Expert Anfinogenov: “It’s becoming expensive to maintain your own stores.”
LG, Bosch and Sony companies are closing their remaining brand stores in Russia. Some retail outlets will still be open until the summer, selling leftover TVs, game consoles and other household appliances. And then that's it. Will companies give away electronics for next to nothing? How will the closure of these stores affect prices and should you beware of resellers? Economist and consumer goods market expert Alexander Anfinogenov told MK about this.
Photo: Gennady Cherkasov
Back in mid-March 2022, LG Electronics, which produces televisions, laptops and household appliances, announced that it would pause all deliveries to Russia. A similar decision to suspend operations was made by Sony and the German Bosch. However, due to the provisions of long-term lease agreements, foreign companies have only now been able to begin the process of fully exiting the domestic market. In case of early termination, brands would have to pay large penalties immediately.
— Nobody will give anything away for nothing. They may try to get closer, relatively speaking, to the retail cost of the product, but nothing more. It is not profitable to give away at a big discount. It is easier for them to sell their goods in batches, through proven channels to market players, primarily to marketplaces. And they are already selling these products to consumers with a bang.
— For two years we have been hearing transnational companies snorting towards our country: this is not so, and that is not that. Meanwhile, the demand for mono-brand stores throughout the world is in doubt. There are more and more channels through which you can purchase products. By and large, the emotional charge from going to a company store, for example, Sony, is no longer so relevant for the consumer. We learned to use delivery and go to local stores. Product-consumer communication has changed. It is becoming increasingly expensive for companies to maintain their own stores.
— Theoretically, this is possible. But we understand that the entire range that is sold in these stores is simultaneously presented both in traditional retail and online. And it is quite possible that mono-brand stores sell the same goods at a higher price due to mandatory certification, rental of retail space, and so on. Therefore, it is difficult to say how pricing will occur when this product is sold out. But I don’t think you can count on a strong discount.
— There is such a thing as “brand dependence”. But there is also an awareness that there are alternatives. If there is no alternative to the PlayStation game console from Sony, then it will continue to be brought to Russia and sold, because there will be demand. But if you take a TV or any other standard device, there are many alternatives on the market and many of them are much cheaper. Today, for the cost of one Sony TV panel you can buy 4 similar ones, but made in China. At the same time, they will practically not be inferior in quality. Some things are unique, and some are repeatable. If in the first category there is no substitute, then in the other there are many of them.
— Manufacturers from Turkey occupy niches very successfully in household appliances. But overall, China dominates. And this is not because they are great geniuses. They simply know how to make transnational products.
— They gather their strength, increase production, and try to become competitive. It is not simple. But the results are already there. For example, everyone knows about the line of smart watches created by the Apple corporation. So, for about eight years now, a Stavropol company has been producing sapphire glass for them. And the overseas company still buys them without regard to sanctions. It’s harder with household appliances. We Russians have such a mentality that it is easier for us to build one spaceship than to make a thousand identical washing machines.