FMCG promotions in Russia

Companies offering FMCG products on the Russian market are adopting alternative ways to grow sales

In one of our previous articles we have referenced advice from Nielsen Russia on how to avoid the “discount trap” while selling on the price-sensitive Russian market. Recent data on the promo sales share growth shows that the discount strategy might be becoming less effective for FMCG products in Russia: the growth of sales for FMCG products on promotion has slowed down in 2019 compared to 2018.

 

FMCG promotions in Russia: leading categories of products on sale in 2018 and 2019, with % of sales in monetary value

Reasons why FMCG promotions in Russia are becoming less effective

A Nielsen Russia report attributes the decline to the following factors:

  1. “Discount fever” giving way to “discount overload”
    Not all consumers may be hunting for discounts, and for them discounts are not the most important factor in purchasing decisions.
  2. Growth of the low-cost store segment
    There are multiple stores in Russia where everyday prices are equal to or lower than the discounted prices at other stores.
    As a result, price shoppers might be choosing them over buying discounted products in stores with higher price segments.
  3. Optimized sales strategy
    Strategic discount management allows companies to cut unnecessary promotions, at the same time leading to stagnation for this market segment.
  4. Switching over to non-monetary promotion strategies
    Some of the more popular examples include loyalty and cashback programs.

 

Optimizing FMCG promotions in Russia for the current market situation

According to Marina Volkova, Nielsen Russia Chief Consulting and Analytics Officer, the slump in discount sales rate growth as a whole can be seen as a positive development. On the other hand, this trend may become a cause for concern if a company continues to rely on discounts as a sales growth strategy.

The current developments on the FMCG market in Russia may be considered an opportunity to reconsider your pricing strategy, as well as the frequency and terms of your sales.

Learn more about selling to your Russian audience, with discounts or without

While discounts remain a significant incentive to purchase for a wide variety of FMCG products, from laundry detergent to chocolate bars, there are other factors to consider.

Here are some of the Russian Search Marketing resources that will help you better understand your Russian target audience and set up more effective promotions for the rest of 2019: