It’s time for a

consumer-centred
vision
Global Consumer Insights Survey 2019
PwC believes it’s time
to emphasise the importance of
customer experience.”
Executive summary

It’s now been a full decade since the economic

crisis ushered in what’s often called the “new
normal”, a supposed recalibration of what’s
possible in terms of global economic growth. But
the world’s consumers have displayed
unexpected resilience, driven by technological
advances that have unleashed a Golden Age of
consumption, offering a worldwide bazaar of
goods and services — open day and night — to
anyone with a mobile phone.

Not only are consumers the strongest link in the

global economic chain, but PwC’s 10th annual
Global Consumer Insights Survey (GCIS) —
which gathers the sentiments of more than
21,000 online consumers in 27 territories —
shows that technology has put them in a position
to demand a tailored, channel-agnostic, socially
conscious and social media-powered
experience.

Because consumers today are so discerning and

Martijn Peeters powerful, it’s our perspective that most
Partner, Retail & Consumer organisations need to invest far more in the
Leader customer experience. Retail evolution is driven
by the need to adapt to a changing environment
and respond to these challenges. Organizations
that fail to do so will lag behind on the path to
winning the customer.

This report is divided into two sections to help

start you on the path towards understanding
your customer:

• Key trends and changes of Russian

consumers behavior
• How to adapt business to changing consumer
preferences?

3
 Profile

696
participants
By federal districts

St Petersburg
North-West
8%
6%
Central

Moscow
24% 14%
Ural

10% Far-East

16% 9% 4%
9%
Siberia
South and North
Volga
Caucasian

By gender

47 % Male Female 53 %

4
By age

The Greatest Generation Z

Generation (52+) (17-22)

6%
18%

28% Young
Generation X 9% Millennials
(37-51) (23-26)

22%
17%

Mature Millennials Core Millennials

(32-36) (27-31)

Global consumer insights survey 2019 5

1 Key trends and changes
of Russian consumers
behavior
01 Rapid growth of online shopping
There is strong increase of online shopping in key
categories, mostly driven by young millennials
with high income living in Moscow and
St Petersburg. Fast delivery becomes as
important for consumer as prices and assortment
when they choose a particular retailer.
Demand for both digital and
02 human in-store experience
Russian consumers tend to do more daily
microtrips to nearest stores. They enjoy new
digital services in stores and indicate easy
payment, customization and helpful assistants as
key imperatives that improve their shopping
experience.
Growing influence of sustainability
03 issues
Russian consumers care about sustainability
and ready to pay premium for organic and local
products with eco-packaging. They actively use
online channels to learn about sustainable
products before purchase.
Strong shift to digital
04 communication channels
Communications market indicate a strong shift to
digital channels with personalized content, despite
the fact that TV advertisements remains valuable.
Social media highly influence customers shopping
decisions in different categories and has great
power
6
6
on consumer trust.
Creating online channel and connecting it with
in-store shopping experience become crucial for
development for most of product categories.
Following the migration of consumers to mobile
devices, retailers should provide consumers
with easy-to-use mobile facilities and expand
the delivery network of lockers and pick-up
points considering the traceability of deliveries.
Retailers should focus on smaller formats and
create right shopping atmosphere paying
attention both to technological advancement
and store personnel skills and motivation.
Make sustainability a core part of a brand
strategy. Retailers have to support
sustainable practices and projects so that
customers feel engaged when buying
products.
TV advertising remains important for reaching
out to the broad audience but retailers start
investing more in social media and
personalizing ads with help of different agile
metrics. Retailers need to encourage
feedback from customers and learn to deal
with negative reviews.
How to adapt business
to changing consumer
preferences?
Investing in employees
experience
Customer experience exists in a
feedback loop with employee experience.
An organisation trying to improve
customer experience without considering
employees skills and motivation is
missing an integral part of the equation.
Building
communities under
your brand vision
It’s important to figure out what
employees and customers care about and
to communicate your shared values.
Building on
“magic moments”
In an age of expanding digital options,
consumer loyalty can vanish with the
touch of a button. To minimise is, focus
on “magic moments” that earn loyalty
over time and create a relationship that
endures beyond the next product search.
7
2
Understand your
customers based on
their behaviour
Consumer insights enable far greater
personalization than the old-school paid
media approach of segmenting
customers by demographics alone.
Treat consumers’ data
with respect and deliver
value in exchange for it
Customers want the companies they
interact with to protect their personal data,
and PwC research indicates that they’ll
shop elsewhere if they don’t trust that a
company is safeguarding it.
Win the customer
journey
There are more trips, more choices. You
can win customers online by understanding
what they are trying to experience and then
making it easier for them through easy of
navigation, breadth and quality of selection,
price, quality of advice or exclusivity.
7
Rapid growth of online
shopping
Key insights
Who
How many of Russian
consumers shop online?
What e-commerce trends are
expected in the future?
What is the profile of the most
active shopper online?
How does online shopping
frequency vary by generation,
income level and geography?
Where
Who is leading on Russian e-
commerce market?
What are the growth plans of
top companies?
Where do shoppers make
purchases online - in Russian
or foreign market?
8
p. 10-11
• E-commerce market in Russia is constantly growing, reaching 1 150 B RUB in
sales volume and 75 M online users in 2018
• The number of Russian consumers shopping online on a monthly basis
reached 69% in 2018
• E-commerce market is expected to double by 2023
p. 11-12
• Central, Northwestern and Urals Federal regions provide a key contribution
over 70% to online shopping
• There is a direct correlation between consumers' income and online
consumption as more that 82% of residents with income higher that 70K
actively shop online
• Most frequent online shoppers are millennials: more that 80% shop online
monthly
p. 14
• Russian e-Commerce market is not yet consolidated, top-6 national players
account for 23% of the market
• The trend for market consolidation will continue, resulting in 49% of national
players' market share to 2023, mostly driven by Yandex.Market and Beru
• Aliexpress Russia is estimated to take 14% of Russian e-commerce market to
2023
p. 15
• 21% of consumers shop only in Russian stores, whereas only 15% shop in
foreign stores and 19% shop in both Russian and foreign stores
• Further regulation of Russian e-Commerce market puts pressure on foreign
retailers

