comparable or even lower.

In fact, we can say that the market will change a lot, but we saw something similar in 2009. These changes are not fatal, and within 1.5-2 years, taking into account the stabilization of the general situation, the market will win back. But this will be a slightly different market, where the scenario of the appearance of operator phones and subsidies is possible, which will completely reformat relations in the market.

In the next few months, resellers, independent retailers will be able to sell those devices that they bought in large networks at the old prices. But then they will begin to experience hunger, the inability to purchase goods at new prices, as they will eat up profits. And this will be a direct road to closure for them, only those who pursue a balanced policy will survive, reduce their costs as much as possible and try to increase sales.

The mechanism by which the market correction occurs is very simple. Chains and stores that received windfall in November and December will invest in a new product in January (at new prices), but its purchases will be much less, as demand will fall. And in general, this will not bring any problems for the networks, as their economy is developing. At the same time, independent retailers will be on a starvation diet, and many outlets will close. When the situation improves and new opportunities appear, they will reopen.

Now let's focus on those who build their business on the resale of accessories, iPhones and similar things within the country, bringing them in suitcases. This is a huge market, shops fill all sorts of shopping centers, and they have formed a real competition for organized retail. In the absence of cheap goods in the coming months, they will be closed en masse, they simply have nowhere to get goods at affordable prices. Let me give you a simple example, the Jawbone UP2 bracelet costs 3,990 rubles in MVideo (plus a discount for 1,000 rubles), they have an average of 6-7 thousand rubles, with a tendency that the price will be about 12-14 thousand rubles. And even with this level of new prices, such resellers will not be profitable, and the first price shock in January-May will reduce sales in this market segment. The lack of cheap iPhones and other products will also put an end to their resale.

For such small players, there are two strategies at the moment - many are trying to sell as much as possible in December and then temporarily close, wait out the bad time. This is due to the fact that they will either have to fix losses and sell the leftovers for a very long time, or give them to their colleagues at a good discount. It turns out that those who remain will win in the moment, but only for a month and a half. Then the situation will repeat again. We can say that the market of resellers will narrow to the limit, in the new conditions without direct contracts for the supply of goods, they have no chance. Those who have a narrow specialization in their niches will win. They will fall in turnover, but the client will remain with them due to the very specialization. The accessories market will also see a drop in the average check, that is, with an increase in the exchange rate, this means a deterioration in the characteristics of devices. Both strategies are equivalent, and the only question is when you have to fix losses, now or after some time. The reseller market in Russia was disproportionately inflated, and in this crisis it was time for them to either go to another level, look for direct distribution from certain brands, or leave the market. But in any case, their departure is a temporary phenomenon, with a change in the situation, they can suddenly appear out of nowhere and continue their activities. This is unlikely in the next year.

For the Russian market, the change in key indicators is obvious, the lifetime of a smartphone will increase to an average of 18 months from the current 13 months. This is an average time, in reality for many it will be equal to 25-26 months. For tablets, the life cycle can be described simply - as long as they work, which, in fact, will push the market down in 2015.

Despite the negative market forecasts, the second-tier players will continue to take an active position on it - for them, this is also the time to decide whether to grow and sell their goods not only at the expense of price (with a budget market and low margins), or quickly lose their sales. Oddly enough, but the advertising approach, PR will be a cheap way to establish themselves for such brands. It is no understatement to say that 2015 will be marked by marketing activities of companies that most have never heard of. It is possible that he will never hear after.

I will repeat the main idea - the cost of money for companies operating in Russia increases with a shrinking market. This means retail prices for many, if not all, goods will rise and be at the same level as in Europe or China, that is, significantly higher than they were before. The margin in the entire supply chain will decrease, if today it is 40-45 percent depending on the player (wholesale, retail, excluding the manufacturer), then in 2015 it will fluctuate at the level of 20-30 percent. This means that retail chains will have to either optimize the number of employees and reduce the payroll, or actively look for ways to reduce costs, read, reduce rents.We can expect Euroset and Svyaznoy to be the instigators, both companies are interested in lowering rental rates in ruble terms. With a successful approach, and most likely it will be successful, rental rates will fall in the short term for 6-8 months by 10-15 percent. If you try to recalculate in currency terms, you will see that the rental price will become noticeably lower, it will decrease in costs.

The above scenario of the market development in Russia is the most probable and starts to operate from the moment of relative stabilization of the ruble. Until that moment, we will observe quite large fluctuations that rock the market and reduce its size, as buyers wait and not in a hurry to buy goods.

As a summary, I want to note that a crisis always provides opportunities, reshapes the existing order of things. It sounds trite, but it is at this time that you can both go broke and make a fortune. I hardly talked about the secondary market, which may grow and become noticeable. Unofficial service centers will revive for a while, but the official ones, on the contrary, will feel as bad as they do today and stand on the verge of survival, or even prepare for closure. Although, it would seem, they are from the growth of the secondary market, the number of repairs, on the contrary, should benefit. But this is a separate and large topic for conversation, the material turned out to be quite detailed, although I described the situation on the market in very large strokes. This picture may be different, but the main outline of what is happening is just that. Buyers should prepare for the fact that long-standing and familiar price guides no longer work. If earlier the flagship cost about 30,000 rubles, now it is 55-60 thousand rubles and more. Chinese flagships for 15 thousand rubles are smoothly turning into models priced at 30-35 thousand rubles, or even more. We are all in for a psychological shock from prices that have already begun to change daily, retail does not have goods and rewrites price tags daily.The main thing in this situation is not to panic and wait for the moment when everything calms down and becomes stable. And always have a back-up plan in case the main one doesn't work. But I sincerely believe that this crisis at the moment is nothing that could globally destroy the Russian electronics market. Reformatting, changing the alignment of forces and players both among retail chains and vendors is a definite yes. But nothing more will happen. Whatever one may say, this is a time of great and very great opportunities. Those who are not afraid to act now, in the future may receive a prize in the form of a significant share of the Russian market. But these are big risks, and therefore there are only a few such people in every crisis.

Couch analytics #23. What awaits the Russian electronics market - development scenarios

I did not plan the second issue of "Spikins" this week, but life decreed quite differently, the ruble on Tuesday, which was aptly dubbed black, broke through the psychological threshold of 1 to 100 against the euro. The dollar lagged behind in its strengthening quite a bit, and then the transformation of all consumer markets within Russia began. We have the opportunity to evaluate the impact of current events on the electronics market, as well as describe the scenarios by which it can develop in 2015. I advise you to read this text carefully and possibly several times if you are related to the electronics market. In it, I will try to answer the questions that many market participants have asked me in recent days and weeks, summarize my answers and give fairly general forecasts about the future of our market.

Background to the question and Black Tuesday sales in the electronics market

The weakening of the ruble over the past month has led to the fact that the inhabitants of Russia tried to keep their savings as much as possible. Everyone had their own strategy for this, which differed depending on the amount, the amount of money in the bank account and where the person lives https://cars45 .com.gh/3bF0RAPjLjEF1LsFitfLvO4Y. Conventionally, we can single out several classical approaches that we saw in previous crises on the Russian market.

Those who had sufficiently large deposits or accounts in rubles closed them and converted them into dollars or euros as soon as the ruble began to weaken. The majority took a conservative position and waited for the ruble to win back its fall, so they transferred funds at an already less favorable rate, partially provoking a further weakening of the ruble. But most of this conversion took place back in November 2014, by the end of the month, a few continued to believe in the ruble and keep their savings in it.

Many quite rightly decided that by converting rubles into another currency they would lose a significant part of their savings, and therefore they began to invest in the purchase of various goods - jewelry, watches, electronics, plumbing, furniture. Demand for luxury goods temporarily jumped in November, then returned to normal levels. Almost did not notice the growth in demand retail chains selling optics, glasses, and clothing. The food market also did not notice any excitement, with the exception of the rise in prices for buckwheat, which once again turned out to be an indicator product, a promoted brand that all residents of the country, without exception, are guided by. There were problems and rush demand with buckwheat, although there was nothing like that for all other positions.

In principle, we can say that this crisis is very different from the previous ones in that there is a sanctions regime that directly affects the food market, there was a noticeable import substitution, but it affected such goods as meat and dairy products, cereals, but did not affect the consumption of the average resident of the country - the price increase, which is linked to sanctions, is rather secondary. But we can say that in December there was no boom in the food markets, unlike the electronics market, which showed unprecedented growth rates and made the average monthly turnover of December in just a few days.

For me, this is the fourth crisis in the recent history of Russia, and I can say that it is very different from the previous ones in terms of the structure of demand. In the 90s, people invested their savings in food, clothing, and essentials. In the 2000s, demand shifted from this area to the purchase of cars, furniture, and partly electronics. The crisis of 2014 is fundamentally different from all previous ones in terms of the availability and need for certain goods. Investments in real estate, cars, furniture, repairs or something like that remained, but for the first time, electronics became the most massive product of the crisis.

