Russia Country Market
Insights and Opportunities
Electronics - Consumer Sector
Overview: The Russian consumer electronics market includes telephones, MP3 players, home and automotive audio/video equipment, personal computers, TV sets, calculators, GPS automotive navigation systems, home security and automation products, products for playback and recording of digital video and audio media, digital cameras and camcorders, and other products for entertainment and communications.
Before the recent economic crisis, the consumer electronics market was one of Russia’s most developed and most competitive retail sectors with annual growth rates ranging from 10% to 25%, depending on the product. According to data published by GFK-Russia (a subsidiary company of the German GFK-Group), the size of the combined consumer electronics and household appliances markets in Russia was $36.8 billion in 2007 and $40.6 billion in 2008.
In 2009, Russia’s consumer electronics market drastically declined. Industry experts estimate that it decreased by 35% and reached only $18.5 billion; but they also predict that the market will recover and return to strong growth as the general economy improves over the next few years.
The major portion of the consumer electronics market is occupied by products imported from Asia, Europe, and the United States. All major global brands are represented in Russia and have wide recognition. Local production is low and mostly represented by IT manufacturers and ODMs (original design manufacturers) providing EMS (electronics manufacturing services) for contract manufacturing of CRT, PDP, and LCD TVs, as well as DVD players under the Sony, Panasonic, Akai and other well-known marks.
About 50% of consumer electronics marketed in Russia are sold by several of the largest retail chains that have hypermarkets and stores located in Moscow, St. Petersburg and other large cities. Another 25% are sold by regional chains, while the rest is sold by small retail companies and through the internet.
Accurate figures for the consumer electronics market in Russia are difficult to determine due to a large number of so-called “grey market products” imported into the market. However, with the growth of the largest retail chains, whose market share will increase, a corresponding decrease in “grey market” goods is expected. According to the Russian Association of Trading Companies and Manufacturers of Consumer Electronics (RATEK), 100% of mobile phones, about 50% of notebook computers, nearly 80% of LCD and PDP TVs, and over 20% of photo and digital video cameras are legally imported into Russia, and their share is increasing. The U.S. consumer electronics share of the Russian market is mostly represented by IT products, high-end audio products, automotive audio and navigation products, home security and automation products, and mobile phones.
Opportunities: Prior to the impact of the global economic crisis on the Russian market that began in late 2008; the consumer electronics sector was recognized as one of the fastest growing in Europe. During the crisis, however, customers started to save on purchases of consumer electronics, which are discretionary items for Russians. The market’s future direction is difficult to predict but analysts believe that it will begin to recover in 2010 with growth of about 4-5%.
New highly advanced products are in constant demand, however, and these sales show continuing growth. As most of these products are imported and there is always strong demand for the latest and most technological categories, solid opportunities exist for U.S. companies, particularly in high quality electronics gear and modern digital electronic products. High-end mobile phones, particularly the latest smart phones, are highly sought-after status symbols for Russian consumers. Automotive navigation products are increasing in use, particularly on Moscow’s spread-out and congested roadways. Quality, functionality and uniqueness are competitive advantages. For these reasons, Russia remains a significant international market for U.S. consumer electronics.
Products in demand include: Audio/video equipment; Automotive audio and navigation products; Home security and automation products; Multi-media; and Wireless / networking products.