Belarusian consumer market evolution in the first half of 2016

The main feature of the Belarusian consumer market in the first half of 2016 is its further shrinkage. During 2015, the volume of retail trade through all sales channels decreased by 1.3% as compared to 2014 and in the first half of 2016 – by 1.6% as compared to the first half of 2015. Retail turnover of public catering decreased respectively in 2015 by 5.1%, while in the first half of 2016 – by 0.5%.
Retail turnover of trade and catering sectors declined amid the Belarusian population increase due to the positive balance of external migration. On 01.07.2016, the population of the country amounted to 9.5 mln people, demonstrating an increase of 1590 people from the beginning of the year. Average consumption expenditure per capita (excluding paid services) in the first half of 2016 amounted to 3159.9 thousand rubles in comparable prices, and in the first half of 2015 – to 3265.3 thousand rubles, that is decreased by 3.2%. Due to the devaluation of the Belarusian ruble, monthly consumer expenditure per capita in US dollars decreased by 18.7%. In the first half of 2016, they amounted to 158.5 US dollars, in the first half of 2015 – to 194.9 US dollars.
Contraction of consumer demand in Belarus in the first half of 2016 was an important factor of overall economy contraction. As compared to the first half of 2015, the country’s GDP decreased by 2.5%.
The main reason for consumer market shrinkage is the decline in real income. Real disposable income of the population declined in 2015 by 5.9% as compared to 2014, in January-May 2016 – by 7.0% as compared to the same period in 2015. In 2015 and during the first five months of 2016, the decline in real income significantly outpaced consumer market capacity, resulting from «consumption» of the savings traditionally stored by the population in foreign currency. In January-June 2016 alone, the population sold currency in the amount of 4.285 billion US dollars and bought currency amounting to 3.398 billion US dollars. According to some experts, foreign currency consumption today is connected not only with a desire to maintain the usual consumption level, but also with limited monetary resources of different categories of people to meet basic needs for food, clothes and shoes, pay utility bills.

Apart from consumer market shrinkage and its lagging behind the income reduction, other important tendencies of its development in the first half of 2016 include:
1. Different trends in the reduction of retail turnover in trade and catering sectors. If retail turnover continued to decline following the reduction of real population income, the rate of retail turnover decline in public catering in the first half of 2016 began to slow down as compared to 2015. Due to this, we can talk about relative stabilization of retail turnover in public catering, since the poorest consumers of catering services have left the market (their presence reduced sharply in 2015).
2. Growth in share of food products in retail turnover in trade and catering sectors. If this share was 52.0% in 2015, in the first half of 2016 it amounted to 54.1%. This is due to a significant reduction in the living standards of the Belarusian population. The share of food products in retail turnover, according to many experts, is the most reliable indicator of the population living standards.
3. Retail turnover reduction in markets and shopping centers vs retail turnover growth in trade companies. In the first half of 2016, turnover growth in trade organizations amounted to 1.7% as compared to the first half of 2015, while retail sales volume in markets and shopping centers decreased by 17.7% during the same period. Turnover reduction in markets and shopping centers was largely due to the deterioration of trading conditions for individual entrepreneurs with regard to the requirement to sell only certified products starting from January 1, 2016, according to the Presidential Decree No. 285 «On Some Measures of Business Regulation» dated June 18, 2005. As a result, the share of trade companies in retail turnover through all sales channels has increased up to 85.1% (it amounted to 81.4% in the first half of 2015).
4. Sustainable development of foreign-owned retail trade. As compared to the first half of 2015, turnover of foreign-owned trade facilities in comparable prices grew by 11.9% in the first half of 2016; state-owned – decreased by 2.1%, privately owned – decreased by 4.7%.
5. Consumer demand reduction has had a particularly negative impact on the economic activity of small retail organizations. As a result, large and medium-sized trading companies increased their share in retail trade among all organizations by 70.2% in the first half of 2015 and up to 75.2% in the first half of 2016. At the same time, big companies have increased their contribution to the retail turnover of organizations from 63.3 to 66.5% and medium-sized companies – from 7.5 to 8.7%.
Given the dynamics of real monetary income decline, we can predict a further shrinkage of Belarusian consumer market. «Hard times» for the Belarusian retail trade and catering industry did not end in the first half of 2016.
For more information on the development of retail trade and public catering in Belarus in January-June 2016, please see the relevant section of Analytics materials on the website.