– At the beginning of 2022, many foreign brands suspended their operations in Russia and then completely withdrawn from the market. More than a year has passed since then, and it looks like some conclusions can be drawn. Can any conclusions be reached?
— The precedent is truly unique, even the experience of the pandemic that hit the market was different. What is the main difference here? Some brands are completely withdrawn from the market. This has never happened in large numbers before. Almost all of the leaving brands were actively represented offline.
The stratification of two factors – the separation of brands and the generally unstable economic situation – caused the offline to sink quite strongly.
And its large share of the overall fashion market (70-75%), respectively, caused the overall offline market to drop slightly. With all this, reverse processes continue in the online part – we are seeing a significant increase. Especially on the big players side.
Something else unique about this year: Never before has a brand exited the market and closed all direct channels, leaving partner sales. For example, marketplaces. We know of examples of big brands that do not sell their products directly in Russia, but continue to do so through their marketplaces. Accordingly, this gave a strong impetus to the development of online channels. For example, the number of new businesses coming to Avito increased by 50-60%.
— There is a lot of talk now about Iranian and Turkish brands entering the Russian market. However, the more European style of Russian buyers seems to differ significantly from the trends in these countries. So should we expect brands to have a hard time holding on?
– Like him. Not only trends, but also consumption culture, way of doing business, product variety and stylistic components differ. They even differ between Asia and the Middle East. But for example, China, where most of the goods sold in our market are produced, is closer to us in this sense than, for example, the Persian Gulf countries.
However, our market is still much more similar to the Western market. And if you look at the composition of the Russian market in terms of brands, there are very few Asian brands out there.
Therefore, I do not believe that eastern countries can be integrated in the near future, but it is possible in the long run.
Much depends on brands’ interests and competencies and how they can adapt. Because even Western brands that once entered the Russian market needed time to adapt.
— What should foreign brands do to accelerate their adaptation to Russia?
– There is such a thing as “localization of the collection”. Russia is a market where collections must be adapted, at least for most brands. This is true even for the West, which is closer to us! For countries where the differences are even greater, the degree of localization will be greater. Therefore, brands face the problem of profit and the opportunity to do so in general.
For example, Turkish brands can integrate quickly because they are closer to us and understand the characteristics of the Russian market. For example, there is Turkish Colin’s, which has been operating in Russia since the 90s. I think that for Iran and some other brands, if possible, integration into the Russian market will not be soon and will be difficult.
— What are the main trends in localizing Western brand clothing for the Russian consumer?
– First, companies, especially those related to “fast fashion”, are demand driven. They display a wide range of products in stores and see what sells well and what doesn’t. They quickly produce what is in demand or something similar and remove what is not for sale. Companies also take into account the stylistic differences of different countries, because the fashion in Moscow, Istanbul or Shanghai is noticeably different. Secondly, climatic features affect the variety of products as well as which materials are used. Third, natural fabrics are essential for Russian buyers. So, for example, buying a winter sweater made of artificial wool is a strange thing for many Russians over 35. Moreover, generations are changing and many things typical of the 2000s and 2010s are slowly disappearing.
– After the departure of foreign brands, everyone started talking about the growth of the resale market. How long do you think this trend will last?
— I think it’s a long-term trend and it only comes to us. For the Zoomer generation, resale is the norm. And while this generation is one of the driving forces of commerce, the trend will be relevant. What will happen in the next generation is still unknown, but most likely resale will not be alien to them either.
According to all forecasts and analysis, resale is expected to develop only in the next 10 years, and the share of this segment in the sales market is almost one of the largest. According to Avito figures, we see that purchases have doubled in the last year. Whenever something big happens in the economy, there is an influx of new resale users who remain.
For many, the resale market is close to the concept of selling counterfeit items. In Avito, it has become possible to check whether the accessories are original, but copies of the objects continue to appear. How can this be handled?
— This whole story about the fake market is very old and big. All brands try to combat it in one way or another, but it’s nearly impossible. At Avito we take a principled stance: we do not support this market. That is, if someone writes in an ad that the product is fake, the ad is blocked. Brands send us lists of copies they find on the site, and we clean it up. Of course, a proactive work is being done, but we understand that after the ad is removed, a different account, name, etc. will be created. may appear below.
This is an endless struggle.
Avito has an authentication service specifically to combat counterfeit products. It can be used by branded product vendors. Authentication is carried out by partner Avito, one of the leading international experts in the verification of fashion products. Several independent experts evaluate products based on photos, and after successful verification, the ad has an “Original” badge. Photo upload templates vary by product. For example, to check sneakers you need a photo of the insoles, to check a bag you need a photo of the accessories and the serial number.
– Which category of products do people buy second-hand the most? It would seem that buying outerwear and bags may be a good idea, but it’s much easier to miscalculate shoes.
The two most popular categories are outerwear and shoes. In the premium segment, resale is more common as items are of higher quality, last longer and have higher value. Bags are also well resold and bought, but the volume of this segment is not large enough to be compared in absolute terms with the first two categories. In general, it will be reasonable and sufficient to buy anything. But it’s important to have the right expectations of the product one buys and to have the understanding that someone has used this thing before.