What
Which categories of goods do
customers buy exclusively online?
Which categories indicated biggest
growth in online sales?
How likely are customers to order
grocery online?
What barriers do they see when
buying grocery online?
How
What devices do consumers use
for shopping?
How often do they make
purchases online via gadgets?
How many customers currently
own or plan to buy a voice
assistant?
What activities do consumers use
voice assistants for?
How often do consumers shop via
home voice assistants?
Why
What does consumer expect of
online shopping?
What would make a successful
online experience for different
genders and generations?
What is good delivery experience
for a customer?
How long consumers are willing
to wait for a delivery?
How to meet customers delivery
expectations?
What is the current trend on
e-commerce delivery?
p. 16-17
• Books and media entertainment is the leading category in on Russian e-
commerce market as 13% of consumers buy it exclusively online.
Electronics devices sector is a runner-up with 9% of consumers buy it
only in online stores
• The fastest growing goods to be bought exclusively online are books,
media entertainment – 3,8% growth and clothing & accessories – both
3,0%
p. 18-19
• Russian consumers develop strong interest in adopting online grocery
shopping. 54% of consumers are likely to purchase grocery online over
2019
• Two main barriers for e-grocery shopping are the desire to see and touch
the products (67%) and concerns about quality (57%)
p. 20-21
• Mobile internet audience in Russia has grown up to 56% of total adult
population in 2018
• 79% of Russian consumers use smartphones for online shopping in 2018.
Daily shopping indicate 8% growth via mobile devices
p. 22-23
• Level of smart home voice assistants ownership is not quite high in
Russia - only 8%. Although 27% of Russian consumers have a stake in
purchasing a voice assistant
• Currently 53% of consumers use voice assistant for searching products
and 36% buy products via voice assistants
p. 24-25
• Around 70% of Russian consumers name better price, fast delivery and
good assortment as three key successful online shopping factors
• Youngsters are interested in best prices, returns and social media
content
• Millennials want easy website and apps, unique assortment and helpful
associates. Matures seek for fast delivery, trusted brand and items in
stock
p. 26-27
• The speed of delivery is crucial for online retailer. 74% of consumers
believe that the most important delivery experience is to get the product
as quickly as possible
• Russia is among top-3 countries which residents want the products to be
delivered in a specific time slot (12%) or in a few hours (33%)
p. 28-29
• Demand for fast delivery and specific time to borrow the purchase lead to
rapid growth of pick-up and locker delivery in Russia (+392% growth
since 2016)
• Leading online retailers opened more than 4500 pick-up points in 2018.
9
 Who Where What How Why

