FOCUS: Russia’s Jan–Sep smartphone sales rebound on cheap credit, discounts

By Yekaterina Yezhova

MOSCOW, Oct 31 (PRIME) -- Revenue of Russian handset retailers from smartphone sales in January–September increased almost by a third on the year to 220 billion rubles, thanks to better credit terms and promotion campaigns. The country’s top sellers said the market, with over 80% of devices running on Android, is recovering and will most likely feel good in 2016–2017.

“The current economic situation in the country is still the key trend-setter for the whole market of devices. We can say that thaw is coming to the market. Smartphones show positive dynamics in sales. It results from a growing number of devices bought on credit,” Alexei Shirokov, director of the purchases department at gadget retailer Euroset, said in a research.

“Last year banks’ policy regarding consumer lending was restrained and they lent money to people unwillingly, they revised their view in 2016, and the number of loans increased hugely.”

Smartphone sales soared 30% on the year to 223.3 billion rubles in January–September. In units, sales rose 6% to 18.6 million units. An average price rose 24% to 12,000 rubles, according to Euroset.

Another large multi-channel retailer Svyaznoy has similar figures: sales jumped 31% to 220 billion rubles and 7% to almost 19 million devices in the reported period.

“Sales growth in monetary terms is explained by higher prices for devices. Flagship models are also in demand. An average price of a smartphone added 22% to 11,800 rubles,” Sergei Tikhonov, a spokesman for Svyaznoy, told PRIME.

“Sales in natural terms were stimulated by affordability of credit programs in comparison to last year. The dynamics were also backed up by campaigns held by the country’s retailers. In 2016 customers got used to smartphone prices, which have risen over the recent years, and demand for devices has started coming closer to the 2014 levels.”

The iPhone keeps its leading position in money terms. Apple has cemented its positions with the launch of the iPhone 7 and 7 Plus, Tikhonov said.

A market source told PRIME that Apple, Samsung, Lenovo, LG and ZTE dominated the local market in terms of sellers’ revenue. In natural terms, leaders were Samsung, Apple, Lenovo, Fly and Alcatel.

Commenting on having Lenovo and ZTE among the most popular brands, Tikhonov at Svyaznoy said Chinese companies keep on actively influencing the smartphone market in Russia. “The share of Chinese brands exceeded a third of all sold devices in January–September and rose 40% on the year,” he said.

“Their popularity can be explained by a wide range of high-quality and advanced devices in various price categories. They cost less than more familiar brands.”

Statistics given by Euroset showed that sales of top-end smartphones increased not only in money terms, securing a fatter revenue for sellers, but also in units, which allowed prestigious devices to get a bigger slice of the market.

By revenue, the share of devices with a price tag from 30,000 rubles and higher added 6 percentage points to 29%, and the share of devices with a price of 20,000–30,000 rubles gained 5 percentage points to 18%.The share of devices for 5,000–10,000 rubles lost 3 percentage points to 20%. The share of devices for 3,000–5,000 rubles went down 3 percentage points to 6%.

By units, the share of devices from 30,000 rubles added 2 percentage points to 7%, and devices for 20,000–30,000 rubles gained 4 percentage points to 9%. The share of devices for 5,000–10,000 rubles remained flat on the year at 33%. Smartphones for 3,000–5,000 rubles occupied 19% of the market, despite losing 3 percentage points.

“The smartphone, which only yesterday was several thousand rubles more expensive, has become more affordable and the customer can now buy premium devices. The April price decrease covered almost all segments with a stronger impact seen for devices for more than 20,000 rubles apiece,” Euroset said in the research.

Short-term prospects

“The market will continue growing until the end of the year. We expect to see rush sales in October–December, closer to the New Year holidays. People will keep on buying flagship devices that will push sales higher in monetary terms. We expect the smartphone market to show a double-digit growth in rubles as of the end of 2016,” Tikhonov at Svyaznoy said.

Shirokov at Euroset expects the market to continue its revival in 2017 as well. “We’ll see more smartphones equipped with the near field communication (NFC) function in a cheaper price segment. Sales of accessories to smartphones will rise in natural terms,” he said.

“Among the trends least influenced by the economic factor we can mention the ever present growth of popularity of smartphones with displays from 5 inches in diagonal, or phablets, and a rising demand for LTE-supporting gadgets.”

(62.9037 rubles – U.S. $1)

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