The reason for this should not be sought at all in the fact that suddenly many people became fans of electronic devices, realized their necessity or importance in their lives. Not at all. Electronics in Russia has become the most easily accessible product with a minimum price change compared to the pre-crisis level.

Suffice it to recall that major consumer electronics chains, as well as phone and tablet sellers, have a total of more than 15,000 stores across the country, from small tents near the subway or transport stops to electronics hypermarkets. Walking distance and convenient location made their choice preferable. People didn't prioritize electronics per se, but they thought they would save time and money, get goods faster in electronics stores because of their availability. Remember this word - availability, it played the biggest role in today's conditions market.

In November and December, until Black Tuesday, December 16, sales in electronics chains gradually increased. In November, the chains recorded growth from 20 to 65 percent in sales, both in monetary and unit terms. The market has become multidirectional - some companies have sharply raised prices, for example, Apple did, setting prices at plus 27 percent of the old ones, and some companies have even reduced prices for key models, like Samsung did. We partially discussed this point in Sofa Analytics #20.

The first results of Apple's price increase can already be assessed, despite the shortage that existed before, sales of models supplied at the new prices fell by about 30 percent, buyers were not ready for a new price level. But the main problem for Apple was that other players, primarily Samsung, did not raise prices, but even lowered them. In the first two weeks of December, sales of the Galaxy S5 at a new price of 24,000 rubles increased by 86 percent, Galaxy S5 Mini - by 392 percent, Galaxy Alpha - by 5 percent (for this model, the price change was minimal). But the sales of all models of the line also increased proportionally, as their prices did not change. In the first two weeks of December alone, Samsung was able to increase its market share by 2.7 percent in Russia, and at the moment this growth continues.

During a crisis, the multidirectional efforts of players create different conditions, and buyers choose the most advantageous offer - from their point of view, these are prices that are as close as possible to pre-crisis prices. In addition to Samsung, such companies as Sony, HTC, in Canon photo equipment, Philips, Sony, Samsung, and LG TVs turned out to be winners. In November and December, buyers showed reasonableness in choosing goods, guided by prices, as for them it was an opportunity to realize their pent-up demand, for example, to buy a good TV, washing machine, or something else. In most cases, they invested their money in buying goods for their own use.

In early December, the customs tightened the screws a little, which affected the growth in prices for smartphones and tablets of a number of companies, we also discussed this in detail in a separate article. This was an appendage to the market situation on the part of the state.

But the difference in offers continued to persist, in fact, most players decided to keep prices at the pre-crisis level as much as possible, index only the most popular, scarce goods and enter the new year with the most empty warehouses in order to start the game in 2015 from new price levels and volumes sales. This is a balanced and understandable strategy for most players. Let me remind you that 80 percent of the goods in warehouses were purchased for the holiday period at the old prices and the fluctuations in exchange rates did not affect them in any way.

Now let's see what happened on Black Tuesday. The sharp, unprecedented depreciation of the ruble immediately caused panic and hysteria in society. In exchange offices, the euro exchange rate rose by 100 rubles, the currency was sold at both 120 and 150. In Moscow, one could observe people lining up at exchange offices to buy currency, as if tomorrow would no longer exist and it was necessary to take it only today . Usually these are not very wealthy people who do not have large reserves and do not understand what is happening. On average, they exchanged 200-300 euros/dollars, losing their ruble savings. The difference between the buying and selling rates reached 40-50 rubles, these were clearly speculative offers. The most insecure people tried to save up for a rainy day, succumbing to general psychosis.

But despite the record sales in the first half of December, people still had noticeable ruble amounts, which began to depreciate right before their eyes. And the attractiveness of electronics instantly grew, in terms of the new exchange rate of 100 euros, most of the goods in stores began to cost half as much. The benefit is imaginary, but warming the soul of many buyers. And they didn’t have much choice how to save money. If on December 13 there was no influx of buyers in stores, then on Black Tuesday, traffic and sales began to grow from lunch, and the average bill increased by almost 1.6 times in large stores. The excitement was such that almost everything was swept off the shelves in stores. Look at the photo of the queue in MediaMarkt before closing, about a hundred people are standing with various equipment, this is the last attempt to jump on the departing train.

The reasons why people were able to go to stores and buy appliances again are very different, let's highlight the main ones:

  • For the sake of saving their savings/salary. Most of the money was spent by those who received a salary, bonus or some money that had not yet been spent. This also includes those who, by coincidence, are furnishing their apartments or houses right now.
  • For resale - small market players, single traders and shops. It's no secret that in January the same goods will cost 30-50 percent more. In the wholesale and retail channels, prices will change, so many have formed their stocks. Given that the big wholesalers had limited sales at the old prices, this was the only way to quickly and painlessly replenish their stocks. It also makes it possible to invest working ruble capital and "live through" January-February.
  • For re-export - foreigners bought for their own use, as prices are surprisingly low, differ by 2-3 times from those in other countries. But just as massively goods were bought by shuttles from Belarus, Kazakhstan and a number of other countries. This is also a small private business, which was the first to orient itself and fill its warehouses. They exported such goods in suitcases, that is, it almost did not concern large household appliances.
  • Private investment - the scheme used by resellers is not at all new, and many private buyers, very far from the electronics market, considered it a good opportunity to "make money". Basically, they tried to buy an iPhone, MacBook or similar equipment, which, they believe, will be in guaranteed demand at the new prices. At the same time, they are ready to sell it after a price change by 10-12 percent cheaper, which will give them at least 10-12 percent profit.

We can stop here, since the main motives are described, and sales of only one day of Black Tuesday can be described as a record for the entire history of the Russian electronics market. It will take some more time to calculate the revenue, but we can already say that these were sales for at least the entire previous week, or even 8 days, which were also at a record high level. But this is only the first step towards the market that we will see in 2015. Let's look at the direct implications of Black Tuesday for the electronics market.

Black Tuesday - empty warehouses, empty shelves

The rush demand for electronics has led to the fact that stocks in retail chains and large distributors have been reduced to the minimum for most positions. Deliveries of goods do not stop, but for the first time, logistics does not have time to deliver goods on time, and the ambiguity with the ruble exchange rate imposes its own limitations. Someone limits supplies artificially, someone cannot cope with demand and ships the maximum amount of goods.

Apple once again closed its online store for product repricing, it is assumed that the new prices will be available for the entire lineup, they will grow by 25-30 percent (a couple of weeks ago they already rose by 27 percent). Considering that Apple is not a defining player for the market, it plays in its own niche, this does not affect the mood of other companies in any way.

Only for Apple it is important what the new prices will be, the company will obviously set them at the level of the euro in order to avoid re-exporting its products to Europe. The main re-export that has taken place in recent weeks has been for Apple products. It simply did not stay on the Russian market, even the first activations went outside the Russian Federation, if we talk about the iPhone. But the goods quickly ended, and Apple again began to solve their problem in the usual way. At the new price level, sales of all Apple technology will freeze for a while, it will be inaccessible to most consumers due to the fact that their ruble salaries will not grow so quickly.

But if we look at the market of electronics and household appliances in general, subtracting from it Apple, which has a special account and plays in its niche without much influence on other players, both in plus and minus, we get an interesting picture . Stocks have been depleted, new purchases will be at new prices for most players, and what they manage to bring into the country at old or conditionally old prices before the New Year will be enough for several days of trading, even with the decline in demand in the days after Black Tuesday.

The shortage of goods in most positions has led to the fact that most retail chains are faced with the choice of entering New Year's sales with completely empty shelves or raising prices for those goods that are in the biggest deficit. Retail chose the latter.

For example, in Samsung branded retail prices for the most popular models have grown significantly. So, the Galaxy S5 Duos began to cost not 27,990 rubles, but already 36,990 rubles, the usual S5 at 24,990 disappeared from sale, it simply does not exist. At the same time, as before, you can buy a set of a tablet and S5 for 27,990 rubles, the promotion runs until January 12, but the amount of goods is scanty, there is almost none. There is a possibility that the goods will end faster than the action will end, in new deliveries it is clearly not enough. Another example - the price of the Galaxy Note 4 is now not 39,990 rubles (on Tuesday the price was increased from 36,990 rubles), but 53,990 rubles. Why such a level of cost? The answer is that the model is almost non-existent after black Tuesday, there are single devices, no stock.

It is interesting that Samsung did not change prices in any way and did not influence them, the purchase price for all partners for Wednesday evening remained exactly the same, Arkady Graf, head of the Samsung mobile direction in Russia, told me about this. It is possible that the price will change in the near future, but the changes in retail are directly related to what happened on Tuesday. There is no product on the shelves, it just ran out. And it no longer matters how and how much to sell it, it is almost absent.

