Retail
Nothing can replace the experience of going into a store and seeing, hearing, feeling, smelling and touching the physical products. While online sales keep growing, successful retailers must know how to work both on- and offline.
Russia bound
- Retail November 2006
When tanks rolled into Red Square on 19 August 1991 to reverse Mikhail Gorbachev’s liberal reforms, the people behind the coup were undone by a Russian phenomenon – the dacha, or country villa. Soviet leader Gorbachev and president of the Russian republic Boris Yeltsin were away at their dachas. Gorbachev was in the distant Crimea peninsula and Yeltsin was still close enough to Moscow to rush back and defy the coup. Four months later, the Soviet Union was gone and the new Russian republic was embarking upon a decade of economic reform. Had the coup participants bothered to look at their calendars, they would have realised the folly of attempting a takeover at the height of cucumber season.
Russia’s past is filled with examples of inequality – from tsarist times and even into the Soviet communist period, when some comrades were much more equal than others. But it would be a mistake to think that the dacha is the sole preserve of presidents and oligarchs, especially in modern Russia.
While elite dachas can cost upwards of US$1.5 million, in many cases a dacha may be little more than a wooden shack. But for the 21 million households (or two out of three urban families) that own one, the dacha is not so much a place to live, but rather part of a way of life. An old Russian motto says: “Raise a son, build a house and plant a tree”. According to Oksana Povarishnikova, Client Service Director at Synovate Russia, the spirit behind that motto is still very much alive in the 21st century.
Dacha dreams
“There are two types of dacha. There is the small lot with a small house or cabin, and around it the land is used to grow vegetables, fruit and sometimes flowers. Most of these dachas don’t have sewage or heating and are not suitable for winter living. The other type of dacha is very similar to Western-style suburban homes, complete with indoor plumbing and central heating,” says Povarishnikova.
She points out that usage and occupancy also vary according to the property. “Some lower income households use the harvest from their dacha plots to stock up on vegetables for the winter. These people visit their dachas over weekends from early spring to late autumn. The elderly and children often retreat to the dacha for the whole summer.”
Suburban, upscale properties offer more flexibility, notes Povarishnikova. “They are visited by the working gene-rations over weekends and holidays, with the elderly often living there year round.”
“What is common about all types of dacha is that they are located ten to 200 kilometres from the main family home, and accessible by public transport or car,” adds Povarishnikova. She is convinced most Russians are proud of their dachas. A recent Synovate survey of a representative sample of Russian adults in major cities backs up that claim, with 87% of respondents citing “having a good home to live in” as being of great importance to their lifestyle.
An average plot of land may measure only 600 square metres, but the average dachnik – the term given to a dacha dweller – is definitely green fingered. “Some people grow vegetables, some cultivate lawns and flowers... gardening is a very important attribute of dacha living,” Povarishnikova says. One significant transformation in the past four or five years has been the change of emphasis in dacha gardening habits. Throughout the immediate post-perestroika years of galloping inflation and empty food stores, dacha plots provided a major source of family income via subsistence farming. These days, with food shortages a thing of the past, even less affluent dachniks no longer need to plant an entire dacha plot full of vegetables. So the typical dacha gardener has begun to embrace all things horticultural – saplings, seedlings, swings, arbours, garden furniture, gazebos, mowers and all types of garden tools.
Room to grow
New suburban communities recently constructed around the Russian capital provide another market opportunity. “The new trend for upper middle class families is to move outside the city and live in suburban homes. The suburban settlements are booming around large cities,” notes Povarishnikova.
German retail group Marktkauf opened its first Moscow shopping centre in 2003. At the time, it was the group’s largest retail outlet, providing a DIY superstore and garden centre, hypermarket and specialist mall within the 116,000 - square-metre site. Other retailers have joined the marketplace, says Povarishnikova. “In Moscow, the German company OBI, Leroy Merlin and Ikea all have three stores.”
A Synovate survey conducted in April found 36% of respondents visited a DIY store in the past year. Rising living standards in recent years has given many dacha owners the opportunity to spend more of their discretionary income on home improvements. The Economist Intelligence Unit revealed Russia’s median household income in 2000 as US$1,970. By 2005, it had increased to US$6,000, a compound annual growth rate of 25% over the six-year period.
Besides raw statistics, there is also a feeling that life is getting better. In a recent survey, 42% of respondents completely disagreed with the statement, “Five years ago things were better for me.” According to Povarishnikova, “An increase in per capita income should increase DIY spending – more consumers would be able to renovate their homes or dachas, with bigger budgets for home improvements.”
After all that hard work, industrious dacha owners are also keen to spend some of their new income on ways to make lives in their dachas more comfortable. Yet despite the fact Russia is now the nation with the largest number of second home owners, international retailers wanting to sell to dachniks won’t have an easy ride. For a start, Povarishnikova points out, “Most dachas are equipped with smaller and cheaper versions of white goods compared to what consumers have at home.” Additionally, 61% of respondents completely agreed with the 2006 survey statement: “If a local and international brand are of equal quality and price, I would prefer the local brand”.
Foreign players in the Russian DIY and home products market will need to achieve best quality at reasonable prices. To do this, they will need to establish production facilities in Russia. However, Russian manufacturers will no doubt try to match the competition.
With incomes rising, the tradition of the dacha, which dates from the time of Peter the Great, is firmly rooted. The word dacha means gift or something given in old Russian and stems from the time when a tsar would give a plot of land with a house to a loyal subject. In today’s Russia, dacha can also mean a gift – for retailers.