Russia is currently showing one of the

highest growth rates of online shopping

Figure 1. Percentage of respondents making an online purchase at least once a month, 2018

70%

67% 71%
82% 81%
57% 59%
75%

66% 57% 65%

67% 66%
More than 80%
From 70 to 80%
From 60 to 70%
From 50 to 60%
Tha
Out of survey
V

Q: On average, how often do

you buy products online? 63%
Respondents: 21,480
Source: PwC, Global Consumer
Insights Survey, 2019
South Africa,

Figure 2. Countries with fastest growing online shopping rates, p.p., 2018

22 19
Russia Poland
17 18

20 17
Malaysia Vietnam
18 29

10
 Who Where What How Why

E-commerce market in Russia is constantly

growing, reaching 1 150 B RUB in sales volume
in and 75 M Internet users in 2018.
On average, 67% of global consumers shop
online at least once a month. This is up to 5
p.p. more than in last year.

69% China, Germany, the UK and Vietnam are the

leading countries, the leadership remains the
same from the last year.
Russia has shown high growth in both online
shopping audience and order frequency. The
Japan, 58% number of consumers who buy goods online at
95% Hong Kong, 76%
least once a month increased by 22 p.p. and
reached 69% of all respondents in our 2019
survey.
Philippines, 60%
72% 87% Singapore, 69%
In addition, 27% of respondents indicated that
they made online purchases at least once a
Malaysia, 70% week, an increase by 17 p.p. from the previous
year.
Indonesia, 64% In 2018, Russia became one of the leading
countries in online shopping growth in terms of
both audience size and order frequency.
70% From 2013 to 2018, Russian e-commerce
turnover doubled and, according to Euromonitor
forecasts, it will double again by 2023.
This suggests that rapid growth will continue to
be a trend in Russia’s online retail market.

The e-commerce consumption keeps posting

14 double digit growth rates, this trend is set to
Hong Kong continue across all industries.
19
This grants good opportunities for retailers to
Once a month Once a week reach and acquire target audience and sustain
growth by creating online spaces, connecting
Q: On average, how often do you buy them with in-store shopping experience and
products online? turning to omnichannel business model.

Respondents:21,480 11
Source: PwC, Global Consumer Insights Survey, 2019
 Who Where What How Why

The most active online shoppers are

millennials with higher incomes, mostly
located in Russia’s central regions

Figure 3. Percentage of respondents who make an online purchase at least once a month
in Russia, by region, 2018

St Petersburg
78% + 42% weekly

More than 70%

73%
From 60 to 70% Moscow 72%
From 50 to 60% 74% + 33% weekly

Less than 50% 70%

68%
66%
49%
Q: On average, how often do you buy products online?

Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019

Figure 4. Percentage of respondents making an online purchase at least once a month in

Russia, by income, RUB, 2018

90%
82%

59% 56%

20,000 40,000 70,000 100,000

Q: On average, how often do you buy products online?

Respondents:696
Source: PwC, Global Consumer Insights Survey, 2019

12
 Who Where What How Why

The main hubs of e-commerce growth in Russia

are St. Petersburg and Moscow. More than 40%
in St. Petersburg and 30% in Moscow shop
online at least once a week. Other regions with a
high share of active shoppers include the
Central and North-West Federal Districts, where
more than 70% of consumers shop online at
least once a month.
The key audience for online shopping is still
concentrated among consumers with above
average monthly incomes. Growth in online
56% shopping rates tends to be restricted to
consumers who earn more than RUB 70,000.
Further growth is directly linked with income
levels. More than 90% of consumers who earn
more than RUB 100,000 shop online at least
once a month.
Most frequent online shoppers are Mature
Millennials with more than 38% buying online at
least once a week. However, in general, the core
online audience is younger. More than 80% of
respondents aged 23 to 31 shop online at least
once per month.

Figure 6. Profile of most active shopper of

Russian online retailers, 2018
Figure 5. Percentage of respondents who
make online purchases, by generational
groups, 2018 Once a month
Consumer profile
Once a week

23-26 years old

85
81 71
67
58
53 lives in Saint-Petersburg

37 28 38 27 self-employed
17 19

Generation
17 Z Young
37 Core Mature
38 Generation The Greatest
(17-22) millennials 28
Millennials Millennials 27X 19
Generation earns more than 100K RUB
(23-26) (27-31) (32-36) (37-51) (52+)

Q: On average, how often do you buy products Q. Do you shop at Russian online stores? (divided
online? by age, generation, income, geography,
Respondents: 696 employment status)
Source: PwC, Global Consumer Insights Survey, 2019 Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019
13
 Who Where What How Why

Russian e-commerce market will continue

to consolidate by national players

According to Euromonitor data, 16% of Figure 7. Companies’ value shares of the

the Russian online retailing market is Russian Internet retail market, %, 2018-2023
taken by the third-party merchants 100%
Alibaba, Amazon and eBay. Alibaba
stands out the most, as its audience
37
expanded to 20 million active users in 49
43
56
2018. Alibaba wants to increase its 67 63
presence in the Russian market by 7
creating a joint venture with Mail.ru 7
7 14
Group, Megafon and the Russian 7
11
8
Direct Investment Fund. 7 5 16
7 2 15
13
1 12
9 10
Russian e-Commerce market is not
22 24 25
consolidated yet, top-6 national players 16 18 20
account for 23% of the market. The
trend for market consolidation will 2018 2019 2020 2021 2022 2023
continue, resulting in 49% of national Yandex.Market + Beru Ozon
players' market share to 2023, mostly Aliexpress Russia (Tmall) Wildberries
driven by Yandex.Market and Beru. Other online stores
Aliexpress Russia is estimated to take
Source: Morgan Stanley, 2018
14% of Russian e-commerce market to
2023.

Figure 8. Companies’ value shares of the Russian Internet retail market, %, 2018

Alibaba,
Adidas Petshop.ru Amazon and eBay
Asos Pleer.ru 16
Bonprix, Otto Shoppinglive
Quelle, Witt Sportmaster
Wildberries
Detskiy Mir Svyaznoy 5
Dochki Synochki TsUM
E96.ru Ulmart.ru 5 Mvideo
Eldorado Utkonos
Euroset.ru Vseinstrumenti Others 3 DNS Group
Holodilnik.ru Yandex.
IKEA Market 62 3
Citilink
Korablik Yves Rocher 3
KupiVIP Zara 3 OZON
La Redoute Lamoda
Labirint.ru
Meggy Mall

Source: Euromonitor, Internet Retailing in Russia, 2019

14
 Who Where What How Why

Increased shopping at Russian retailers is

driving online traffic

Figure 9. Top 10 Russian online retailers, Russian online retailers are among the world
traffic, M visits, Q4 2018 leaders in traffic. In February 2018, Wildberries
was ranked first in terms of traffic among
international clothing and footwear retailers,
Wildberries 190
followed by H&M, Zara and Asos.
DNS-Shop/
159 Figure 10. Websites that Russians shopped
Technopoint
on, %, 2018
OZON 146

Mvideo 80

Citilink 73 21
19
15

Eldorado 72

Only in Only in Both

Lamoda 61
Russian stores foreign stores

Svyaznoy 42 Source: Data Insight, e-Commerce in Russia, 2018

Ulmart 31 Russians now tend to buy products in Russian

rather than international online stores, which
has helped to drive traffic growth.
Bonprix 27

Source: SimilarWeb, 2019 Russia is the last major emerging market

The leading Russian online retailers
registered 881 M website visits (mobile
and desktop) in Q4 2018.
The top three retailers in terms of traffic
are Wildberries, DNS-Shop and OZON,
whose websites are visited by a total of
140-190 M consumers in Q4 2018.
without a dominant e-commerce player. Huge
numbers of web-traffic of Russian retailers
confirm big demand for online shopping.
Russian retailers are planning aggressive
campaigns in order to hold the leadership on the
market. Newly created joint ventures Beru and
Bringly by Yandex (with Sberbank) or Aliexpress
Russia by Mail (with Alibaba) give dominant
players the access to capital and ability to
leverage existing platforms.

15
 Who Where What How Why

Books, media entertainment, clothing and

jewellery are fastest growing categories
for exclusively online purchases

Figure 11. EXCLUSIVELY ONLINE purchases by category, %, 2018 to 2017

3,8
Growth of EXCLUSIVELY ONLINE purchases by category, p.p.

2,0

2,0
1,1 3,0 3,0

12,5%
8,9%
6,6% 5,9% 5,7% 5,6%

Books, music, Consumer Household Health & beauty Jewelry/Watches Clothing and
movies and video electronics (incl. appliances (incl. (cosmetics) footwear (incl.
games cameras, TV, DVD freezers, sportswear, kids
players, etc.) and microwaves, etc.) and babies)
computers

Q. For each of the following product categories, how many purchases have you made exclusively online
Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019

Books and media entertainment is the fastest

growing category of goods that people
purchase exclusively online (3.8 p.p. growth).
Also clothing & accessories are the fastest

13%
growing product categories to be bought
exclusively online which indicate 3 p.p growth
from last year. More people also purchasing
groceries exclusively online (2 p.p. growth from
last year).

Books and media entertainment is the leading of respondents buy

category in on Russian e-commerce market as
13% of consumers buy books, music, media
and video games exclusively online. Electronics
devices sector is a runner-up as 9% of
9% tech & electronics only
in online stores

consumers buy tech & electronics only in online

stores.
16
 Who Where What How Why

Purchasing exclusively online indicate

growth across all categories of products

2,1
1,4 1,1 2,0 0,3

5,5% 4,6% 4,5% 4,2% 4,0%

Toys Do-it-yourself/home Sports Grocery Furniture and

improvement equipment/outdoor homeware

over the last 12 months?

Customers start to actively purchase online

product categories that do not require visual or
of respondents buy kinesthetic experience. However, traditional
books, music, media in-store products as jewellery and watches
and video games have made successful inroads to the e-
commerce market.
exclusively online
Retailers should take immediate actions as
their customers are coming to online
channels: as the time flows, pure offline
players will be close to extintion.

17
 Who Where What How Why

Most Russian consumers are ready for

online grocery shopping

Figure 12. Growth rate of the share of consumers that are likely to order groceries
online, p.p., 2018 to 2017

22 20 19
13 13 12 11
7 5
2 2

Canada

Brazil
Indonesia

Malaysia

Poland
Middle East

Russia

USA
Netherlands

China
Belgium

Q. Over the next 12 months, how likely are you to purchase groceries online?
Respondents: 21 480
Source: PwC, Global Consumer Insights Survey, 2019

54%
of respondents likely to purchase
groceries online
Around 54% of Russian consumers are likely
to buy groceries online, which represents 12
p.p. growth over the previous year. Russia
ranks 7th in terms of people’s readiness to buy
groceries online. Number of those who are not
likely to buy groceries online fell by 24 p.p. in
2018.
About 4% of Russian consumers indicate that
they already buy groceries exclusively online
and 12% indicate that they do most of their
grocery purchases online.
18
As grocery shopping migrates online, traditional
brick-and-mortar stores will have to respond,
by turning shopping from a
simple transaction into a lifestyle activity.
Traditional food retailers have to adapt to
customer needs by developing Click&Collect
technologies, entering into partnerships with food
delivery services, installing in-fridge lockers.
It may be hard for a customer to orient in online
grocery store without wandering by product
shelves, so make navigation through online
store easy and understandable, include food
recipes to help choosing from wide product range.
To reassure customers, make quality a priority
in transportation-to-home and storage stages.
 Who Where What How Why

Figure 13. Key reasons not to purchase groceries online, %, 2018

I prefer to see and touch 67

products
Concerns over quality
Easier to compare prices
in-store
Food could be damaged
during delivery
Delivery costs / minimum
order price is too high
However, some key concerns are
holding people back from ordering
57 food online. Russian consumers
prefer to see and touch products
before buying to ensure their
25 quality.
In addition, 19% of consumers are
23 not likely to order food online
because the delivery costs or
minimum order price are too high.
19

Figure 14. Main concerns on purchasing delivery online, in comparison with men/women,
p.p., 2018
Food could be Easier to compare prices
damaged during in-store + 11 p.p.
+ 13 p.p.
delivery

Need
Enjoy discovering new
+ 9 p.p. assistance + 6 p.p.
products in-store
from store staff

+ 7 p.p.
Concern over quality Websites are not easy to + 2 p.p.
use for grocery shopping

Q. Why would you be unlikely to purchase groceries online?

Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019

19
 Who Where What How Why

Russian consumers are shopping more

frequently using their PCs and
smartphones

Figure 15. PC as a shopping channel, %, 2018

+14 p.p.