It doesn't matter who changed prices, Samsung or partners, now it will snowball, and since Samsung is an indicator for the market, most companies will follow suit. In principle, we already see in the regions that the cost of many devices from other manufacturers has begun to grow. Manufacturers also did not change prices, but they went up at the request of retailers, who see no other way out - they need to sell something. In large networks, they keep prices for those goods that are still available, but gradually begin to raise prices for the most popular positions, as this gives additional profit.

In some networks, for example, in Svyaznoy, when selling equipment, boxes are necessarily opened. This is done in order to reduce the secondary market at the beginning of the year, realizing that the same lower cost phones will compete with them.

Most of the market was expecting the new prices to be set in January, but it looks like we'll see them for many items in the coming week. Nevertheless, buyers still have the opportunity to relatively profitably find certain devices at conditionally old prices.

For the first time the crisis in Russia has led to an instant cleanup of warehouses for electronics and household appliances, and this leads to interesting short-term results.

Short-term prospects for the Russian market, resellers and officials

The exchange rate of the ruble remains an unclear factor that affects the entire market. It doesn't matter what the exchange rate of the ruble will be, it will affect the volume of the market, retail prices, but not how the market will change. Until the moment when the market is multidirectional, that is, the rate is not set at some level and does not keep around it, we will observe the same thing as in November and December - the simultaneous existence of high prices - for example, at Apple - as well as periodic their "fall" in terms of currency and the growth of sales for the export of devices to other countries. There will be "favorable" prices as well as new ones. Under these conditions, those producers who can supply the maximum amount of goods at conditionally old prices will win. But this is a temporary game, since it is impossible to assume that the rate will jump for a long time.

At the new price level, at any mark, the new rules of the game will become clear. But now it is not so much the exchange rate of the ruble that is decisive, but the new economic conditions within Russia. For the majority of suppliers and manufacturers, the cost of money inside Russia is growing, and those companies that have global financial instruments to mitigate these risks are beginning to win. These are manufacturers such as Samsung, HTC, Sony, LG, Huawei, Microsoft and others.

Let me give you an example - Microsoft hedged currency risks, like many other companies, at the level of 35 rubles per dollar. That is, at the moment the company can sell its products, including phones, at very low prices, raising their prices not as fast as other companies. It is said that this hedging may be valid until the end of spring. In theory, this gives Microsoft a good chance to increase its share, which the company, unfortunately, most likely does not realize in smartphones.

For Russian manufacturers, as well as small B-brands, the lack of available financial instruments, credit lines will make the value of money significantly higher than it was in 2014. The competition in the market will not change, there will be a rotation of names, but the number of players will remain excessive, although sales of each of them will decrease. As a result, the cost of products from B-brands will increase sharply, by at least 15-20 percent, and this is in addition to the new cost due to exchange rate differences. That is, under the new lending conditions, a conditional smartphone X, which cost $100 with delivery to Russia, will cost $115-120 (not in rubles, in dollars!).

And this will directly close the price gap between large companies and Chinese manufacturers. Chinese phones will become less attractive in the eyes of end consumers. Moreover, given the efforts of customs, it will become impossible to optimize the import of phones in large quantities, which will also affect the cost. It is not so important that the price of Chinese models will be 30-35 thousand rubles at the current exchange rate, it is important that the gap in prices with large companies will become noticeably smaller. And then users will start choosing those brands that they know.

On the other hand, the floor price will become the dominant factor in choosing devices in 2015, the market in the top segment, where Samsung / Apple and a number of other companies play, will shrink sharply. So it was in previous crises, so it will be now, it is difficult to expect anything else. Due to the weakening of the ruble, we may not see a drop in the average price of devices, but in general, there is no need to engage in sophistry, the market volume, both in units and in monetary terms, will sag a lot.

We at the Mobile Research Group have several scenarios for the development of the situation, I will give a few figures. The Russian market of smartphones and phones in 2014 is 45 million devices, the tablet market is 10 million devices. In 2015, we expect the phone market to reach 33-36 million units and tablets to 6.5 million units. The cheapest devices, such as carriers, will dominate if the latter maintain subsidies for them. The middle price segment, in which the same Chinese tried to earn the main money, will sink very strongly. The alternative in the form of buying goods abroad via the Internet may not be considered, since the margin on goods in Russia will fall, as a result, local prices will be comparable or even lower.

In fact, we can say that the market will change a lot, but we saw something similar in 2009. These changes are not fatal, and within 1.5-2 years, taking into account the stabilization of the general situation, the market will win back. But this will be a slightly different market, where the scenario of the appearance of operator phones and subsidies is possible, which will completely reformat relations in the market.

In the next few months, resellers, independent retailers will be able to sell those devices that they bought in large networks at the old prices. But then they will begin to experience hunger, the inability to purchase goods at new prices, as they will eat up profits. And this will be a direct road to closure for them, only those who pursue a balanced policy will survive, reduce their costs as much as possible and try to increase sales.

The mechanism by which the market correction occurs is very simple. Chains and stores that received windfall in November and December will invest in a new product in January (at new prices), but its purchases will be much less, as demand will fall. And in general, this will not bring any problems for the networks, as their economy is developing. At the same time, independent retailers will be on a starvation diet, and many outlets will close. When the situation improves and new opportunities appear, they will reopen.

Now let's focus on those who build their business on the resale of accessories, iPhones and similar things within the country, bringing them in suitcases. This is a huge market, shops fill all sorts of shopping centers, and they have formed a real competition for organized retail. In the absence of cheap goods in the coming months, they will be closed en masse, they simply have nowhere to get goods at affordable prices. Let me give you a simple example, the Jawbone UP2 bracelet costs 3,990 rubles in MVideo (plus a discount for 1,000 rubles), they have an average of 6-7 thousand rubles, with a tendency that the price will be about 12-14 thousand rubles. And even with this level of new prices, such resellers will not be profitable, and the first price shock in January-May will reduce sales in this market segment. The lack of cheap iPhones and other products will also put an end to their resale.

For such small players, there are two strategies at the moment - many try to sell as much as possible in December and then temporarily close, wait out the bad time. This is due to the fact that they will either have to fix losses and sell the leftovers for a very long time, or give them to their colleagues at a good discount. It turns out that those who remain will win in the moment, but only for a month and a half. Then the situation will repeat again. We can say that the market of resellers will narrow to the limit, in the new conditions without direct contracts for the supply of goods, they have no chance. Those who have a narrow specialization in their niches will win. They will fall in turnover, but the client will remain with them due to the very specialization. The accessories market will also see a drop in the average check, that is, with an increase in the exchange rate, this means a deterioration in the characteristics of devices. Both strategies are equivalent, and the only question is when you have to fix losses, now or after some time. The reseller market in Russia was disproportionately inflated, and in this crisis it was time for them to either go to another level, look for direct distribution from certain brands, or leave the market. But in any case, their departure is a temporary phenomenon, with a change in the situation, they can suddenly appear out of nowhere and continue their activities. This is unlikely in the next year.

For the Russian market, the change in key indicators is obvious, the lifetime of a smartphone will increase to an average of 18 months from the current 13 months. This is an average time, in reality for many it will be equal to 25-26 months. For tablets, the life cycle can be described simply - as long as they work, which, in fact, will push the market down in 2015.

Despite the negative market forecasts, the second-tier players will continue to take an active position on it - for them, this is also the time to decide whether to grow and sell their goods not only at the expense of price (with a budget market and low margins), or quickly lose their sales. Oddly enough, but the advertising approach, PR will be a cheap way to establish themselves for such brands. It is no understatement to say that 2015 will be marked by marketing activities of companies that most have never heard of. It is possible that he will never hear after.

I will repeat the main idea - the cost of money for companies operating in Russia increases with a shrinking market. This means retail prices for many, if not all, goods will rise and be at the same level as in Europe or China, that is, significantly higher than they were before. The margin in the entire supply chain will decrease, if today it is 40-45 percent depending on the player (wholesale, retail, excluding the manufacturer), then in 2015 it will fluctuate at the level of 20-30 percent. This means that retail chains will have to either optimize the number of employees and reduce the payroll, or actively look for ways to reduce costs, read, reduce rents.We can expect Euroset and Svyaznoy to be the instigators, both companies are interested in lowering rental rates in ruble terms. With a successful approach, and most likely it will be successful, rental rates will fall in the short term for 6-8 months by 10-15 percent. If you try to recalculate in currency terms, you will see that the rental price will become noticeably lower, it will decrease in costs.

The above scenario of the market development in Russia is the most probable and starts to operate from the moment of relative stabilization of the ruble. Until that moment, we will observe quite large fluctuations that rock the market and reduce its size, as buyers wait and not in a hurry to buy goods.

As a summary, I want to note that a crisis always provides opportunities, reshapes the existing order of things. It sounds trite, but it is at this time that you can both go broke and make a fortune. I hardly talked about the secondary market, which may grow and become noticeable. Unofficial service centers will revive for a while, but the official ones, on the contrary, will feel as bad as they do today and stand on the verge of survival, or even prepare for closure. Although, it would seem, they are from the growth of the secondary market, the number of repairs, on the contrary, should benefit. But this is a separate and large topic for conversation, the material turned out to be quite detailed, although I described the situation on the market in very large strokes. This picture may be different, but the main outline of what is happening is just that. Buyers should prepare for the fact that long-standing and familiar price guides no longer work. If earlier the flagship cost about 30,000 rubles, now it is 55-60 thousand rubles and more. Chinese flagships for 15 thousand rubles are smoothly turning into models priced at 30-35 thousand rubles, or even more. We are all in for a psychological shock from prices that have already begun to change daily, retail does not have goods and rewrites price tags daily.The main thing in this situation is not to panic and wait for the moment when everything calms down and becomes stable. And always have a back-up plan in case the main one doesn't work. But I sincerely believe that this crisis at the moment is nothing that could globally destroy the Russian electronics market. Reformatting, changing the alignment of forces and players both among retail chains and vendors is a definite yes. But nothing more will happen. Whatever one may say, this is a time of great and very great opportunities. Those who are not afraid to act now, in the future may receive a prize in the form of a significant share of the Russian market. But these are big risks, and therefore there are only a few such people in every crisis.

Couch analytics #23. What awaits the Russian electronics market - development scenarios

I did not plan the second issue of "Spikins" this week, but life decided otherwise, the ruble on Tuesday, which was aptly dubbed black, broke through the psychological threshold of 1 to 100 against the euro. The dollar lagged behind in its strengthening quite a bit, and then the transformation of all consumer markets within Russia began. We have the opportunity to evaluate the impact of current events on the electronics market, as well as describe the scenarios by which it can develop in 2015. I advise you to read this text carefully and possibly several times if you are related to the electronics market. In it, I will try to answer the questions that many market participants have asked me in recent days and weeks, summarize my answers and give fairly general forecasts about the future of our market.

Background to the issue and Black Tuesday sales in the electronics market

The weakening of the ruble over the past month has led to the fact that the inhabitants of Russia tried to keep their savings as much as possible. Everyone had their own strategy for this, which differed depending on the amount, the amount of money in the bank account and where the person lives https://cars45 .com.gh/3bF0RAPjLjEF1LsFitfLvO4Y. Conventionally, we can single out several classical approaches that we saw in previous crises on the Russian market.

Those who had sufficiently large deposits or accounts in rubles closed them and converted them into dollars or euros as soon as the ruble began to weaken. The majority took a conservative position and waited for the ruble to win back its fall, so they transferred funds at an already less favorable rate, partially provoking a further weakening of the ruble. But most of this conversion took place back in November 2014, by the end of the month, a few continued to believe in the ruble and keep their savings in it.

Many quite rightly decided that by converting rubles into another currency they would lose a significant part of their savings, and therefore they began to invest in the purchase of various goods - jewelry, watches, electronics, plumbing, furniture. Demand for luxury goods temporarily jumped in November, then returned to normal levels. Almost did not notice the growth in demand retail chains selling optics, glasses, and clothing. The food market also did not notice any excitement, with the exception of the rise in prices for buckwheat, which once again turned out to be an indicator product, a promoted brand that all residents of the country, without exception, are guided by. There were problems and rush demand with buckwheat, although there was nothing like that for all other positions.

In principle, we can say that this crisis is very different from the previous ones in that there is a sanctions regime that directly affects the food market, there was a noticeable import substitution, but it affected such goods as meat and dairy products, cereals, but did not affect the consumption of the average resident of the country - the price increase, which is linked to sanctions, is rather secondary. But we can say that in December there was no boom in the food markets, unlike the electronics market, which showed unprecedented growth rates and made the average monthly turnover of December in just a few days.

For me, this is the fourth crisis in the recent history of Russia, and I can say that it is very different from the previous ones in terms of the structure of demand. In the 90s, people invested their savings in food, clothing, and essentials. In the 2000s, demand shifted from this area to the purchase of cars, furniture, and partly electronics. The crisis of 2014 is fundamentally different from all previous ones in terms of the availability and need for certain goods. Investments in real estate, cars, furniture, repairs or something like that remained, but for the first time, electronics became the most massive product of the crisis.

The reason for this should not be sought at all in the fact that suddenly many people became fans of electronic devices, realized their necessity or importance in their lives. Not at all. Electronics in Russia has become the most easily accessible product with a minimum price change compared to the pre-crisis level.

Suffice it to recall that major consumer electronics chains, as well as phone and tablet sellers, have a total of more than 15,000 stores across the country, from small tents near the subway or transport stops to electronics hypermarkets. Walking distance and convenient location made their choice preferable. People didn't prioritize electronics per se, but they thought they would save time and money, get goods faster in electronics stores because of their availability. Remember this word - availability, it played the biggest role in today's conditions market.

In November and December, until Black Tuesday, December 16, sales in electronics chains gradually increased. In November, the chains recorded growth from 20 to 65 percent in sales, both in monetary and unit terms. The market has become multidirectional - some companies have sharply raised prices, for example, Apple did, setting prices at plus 27 percent of the old ones, and some companies have even reduced prices for key models, like Samsung did. We partially discussed this point in "Couch Analytics" No. 20.

In early December, the customs tightened the screws a little, which affected the growth in prices for smartphones and tablets of a number of companies, we also discussed this in detail in a separate article. This was an appendage to the market situation on the part of the state.

But the difference in offers continued to persist, in fact, most players decided to keep prices at the pre-crisis level as much as possible, index only the most popular, scarce goods and enter the new year with the most empty warehouses in order to start the game in 2015 from new price levels and volumes sales. This is a balanced and understandable strategy for most players. Let me remind you that 80 percent of the goods in warehouses were purchased for the holiday period at the old prices and the fluctuations in exchange rates did not affect them in any way.

Now let's see what happened on Black Tuesday. The sharp, unprecedented depreciation of the ruble immediately caused panic and hysteria in society. In exchange offices, the euro exchange rate rose by 100 rubles, the currency was sold at both 120 and 150. In Moscow, one could observe people lining up at exchange offices to buy currency, as if tomorrow would no longer exist and it was necessary to take it only today . Usually these are not very wealthy people who do not have large reserves and do not understand what is happening. On average, they exchanged 200-300 euros/dollars, losing their ruble savings. The difference between the buying and selling rates reached 40-50 rubles, these were clearly speculative offers. The most insecure people tried to save up for a rainy day, succumbing to general psychosis.

But despite the record sales in the first half of December, people still had noticeable ruble amounts, which began to depreciate right before their eyes. And the attractiveness of electronics instantly increased, in terms of the new exchange rate of 100 euros, most of the goods in stores began to cost half as much. The benefit is imaginary, but warming the soul of many buyers. And they didn’t have much choice how to save money. If on December 13 there was no influx of buyers in stores, then on Black Tuesday, traffic and sales began to grow from lunch, and the average bill increased by almost 1.6 times in large stores. The excitement was such that almost everything was swept off the shelves in stores. Look at the photo of the queue in MediaMarkt before closing, about a hundred people are standing with various equipment, this is the last attempt to jump on the departing train.

The reasons why people were able to go to stores and buy appliances again are very different, let's highlight the main ones:

  • For the sake of saving their savings/salary. Most of the money was spent by those who received a salary, bonus or some money that had not yet been spent. This also includes those who, by coincidence, are furnishing their apartments or houses right now.
  • For resale - small market players, single traders and shops. It's no secret that in January the same goods will cost 30-50 percent more. In the wholesale and retail channels, prices will change, so many have formed their stocks. Given that the big wholesalers had limited sales at the old prices, this was the only way to quickly and painlessly replenish their stocks. It also makes it possible to invest working ruble capital and "live through" January-February.
  • For re-export - foreigners bought for their own use, as the prices are surprisingly low, differ by 2-3 times from those in other countries. But just as massively goods were bought by shuttle traders from Belarus, Kazakhstan and a number of other countries. This is also a small private business, which was the first to orient itself and fill its warehouses. They exported such goods in suitcases, that is, it almost did not concern large household appliances.
  • Private investment - the scheme used by resellers is not at all new, and many private buyers, very far from the electronics market, considered it a good opportunity to "make money". Basically, they tried to buy an iPhone, MacBook or similar equipment, which, they believe, will be in guaranteed demand at the new prices. At the same time, they are ready to sell it after a price change by 10-12 percent cheaper, which will give them at least 10-12 percent profit.

We can stop here, since the main motives are described, and sales of only one day of Black Tuesday can be described as a record for the entire history of the Russian electronics market. It will take some more time to calculate the revenue, but we can already say that these were sales for at least the entire previous week, or even 8 days, which were also at a record high level. But this is only the first step towards the market that we will see in 2015. Let's look at the direct implications of Black Tuesday for the electronics market.

