The Russian market for household goods: trends and opportunities
The year 2023 was a good year for the Russian household goods market. Let`s take a look at the current market in 2024
In 2023, the demand for household goods not only returned to previous levels but also demonstrated robust growth as it adapted to the evolving market landscape. Our article provides a comprehensive overview of the market and its future development prospects.
Current situation
The combined market value of household goods and building materials in 2023 reached a total of RUB 3.3 trillion. The research conducted by Lemana PRO (formerly Leroy Merlin) provides data that indicates a 6% increase in this indicator in relation to 2022. This figure is slightly higher than the global average (4.7%), which suggests that the domestic market for household goods is gradually regaining strength after a decline due to factors including the pandemic and geopolitical issues.
In 2023, the top 10 retailers collectively achieved a revenue growth of over 11%. Lemana PRO (formerly Leroy Merlin) retained its leading position. The other retailers in the top ten were VseInstrumenty.ru, Petrovich, OBI, Maximdom, Stroitelny Dvor, Megastroy, Saturn, and Baucentr.
It is worth noting that there has been a further increase in the proportion of marketplaces. This trend was particularly evident during the pandemic, and despite predictions of a likely cooling of interest in online purchases of household goods, it continues to gain strength. By the end of 2023, the total volume of sales of household goods on marketplaces had increased by 2.4 times, reaching 276 billion rubles, according to data from INFOLine. At the same time, the volume of sales on Ozon had grown even more (2.6 times), enabling it to become the second largest retailer in the sector.
It is worth examining the factors that drove the recovery and growth of the Russian household goods market. Following a period of turbulence, including the necessity to identify new methods of product delivery, Russian retailers have on the whole, been able to find alternative routes for the delivery of goods or new suppliers.
A further important consideration is the shift in purchaser behavior. During the pandemic, a number of potential buyers postponed expensive purchases, with the greatest impact felt in the sectors of household appliances, country furniture, fitness equipment and elements of the smart home system. In the 2023-2024 period, we expect customers to be more willing to make purchasing decisions regarding household goods. Motivations behind these decisions will be based on the principle "if not now, then when?" Furthermore, a number of brands exits in 2022 have had a significant impact, both on retailers such as IKEA and Zara Home, and on manufacturers. With established brands leaving the market, many consumers have seized the opportunity to purchase such goods.
Furthermore, the high level of construction activity should not be overlooked. In 2023, a record volume of housing was commissioned, reaching over 110 million square meters. This has led to an increased demand for a range of household goods.
Outlook 2024
Analysts anticipate that by the end of 2024, the domestic market for household goods and building materials will reach a value of approximately RUB 3.5 trillion. The construction sector will remain the main driver of growth. Despite the rise in mortgage prices due to the increase in the key rate, the volume of housing commissioning in 2024 is expected to remain at least at the level of 2023. Flats and houses purchased under the old mortgage terms still require improvement, which in turn stimulates sales of household goods.
It seems likely that online sales will continue to grow throughout 2024, both on marketplaces and in the online shops of major retailers. The main drivers of this trend are likely to be items such as small appliances, textiles, home jewelry and kitchenware. It seems that larger purchases will continue to be made offline.
In light of the increasing preference for online shopping among consumers, traditional chain hypermarkets are adapting their strategies to retain their target audience. They are offering innovative solutions, such as 3D visualization, to enhance the shopping experience. The demand for integrated solutions that provide a comprehensive range of services, including product selection, purchase and assembly, in a convenient one-stop shop format, is also expected to remain strong.
How will your business benefit from participating in the MosHome?
The expanding Russian household goods sector presents a wealth of prospects for both newcomers and established companies seeking to tap into new market segments. However, any decision to enter the market or venture into new sectors requires a keen understanding of its key trends and potential.
Participation in a major industry event – the MosHome International Exhibition of Consumer Goods for House, Garden, Sports and Leisure — is an ideal solution for this problem. It is worth noting the high commercial potential of the exhibition. In 2024, the Chains` Wholesale Center for organized business negotiations resulted in over 1,000 negotiations being held, with the total value of signed contracts exceeding RUB 14.8 billion.
MosHome 2024 welcomed over 12,200 professionals from 74 regions of the Russian Federation and 17 countries. It is notable that 67% of attendees represented retail and wholesale trade, with 47% holding managerial positions within their respective companies. The significance of the event as a platform for expanding the partner network and identifying new contacts is highlighted by the fact that 82% of guests have influence over purchasing decisions within their organizations.
