(The original Russian report that this article is excerpted from can be found here)
A world that seemed fantastical just a few short years ago has become our everyday reality. The “technology of the future” has already started to conquer the mass market. This technology saves us time and money, looks after our health, and entertains us. In other words, it has become part of the backdrop of modern life and the technological transformation among Russian consumers has completely changed the rules of the game.
Whereas it took almost a century for the telephone to connect the whole world, digital technology has managed that feat in just a few years. The “Uberization” that overturned the passenger transport industry took all of three years. In Moscow, this transformation has completely disrupted transportation: the carsharing market has grown more than 40 times over in the last few years. In 2018, there were 15,000 cars fulfilling orders, up from just 350 in 2015.
Other industries have experienced similar growth. The foodtech industry has exploded in Russia, doubling in the last three years. The number of contactless payments also increased from 2% to 42% in just two years. Cloud services is another industry that has grown by leaps and bounds: it’s likely to surpass 80B rubles in 2019 and the volume of data stored in the cloud will grow from 33 zettabytes (equal to 10007 bytes) to 175 by 2025. Half of that volume (90 zettabytes) will be generated by devices connected to the internet of things (IoT).
The modern Russian consumer exists between two extremes. Currently, 12.9% of the population lives in poverty. Real income has declined for the past five years straight, with per capita income standing at 31,500 rubles (currently ~$500) per month. On the other side of the spectrum, however, the technological transformation among Russian consumers has taken hold. In Russia, internet penetration has reached 70%, one of the highest rates in the world. Furthermore, 59% of Russians use smartphones and the percent of citizens that use online banking and contactless payments remains one of the highest in Europe. In Russia, more than 85% of retail organizations accept Apple Pay (compared to 75% in the USA, where the technology itself originated). (Note: RSM has cited other sources that showed slightly different numbers for these indicators in previous articles on internet and mobile usage).
To assess how the market and consumers have transformed under these conditions, Nielsen conducted an online survey. More than 50 directors (in both marketing and operations) in the FMCG and retail industries participated, as well as more than 1,000 consumers. The goal was to discover what technology consumers want to use in their lives and how businesses were handling the digital transformation. The consumer survey results showed that the vast majority (81%) already use online banking services; 67% buy clothes, shoes, and other items on the internet, 31% regularly order food online, and approximately 1/5th use fitness trackers or smart watches (22% and 19% respectively). These products and services are already perceived as routine, even though they only recently made their way to the market.
Consumers would feel inconvenienced if these items disappeared or were even temporarily unavailable to them. The Russian consumer has changed markedly along with the digital transformation. They think of technological processes from a utilitarian point of view, expecting a fast and seamless experience and additional benefits.
The majority of those polled (89%) claimed that they expect personalized discounts and promos first and foremost. This is not surprising: according to Nielsen Promo Pressure data, close to 50% of fast-moving consumer goods in the major categories are sold at a discount and this percent is constantly increasing.
The second most-cited application (at 85%) that interested respondents is the ability to automatically track one’s health and individual medical indicators. Finally, respondents want new technology to help them spend their time en route to work and home as productively as possible (82% cited this application). Millenials (at 87%) were particularly interested in this application, which is notable considering that they will have the most purchasing power over the next 10 years. Many participants (68%) also wanted to save time making everyday purchases.
As these statistics show, Russians are not ones to sit on the sidelines and let technological advancements pass them by. Despite having limited purchasing power in comparison with citizens of other developed nations, internet and smartphone adoption are quite high. Products and services that rely on these technologies (such as carsharing, foodtech, and cloud computing) have seen explosive growth and are projected to continue increasing in popularity.