Black Tuesday - empty warehouses, empty shelves

The rush demand for electronics has led to the fact that stocks in retail chains and large distributors have been reduced to the minimum for most positions. Deliveries of goods do not stop, but for the first time, logistics does not have time to deliver goods on time, and the ambiguity with the ruble exchange rate imposes its own limitations. Someone limits supplies artificially, someone cannot cope with demand and ships the maximum amount of goods.

Apple once again closed its online store for product repricing, it is assumed that the new prices will be available for the entire lineup, they will grow by 25-30 percent (a couple of weeks ago they already rose by 27 percent). Considering that Apple is not a defining player for the market, it plays in its own niche, this does not affect the mood of other companies in any way.

Only for Apple it is important what the new prices will be, the company will obviously set them at the level of the euro in order to avoid re-exporting its products to Europe. The main re-export that has taken place in recent weeks has been for Apple products. It simply did not stay on the Russian market, even the first activations went outside the Russian Federation, if we talk about the iPhone. But the goods quickly ended, and Apple again began to solve their problem in the usual way. At the new price level, sales of all Apple technology will freeze for a while, it will be inaccessible to most consumers due to the fact that their ruble salaries will not grow so quickly.

But if we look at the market of electronics and household appliances in general, subtracting from it Apple, which has a special account and plays in its niche without much influence on other players, both in plus and minus, we get an interesting picture . Stocks have been depleted, new purchases will be at new prices for most players, and what they manage to bring into the country at old or conditionally old prices before the New Year will be enough for several days of trading, even with the decline in demand in the days after Black Tuesday.

The shortage of goods in most positions has led to the fact that most retail chains are faced with the choice of entering New Year's sales with completely empty shelves or raising prices for those goods that are in the biggest deficit. Retail chose the latter.

For example, in Samsung branded retail prices for the most popular models have grown significantly. So, the Galaxy S5 Duos began to cost not 27,990 rubles, but already 36,990 rubles, the usual S5 at 24,990 disappeared from sale, it simply does not exist. At the same time, as before, you can buy a set of a tablet and S5 for 27,990 rubles, the promotion runs until January 12, but the amount of goods is scanty, there is almost none. There is a possibility that the goods will end faster than the action will end, in new deliveries it is clearly not enough. Another example - the price of the Galaxy Note 4 is now not 39,990 rubles (on Tuesday the price was increased from 36,990 rubles), but 53,990 rubles. Why such a level of cost? The answer is that the model is almost non-existent after black Tuesday, there are single devices, no stock.

It is interesting that Samsung did not change prices in any way and did not influence them, the purchase price for all partners for Wednesday evening remained exactly the same, Arkady Graf, head of the Samsung mobile direction in Russia, told me about this. It is possible that the price will change in the near future, but the changes in retail are directly related to what happened on Tuesday. There is no product on the shelves, it just ran out. And it no longer matters how and how much to sell it, it is almost absent.

It doesn't matter who changed prices, Samsung or partners, now it will snowball, and since Samsung is an indicator for the market, most companies will follow suit. In principle, we already see in the regions that the cost of many devices from other manufacturers has begun to grow. Manufacturers also did not change prices, but they went up at the request of retailers, who see no other way out - they need to sell something. In large networks, they keep prices for those goods that are still available, but gradually begin to raise prices for the most popular positions, as this gives additional profit.

In some networks, for example, in Svyaznoy, when selling equipment, boxes are necessarily opened. This is done in order to reduce the secondary market at the beginning of the year, realizing that the same lower cost phones will compete with them.

Most of the market was expecting the new prices to be set in January, but it looks like we'll see them for many items in the coming week. Nevertheless, buyers still have the opportunity to relatively profitably find certain devices at conditionally old prices.

For the first time the crisis in Russia has led to an instant cleanup of warehouses for electronics and household appliances, and this leads to interesting short-term results.

Short-term prospects for the Russian market, resellers and officials

The exchange rate of the ruble remains an unclear factor that affects the entire market. It doesn't matter what the exchange rate of the ruble will be, it will affect the volume of the market, retail prices, but not how the market will change. Until the moment when the market is multidirectional, that is, the rate is not set at some level and does not keep around it, we will observe the same thing as in November and December - the simultaneous existence of high prices - for example, at Apple - as well as periodic their "fall" in terms of currency and the growth of sales for the export of devices to other countries. There will be "favorable" prices as well as new ones. Under these conditions, those producers who can supply the maximum amount of goods at conditionally old prices will win. But this is a temporary game, since it is impossible to assume that the rate will jump for a long time.

At the new price level, at any mark, the new rules of the game will become clear. But now it is not so much the exchange rate of the ruble that is decisive, but the new economic conditions within Russia. For the majority of suppliers and manufacturers, the cost of money inside Russia is growing, and those companies that have global financial instruments to mitigate these risks are beginning to win. These are manufacturers such as Samsung, HTC, Sony, LG, Huawei, Microsoft and others.

Let me give you an example - Microsoft hedged currency risks, like many other companies, at the level of 35 rubles per dollar. That is, at the moment the company can sell its products, including phones, at very low prices, raising their prices not as fast as other companies. It is said that this hedging may be valid until the end of spring. In theory, this gives Microsoft a good chance to increase its share, which the company, unfortunately, most likely does not realize in smartphones.

For Russian manufacturers, as well as small B-brands, the lack of available financial instruments, credit lines will make the value of money significantly higher than it was in 2014. The competition in the market will not change, there will be a rotation of names, but the number of players will remain excessive, although sales of each of them will decrease. As a result, the cost of products from B-brands will increase sharply, by at least 15-20 percent, and this is in addition to the new cost due to exchange rate differences. That is, under the new lending conditions, a conditional smartphone X, which cost $100 with delivery to Russia, will cost $115-120 (not in rubles, in dollars!).

And this will directly close the price gap between large companies and Chinese manufacturers. Chinese phones will become less attractive in the eyes of end consumers. Moreover, given the efforts of customs, it will become impossible to optimize the import of phones in large quantities, which will also affect the cost. It is not so important that the price of Chinese models will be 30-35 thousand rubles at the current exchange rate, it is important that the gap in prices with large companies will become noticeably smaller. And then users will start choosing those brands that they know.

On the other hand, the floor price will become the dominant factor in choosing devices in 2015, the market in the top segment, where Samsung / Apple and a number of other companies play, will shrink sharply. So it was in previous crises, so it will be now, it is difficult to expect anything else. Due to the weakening of the ruble, we may not see a drop in the average price of devices, but in general, there is no need to engage in sophistry, the market volume, both in units and in monetary terms, will sag a lot.

We at the Mobile Research Group have several scenarios for the development of the situation, I will give a few figures. The Russian market of smartphones and phones in 2014 is 45 million devices, the tablet market is 10 million devices. In 2015, we expect the phone market to reach 33-36 million units and tablets to 6.5 million units. The cheapest devices, such as carriers, will dominate if the latter maintain subsidies for them. The middle price segment, in which the same Chinese tried to earn the main money, will sink very strongly. The alternative in the form of buying goods abroad via the Internet may not be considered, since the margin on goods in Russia will fall, as a result, local prices will be comparable or even lower.

In fact, we can say that the market will change a lot, but we saw something similar in 2009. These changes are not fatal, and within 1.5-2 years, taking into account the stabilization of the general situation, the market will win back. But this will be a slightly different market, where the scenario of the appearance of operator phones and subsidies is possible, which will completely reformat relations in the market.

In the next few months, resellers, independent retailers will be able to sell those devices that they bought in large networks at the old prices. But then they will begin to experience hunger, the inability to purchase goods at new prices, as they will eat up profits. And this will be a direct road to closure for them, only those who pursue a balanced policy will survive, reduce their costs as much as possible and try to increase sales.

The mechanism by which the market correction occurs is very simple. Chains and stores that received windfall in November and December will invest in a new product in January (at new prices), but its purchases will be much less, as demand will fall. And in general, this will not bring any problems for the networks, as their economy is developing. At the same time, independent retailers will be on a starvation diet, and many outlets will close. When the situation improves and new opportunities appear, they will reopen.

Now let's focus on those who build their business on the resale of accessories, iPhones and similar things within the country, bringing them in suitcases. This is a huge market, shops fill all sorts of shopping centers, and they have formed a real competition for organized retail. In the absence of cheap goods in the coming months, they will be closed en masse, they simply have nowhere to get goods at affordable prices. Let me give you a simple example, the Jawbone UP2 bracelet costs 3,990 rubles in MVideo (plus a discount for 1,000 rubles), they have an average of 6-7 thousand rubles, with a tendency that the price will be about 12-14 thousand rubles. And even with this level of new prices, such resellers will not be profitable, and the first price shock in January-May will reduce sales in this market segment. The lack of cheap iPhones and other products will also put an end to their resale.

For such small players, there are two strategies at the moment - many try to sell as much as possible in December and then temporarily close, wait out the bad time. This is due to the fact that they will either have to fix losses and sell the leftovers for a very long time, or give them to their colleagues at a good discount. It turns out that those who remain will win in the moment, but only for a month and a half. Then the situation will repeat again. We can say that the market of resellers will narrow to the limit, in the new conditions without direct contracts for the supply of goods, they have no chance. Those who have a narrow specialization in their niches will win. They will fall in turnover, but the client will remain with them due to the very specialization. The accessories market will also see a drop in the average check, that is, with an increase in the exchange rate, this means a deterioration in the characteristics of devices. Both strategies are equivalent, and the only question is when you have to fix losses, now or after some time. The reseller market in Russia was disproportionately inflated, and in this crisis it was time for them to either go to another level, look for direct distribution from certain brands, or leave the market. But in any case, their departure is a temporary phenomenon, with a change in the situation, they can suddenly appear out of nowhere and continue their activities. This is unlikely in the next year.

For the Russian market, the change in key indicators is obvious, the lifetime of a smartphone will increase to an average of 18 months from the current 13 months. This is an average time, in reality for many it will be equal to 25-26 months. For tablets, the life cycle can be described simply - as long as they work, which, in fact, will push the market down in 2015.

Despite the negative market forecasts, the second-tier players will continue to take an active position on it - for them, this is also the time to decide whether to grow and sell their goods not only at the expense of price (with a budget market and low margins), or quickly lose their sales. Oddly enough, but the advertising approach, PR will be a cheap way to establish themselves for such brands. It is no understatement to say that 2015 will be marked by marketing activities of companies that most have never heard of. It is possible that he will never hear after.

I will repeat the main idea - the cost of money for companies operating in Russia increases with a shrinking market. This means retail prices for many, if not all, goods will rise and be at the same level as in Europe or China, that is, significantly higher than they were before. The margin in the entire supply chain will decrease, if today it is 40-45 percent depending on the player (wholesale, retail, excluding the manufacturer), then in 2015 it will fluctuate at the level of 20-30 percent. This means that retail chains will have to either optimize the number of employees and reduce the payroll, or actively look for ways to reduce costs, read, reduce rents.We can expect Euroset and Svyaznoy to be the instigators, both companies are interested in lowering rental rates in ruble terms. With a successful approach, and most likely it will be successful, rental rates will fall in the short term for 6-8 months by 10-15 percent. If you try to recalculate in currency terms, you will see that the rental price will become noticeably lower, it will decrease in costs.

The above scenario of the market development in Russia is the most probable and starts to operate from the moment of relative stabilization of the ruble. Until that moment, we will observe quite large fluctuations that rock the market and reduce its size, as buyers wait and not in a hurry to buy goods.

As a summary, I want to note that a crisis always provides opportunities, reshapes the existing order of things. It sounds trite, but it is at this time that you can both go broke and make a fortune. I hardly talked about the secondary market, which may grow and become noticeable. Unofficial service centers will revive for a while, but the official ones, on the contrary, will feel as bad as they do today and stand on the verge of survival, or even prepare for closure. Although, it would seem, they are from the growth of the secondary market, the number of repairs, on the contrary, should benefit. But this is a separate and large topic for conversation, the material turned out to be quite detailed, although I described the situation on the market in very large strokes. This picture may be different, but the main outline of what is happening is just that. Buyers should prepare for the fact that long-standing and familiar price guides no longer work. If earlier the flagship cost about 30,000 rubles, now it is 55-60 thousand rubles and more. Chinese flagships for 15 thousand rubles are smoothly turning into models priced at 30-35 thousand rubles, or even more. We are all in for a psychological shock from prices that have already begun to change daily, retail does not have goods and rewrites price tags daily.The main thing in this situation is not to panic and wait for the moment when everything calms down and becomes stable. And always have a backup plan in case the main one doesn't work. But I sincerely believe that this crisis at the moment is nothing that could globally destroy the Russian electronics market. Reformatting, changing the alignment of forces and players both among retail chains and vendors is a definite yes. But nothing more will happen. Whatever one may say, this is a time of great and very great opportunities. Those who are not afraid to act now, in the future may receive a prize in the form of a significant share of the Russian market. But these are big risks, and therefore there are only a few such people in every crisis.

Couch analytics #23. What awaits the Russian electronics market - development scenarios

I did not plan the second issue of "Spikins" this week, but life decreed quite differently, the ruble on Tuesday, which was aptly dubbed black, broke through the psychological threshold of 1 to 100 against the euro. The dollar lagged behind in its strengthening quite a bit, and then the transformation of all consumer markets within Russia began. We have the opportunity to evaluate the impact of current events on the electronics market, as well as describe the scenarios by which it can develop in 2015. I advise you to read this text carefully and possibly several times if you are related to the electronics market. In it, I will try to answer the questions that many market participants have asked me in recent days and weeks, summarize my answers and give fairly general forecasts about the future of our market.

Background to the question and Black Tuesday sales in the electronics market

The weakening of the ruble over the past month has led to the fact that the inhabitants of Russia tried to keep their savings as much as possible. Everyone had their own strategy for this, which differed depending on the amount, the amount of money in the bank account and where the person lives https://cars45.com.gh/3bF0RAPjLjEF1LsFitfLvO4Y. Conventionally, we can single out several classical approaches that we saw in previous crises on the Russian market.

The weakening of the ruble over the past month has led to the fact that the inhabitants of Russia tried to keep their savings as much as possible. Everyone had their own strategy for this, which differed depending on the amount, the amount of money in the bank account and where the person lives https://cars45.com.gh/3bF0RAPjLjEF1LsFitfLvO4Y https://cars45.com.gh/3bF0RAPjLjEF1LsFitfLvO4Y . Conventionally, we can single out several classical approaches that we saw in previous crises on the Russian market.

Those who had sufficiently large deposits or accounts in rubles closed them and converted them into dollars or euros as soon as the ruble began to weaken. The majority took a conservative position and waited for the ruble to win back its fall, so they transferred funds at an already less favorable rate, partially provoking a further weakening of the ruble. But most of this conversion took place back in November 2014, by the end of the month, a few continued to believe in the ruble and keep their savings in it.

Many quite rightly decided that by converting rubles into another currency they would lose a significant part of their savings, and therefore they began to invest in the purchase of various goods - jewelry, watches, electronics, plumbing, furniture. Demand for luxury goods temporarily jumped in November, then returned to normal levels. Almost did not notice the growth in demand retail chains selling optics, glasses, and clothing. The food market also did not notice any excitement, with the exception of the rise in prices for buckwheat, which once again turned out to be an indicator product, a promoted brand that all residents of the country, without exception, are guided by. There were problems and rush demand with buckwheat, although there was nothing like that for all other positions.

In principle, we can say that this crisis is very different from the previous ones in that there is a sanctions regime that directly affects the food market, there was a noticeable import substitution, but it affected such goods as meat and dairy products, cereals, but did not affect the consumption of the average resident of the country - the price increase, which is linked to sanctions, is rather secondary. But we can say that in December there was no boom in the food markets, unlike the electronics market, which showed unprecedented growth rates and made the average monthly turnover of December in just a few days.

For me, this is the fourth crisis in the recent history of Russia, and I can say that it is very different from the previous ones in terms of the structure of demand. In the 90s, people invested their savings in food, clothing, and essentials. In the 2000s, demand shifted from this area to the purchase of cars, furniture, and partly electronics. The crisis of 2014 is fundamentally different from all previous ones in terms of the availability and need for certain goods. Investments in real estate, cars, furniture, repairs or something like that remained, but for the first time, electronics became the most massive product of the crisis.

The reason for this should not be sought at all in the fact that suddenly many people became fans of electronic devices, realized their necessity or importance in their lives. Not at all. Electronics in Russia has become the most easily accessible product with a minimal price change compared to the pre-crisis level.

Suffice it to recall that major consumer electronics chains, as well as phone and tablet sellers, have a total of more than 15,000 stores across the country, from small tents near the subway or transport stops to electronics hypermarkets. Walking distance and convenient location made their choice preferable. People didn't prioritize electronics per se, but thought they would save time and money by getting the product faster from electronics stores due to their availability. Remember this word - accessibility, it has played the biggest role in today's market.

In November and December, until Black Tuesday, December 16, sales in electronics chains gradually increased. In November, the chains recorded growth from 20 to 65 percent in sales, both in monetary and unit terms. The market has become multidirectional - some companies have sharply raised prices, for example, Apple did, setting prices at plus 27 percent of the old ones, and some companies have even reduced prices for key models, like Samsung did. We partially discussed this point in Sofa Analytics #20.

The first results of Apple's price increase can already be assessed, despite the shortage that existed before, sales of models supplied at the new prices fell by about 30 percent, buyers were not ready for a new price level. But the main problem for Apple was that other players, primarily Samsung, did not raise prices, but even lowered them. In the first two weeks of December, sales of the Galaxy S5 at a new price of 24,000 rubles increased by 86 percent, Galaxy S5 Mini - by 392 percent, Galaxy Alpha - by 5 percent (for this model, the price change was minimal). But the sales of all models of the line also increased proportionally, as their prices did not change. In the first two weeks of December alone, Samsung was able to increase its market share by 2.7 percent in Russia, and at the moment this growth continues.

During a crisis, the multidirectional efforts of players create different conditions, and buyers choose the most advantageous offer - from their point of view, these are prices that are as close as possible to pre-crisis prices. In addition to Samsung, such companies as Sony, HTC, in Canon photo equipment, Philips, Sony, Samsung, and LG TVs turned out to be winners. In November and December, buyers showed reasonableness in choosing goods, guided by prices, as for them it was an opportunity to realize their pent-up demand, for example, to buy a good TV, washing machine, or something else. In most cases, they invested their money in buying goods for their own use.

In early December, the customs tightened the screws a little, which affected the growth in prices for smartphones and tablets of a number of companies, we also discussed this in detail in a separate article. This was an appendage to the market situation on the part of the state.

But the difference in offers continued to persist, in fact, most players decided to keep prices at the pre-crisis level as much as possible, index only the most popular, scarce goods and enter the new year with the most empty warehouses in order to start the game in 2015 from new price levels and volumes sales. This is a balanced and understandable strategy for most players. Let me remind you that 80 percent of the goods in warehouses were purchased for the holiday period at the old prices and the fluctuations in exchange rates did not affect them in any way.

Now let's see what happened on Black Tuesday. The sharp, unprecedented depreciation of the ruble immediately caused panic and hysteria in society. In exchange offices, the euro exchange rate rose by 100 rubles, the currency was sold at both 120 and 150. In Moscow, one could observe people lining up at exchange offices to buy currency, as if tomorrow would no longer exist and it was necessary to take it only today . Usually these are not very wealthy people who do not have large reserves and do not understand what is happening. On average, they exchanged 200-300 euros/dollars, losing their ruble savings. The difference between the buying and selling rates reached 40-50 rubles, these were clearly speculative offers. The most insecure people tried to save up for a rainy day, succumbing to general psychosis.

But despite the record sales in the first half of December, people still had noticeable ruble amounts, which began to depreciate right before their eyes. And the attractiveness of electronics instantly grew, in terms of the new exchange rate of 100 euros, most of the goods in stores began to cost half as much. The benefit is imaginary, but warming the soul of many buyers. And they didn’t have much choice how to save money. If on December 13 there was no influx of buyers in stores, then on Black Tuesday, traffic and sales began to grow from lunch, and the average bill increased by almost 1.6 times in large stores. The excitement was such that almost everything was swept off the shelves in stores. Look at the photo of the queue in MediaMarkt before closing, about a hundred people are standing with various equipment, this is the last attempt to jump on the departing train.

The reasons why people were able to go to stores and buy appliances again are very different, let's highlight the main ones:

  • To save your savings/salary. Basically, those who spent money were those who received a salary, a bonus, or some money that had not yet been spent. This also includes those who, by coincidence, are furnishing their apartments or houses right now.
  • For resale - small market players, single traders and shops. It's no secret that in January the same goods will cost 30-50 percent more. In the wholesale and retail channels, prices will change, so many have formed their stocks. Given that the big wholesalers had limited sales at the old prices, this was the only way to quickly and painlessly replenish their stocks. It also makes it possible to invest working ruble capital and "live through" January-February.
  • For re-export - foreigners bought for their own use, as prices are surprisingly low, differ by 2-3 times from those in other countries. But just as massively goods were bought by shuttles from Belarus, Kazakhstan and a number of other countries. This is also a small private business, which was the first to orient itself and fill its warehouses. They exported such goods in suitcases, that is, it almost did not concern large household appliances.
  • Private investment - the scheme used by resellers is not at all new, and many private buyers, very far from the electronics market, considered it a good opportunity to "make money". Basically, they tried to buy an iPhone, MacBook or similar equipment, which, they believe, will be in guaranteed demand at the new prices. At the same time, they are ready to sell it after a price change by 10-12 percent cheaper, which will give them at least 10-12 percent profit.

We can stop here, since the main motives are described, and sales of only one day of Black Tuesday can be described as a record for the entire history of the Russian electronics market. It will take some more time to calculate the revenue, but we can already say that these were sales for at least the entire previous week, or even 8 days, which were also at a record high level. But this is only the first step towards the market that we will see in 2015. Let's look at the direct implications of Black Tuesday for the electronics market.

Black Tuesday - empty warehouses, empty shelves

The rush demand for electronics has led to the fact that stocks in retail chains and large distributors have been reduced to the minimum for most positions. Deliveries of goods do not stop, but for the first time, logistics does not have time to deliver goods on time, and the ambiguity with the ruble exchange rate imposes its own limitations. Someone limits supplies artificially, someone cannot cope with demand and ships the maximum amount of goods.

Apple once again closed its online store for product repricing, it is assumed that the new prices will be available for the entire lineup, they will grow by 25-30 percent (a couple of weeks ago they already rose by 27 percent). Considering that Apple is not a defining player for the market, it plays in its own niche, this does not affect the mood of other companies in any way.

Only for Apple it is important what the new prices will be, the company will obviously set them at the level of the euro in order to avoid re-exporting its products to Europe. The main re-export that has taken place in recent weeks has been for Apple products. It simply did not stay on the Russian market, even the first activations went outside the Russian Federation, if we talk about the iPhone. But the goods quickly ended, and Apple again began to solve their problem in the usual way. At the new price level, sales of all Apple technology will freeze for a while, it will be inaccessible to most consumers due to the fact that their ruble salaries will not grow so quickly.

But if we look at the market of electronics and household appliances in general, subtracting from it Apple, which has a special account and plays in its niche without much influence on other players, both in plus and minus, we get an interesting picture . Stocks have been depleted, new purchases will be at new prices for most players, and what they manage to bring into the country at old or conditionally old prices before the New Year will be enough for several days of trading, even with the decline in demand in the days after Black Tuesday.

The shortage of goods in most positions has led to the fact that most retail chains are faced with the choice of entering New Year's sales with completely empty shelves or raising prices for those goods that are in the biggest deficit. Retail chose the latter.

For example, in Samsung branded retail prices for the most popular models have grown significantly. So, the Galaxy S5 Duos began to cost not 27,990 rubles, but already 36,990 rubles, the usual S5 at 24,990 disappeared from sale, it simply does not exist. At the same time, as before, you can buy a set of a tablet and S5 for 27,990 rubles, the promotion runs until January 12, but the amount of goods is scanty, there is almost none. There is a possibility that the goods will end faster than the action will end, in new deliveries it is clearly not enough. Another example - the price of the Galaxy Note 4 is now not 39,990 rubles (on Tuesday the price was increased from 36,990 rubles), but 53,990 rubles. Why such a level of cost? The answer is that the model is almost non-existent after black Tuesday, there are single devices, no stock.

It is interesting that Samsung did not change prices in any way and did not influence them, the purchase price for all partners for Wednesday evening remained exactly the same, Arkady Graf, head of the Samsung mobile direction in Russia, told me about this. It is possible that the price will change in the near future, but the changes in retail are directly related to what happened on Tuesday. There is no product on the shelves, it just ran out. And it no longer matters how and how much to sell it, it is almost absent.

It doesn't matter who changed prices, Samsung or partners, now it will snowball, and since Samsung is an indicator for the market, most companies will follow suit. In principle, we already see in the regions that the cost of many devices from other manufacturers has begun to grow. Manufacturers also did not change prices, but they went up at the request of retailers, who see no other way out - they need to sell something. In large networks, they keep prices for those goods that are still available, but gradually begin to raise prices for the most popular positions, as this gives additional profit.

In some networks, for example, in Svyaznoy, when selling equipment, boxes are necessarily opened. This is done in order to reduce the secondary market at the beginning of the year, realizing that the same lower cost phones will compete with them.

Most of the market was expecting the new prices to be set in January, but it looks like we'll see them for many positions in the coming week. Nevertheless, buyers still have the opportunity to relatively profitably find certain devices at conditionally old prices.

For the first time, the crisis in Russia has led to an immediate cleanup of electronics and household appliances warehouses, and this leads to interesting short-term results.

Short-term prospects for the Russian market, resellers and officials

The exchange rate of the ruble remains an unclear factor that affects the entire market. It doesn't matter what the exchange rate of the ruble will be, it will affect the volume of the market, retail prices, but not how the market will change. Until the moment when the market is multidirectional, that is, the rate is not established at some level and does not keep around it, we will observe the same thing as in November and December - the simultaneous existence of high prices - for example, at Apple - as well as periodic their "fall" in terms of currency and the growth of sales for the export of devices to other countries. There will be "favorable" prices as well as new ones. Under these conditions, those producers who can supply the maximum amount of goods at conditionally old prices will win. But this is a temporary game, since it is impossible to assume that the rate will jump for a long time.

At the new price level, at any mark, the new rules of the game will become clear. But now it is not so much the exchange rate of the ruble that is decisive, but the new economic conditions within Russia. For the majority of suppliers and manufacturers, the cost of money inside Russia is growing, and those companies that have global financial instruments to mitigate these risks are beginning to win. These are manufacturers such as Samsung, HTC, Sony, LG, Huawei, Microsoft and others.

Let me give you an example - Microsoft hedged currency risks, like many other companies, at the level of 35 rubles per dollar. That is, at the moment the company can sell its products, including phones, at very low prices, raising their prices not as fast as other companies. It is said that this hedging may be valid until the end of spring. In theory, this gives Microsoft a good chance to increase its share, which the company, unfortunately, most likely does not realize in smartphones.

For Russian manufacturers, as well as small B-brands, the lack of available financial instruments, credit lines will make the value of money significantly higher than it was in 2014. The competition in the market will not change, there will be a rotation of names, but the number of players will remain excessive, although sales of each of them will decrease. As a result, the cost of products from B-brands will increase sharply, by at least 15-20 percent, and this is in addition to the new cost due to exchange rate differences. That is, under the new lending conditions, a conditional smartphone X, which cost $100 with delivery to Russia, will cost $115-120 (not in rubles, in dollars!).

And this will directly narrow the price gap between large companies and Chinese manufacturers. Chinese phones will become less attractive in the eyes of end consumers. Moreover, given the efforts of customs, it will become impossible to optimize the import of phones in large quantities, which will also affect the cost. It is not so important that the price of Chinese models will be 30-35 thousand rubles at the current exchange rate, it is important that the gap in prices with large companies will become noticeably smaller. And then users will start choosing those brands that they know.

On the other hand, the floor price will become the dominant factor in choosing devices in 2015, the market in the top segment, where Samsung / Apple and a number of other companies play, will shrink sharply. So it was in previous crises, so it will be now, it is difficult to expect anything else. Due to the weakening of the ruble, we may not see a drop in the average price of devices, but in general, there is no need to engage in sophistry, the market volume, both in units and in monetary terms, will sag a lot.

We at the Mobile Research Group have several scenarios for the development of the situation, I will give a few figures. The Russian market of smartphones and phones in 2014 is 45 million devices, the tablet market is 10 million devices. In 2015, we expect the phone market to reach 33-36 million units and tablets to 6.5 million units. The cheapest devices, such as carriers, will dominate if the latter maintain subsidies for them. The middle price segment, in which the same Chinese tried to earn the main money, will sink very strongly. The alternative in the form of buying goods abroad via the Internet may not be considered, since the margin on goods in Russia will fall, as a result, local prices will be comparable or even lower.

In fact, we can say that the market will change a lot, but we saw something similar in 2009. These changes are not fatal, and within 1.5-2 years, taking into account the stabilization of the general situation, the market will win back. But this will be a slightly different market, where the scenario of the appearance of operator phones and subsidies is possible, which will completely reformat relations in the market.

In the next few months, resellers, independent retailers will be able to sell those devices that they bought in large networks at the old prices. But then they will begin to experience hunger, the inability to purchase goods at new prices, as they will eat up profits. And this will be a direct road to closure for them, only those who pursue a balanced policy will survive, reduce their costs as much as possible and try to increase sales.

The mechanism by which the market correction occurs is very simple. Chains and stores that received windfall in November and December will invest in a new product in January (at new prices), but its purchases will be much less, as demand will fall. And in general, this will not bring any problems for the networks, as their economy is developing. At the same time, independent retailers will be on a starvation diet, and many outlets will close. When the situation improves and new opportunities appear, they will reopen.

Now let's focus on those who build their business on the resale of accessories, iPhones and similar things within the country, bringing them in suitcases. This is a huge market, shops fill all sorts of shopping centers, and they have formed a real competition for organized retail. In the absence of cheap goods in the coming months, they will be closed en masse, they simply have nowhere to get goods at affordable prices. Let me give you a simple example, the Jawbone UP2 bracelet costs 3,990 rubles in MVideo (plus a discount for 1,000 rubles), they have an average of 6-7 thousand rubles, with a tendency that the price will be about 12-14 thousand rubles. And even with this level of new prices, such resellers will not be profitable, and the first price shock in January-May will reduce sales in this market segment. The lack of cheap iPhones and other products will also put an end to their resale.

For such small players, there are two strategies at the moment - many try to sell as much as possible in December and then temporarily close, wait out the bad time. This is due to the fact that they will either have to fix losses and sell the leftovers for a very long time, or give them to their colleagues at a good discount. It turns out that those who remain will win in the moment, but only for a month and a half. Then the situation will repeat again. We can say that the market of resellers will narrow to the limit, in the new conditions without direct contracts for the supply of goods, they have no chance. Those who have a narrow specialization in their niches will win. They will fall in turnover, but the client will remain with them due to the very specialization. The accessories market will also see a drop in the average check, that is, with an increase in the exchange rate, this means a deterioration in the characteristics of devices. Both strategies are equivalent, and the only question is when you have to fix losses, now or after some time. The reseller market in Russia was disproportionately inflated, and in this crisis it was time for them to either go to another level, look for direct distribution from certain brands, or leave the market. But in any case, their departure is a temporary phenomenon, with a change in the situation, they can suddenly appear out of nowhere and continue their activities. This is unlikely in the next year.

For the Russian market, the change in key indicators is obvious, the lifetime of a smartphone will increase to an average of 18 months from the current 13 months. This is an average time, in reality for many it will be equal to 25-26 months. For tablets, the life cycle can be described simply - as long as they work, which, in fact, will push the market down in 2015.

Despite the negative market forecasts, the second-tier players will continue to take an active position on it - for them, this is also the time to decide whether to grow and sell their goods not only at the expense of price (with a budget market and low margins), or quickly lose their sales. Oddly enough, but the advertising approach, PR will be a cheap way to establish themselves for such brands. It is no understatement to say that 2015 will be marked by marketing activities of companies that most have never heard of. It is possible that he will never hear after.

I will repeat the main idea - the cost of money for companies operating in Russia increases with a shrinking market. This means that retail prices for many if not all goods will rise and be at the same level as in Europe or China, that is, significantly higher than they were before. The margin in the entire supply chain will decrease, if today it is 40-45 percent depending on the player (wholesale, retail, excluding the manufacturer), then in 2015 it will fluctuate at the level of 20-30 percent. This means that retail chains will have to either optimize the number of employees and reduce the payroll, or actively look for ways to reduce costs, read, reduce rents.We can expect Euroset and Svyaznoy to be the instigators, both companies are interested in lowering rental rates in ruble terms. With a successful approach, and most likely it will be successful, rental rates will fall in the short term for 6-8 months by 10-15 percent. If you try to recalculate in currency terms, you will see that the rental price will become noticeably lower, it will decrease in costs.

The above scenario of the market development in Russia is the most probable and starts to operate from the moment of relative stabilization of the ruble. Up to this point, we will see fairly large fluctuations that rock the market and reduce its size, as buyers wait and are in no hurry to buy goods.

As a summary, I want to note that a crisis always provides opportunities, reshapes the existing order of things. It sounds trite, but it is at this time that you can both go broke and make a fortune. I hardly talked about the secondary market, which may grow and become noticeable. Unofficial service centers will revive for a while, but the official ones, on the contrary, will feel as bad as they do today and stand on the verge of survival, or even prepare for closure. Although, it would seem, they are from the growth of the secondary market, the number of repairs, on the contrary, should benefit. But this is a separate and large topic for conversation, the material turned out to be quite detailed, although I described the situation on the market in very large strokes. This picture may be different, but the main outline of what is happening is just that. Buyers should prepare for the fact that long-standing and familiar price guides no longer work. If earlier the flagship cost about 30,000 rubles, now it is 55-60 thousand rubles and more. Chinese flagships for 15 thousand rubles are smoothly turning into models priced at 30-35 thousand rubles, or even more. We are all in for a psychological shock from prices that have already begun to change daily, retail does not have goods and rewrites price tags daily.The main thing in this situation is not to panic and wait for the moment when everything calms down and becomes stable. And always have a backup plan in case the main one doesn't work. But I sincerely believe that this crisis at the moment is nothing that could globally destroy the Russian electronics market. Reformatting, changing the alignment of forces and players both among retail chains and vendors is a definite yes. But nothing more will happen. Whatever one may say, this is a time of great and very great opportunities. Those who are not afraid to act now, in the future may receive a prize in the form of a significant share of the Russian market. But these are big risks, and therefore there are only a few such people in every crisis.