40 42

29
26

19 -5 p.p.

10 11 10
5 5
2 3

Daily Weekly Monthly A few times Once a year Never

a year
2017 2018

Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019

Growing number of Russians are using their
PCs to make weekly online purchases (up to 9
p.p.). Still, most Russians (86%) shop on their
digital devices once per month. However, there
is a clear trend to shifting from monthly
shopping to weekly shopping, especially
noticeable on mobile devices.
There is a continuing growth trend in using PCs
for online shopping. More than 40% of
consumers made orders via PC a few times a
year in 2017. In 2018, about 40% of respondents
shopped on their PCs at least once a month and
19% do so on a weekly basis.
The percentage of consumers who have never
shopped online or have shopped a few times a
year dropped to 5%.

20
 Who Where What How Why

Figure 16. Smartphones as a shopping channel, %, 2018

-7 p.p.

27 27 27 27 28
+9 p.p.
21
16

7 8
6
2 3

Daily Weekly Monthly A few times Once a year Never

a year

Respondents: 696 2017 2018

Source: PwC, Global Consumer Insights Survey, 2019

Following the migration of consumers to

In 2018, the number of respondents who never mobile devices, retailers should adapt their
use their smartphone for shopping dropped by 7 websites to mobile version, design mobile
p.p. At the same time, there was a significant applications and luring notifications.
increase in the share of respondents who shop
on their phones at least once a week. Pay special attention to speed and security
of website to lower the cart abandonment
Both PCs and smartphones indicate 9 p.p. rate.
increase in weekly shopping: mobile devices
are close to catch up with computers in Add convenient payment options as
frequency of online shopping. Apple/Google Pay, e-wallets, etc., as
Young Millennials (23-26 years) are the most customers often do not remember payment
active shoppers via smartphones. More than card details.
60% make online orders on their mobiles at
least once a month.
North-West federal district residents shop via
smartphones more frequent than other regions’
citizens: 43% shop using smartphone at least
once a month, and 22% from Saint-Petersburg
shop via mobile phone on a weekly basis.
21
 Who Where What How Why

There is a growing interest in smart

home voice assistants in Russia

In 2018, the number of respondents who started

using smart home voice assistant systems for
online purchases increased by 17 p.p.

26
About 40% of Millennials currently use smart
home voice assistants for online purchases,
while 13% buy products via these devices at

%
least once a month and 11% at least once a
week.

of Russian consumers plan to

purchase a smart home voice
of Russian consumers

8% currently own home

voice assistant
assistant

Figure 17. Frequency of online shopping via smart devices, %, 2018

Smart home voice assistants Young Millennials representatives are leaders in
-17 p.p.
smart home voice assistants ownership as 13%
89 of them currently own such devices.

Moscow citizens are the clear leaders in Russia

in the use of smart home voice assistants. More
+6 p.p. than 11% claim that they make purchases with
72 the help of a voice assistant at least once a
month, while 8% do so on a weekly basis.
8 7
6 5
3 3 Men are more likely than women to use a voice
1 2 1 2
assistant to make an online purchase. More
than 10% of Russian men order products via
Daily Weekly Monthly A few Once a Never smart home voice assistants at least once a
times year month.
a year
2017 2018
Q. How often do you buy products (e.g. clothes, books, electronics) using the following
shopping channels?
Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019
22
 Who Where What How Why

More than half of smart home voice

assistants owners use devices for
searching products

Figure 18. Activities Russian consumers use smart home voice assistant for, %, 2018

Researching products 53

Streaming music 46

Entertainment
42
(trivia and games)
Controlling other smart
41
home devices
Accessing information
39
(current affairs, weather)

Calendar reminders 39

Purchasing products 36

Listening to audio books/

32
podcasts
Communications
27
(making phone calls)

Q. What are the main activities you use your smart home voice assistant device for?
Respondents:696
Source: PwC, Global Consumer Insights Survey, 2019

There is a great potential for

retailers on voice assistant
channels, as more than half
(53%) of consumers use their
smart devices for searching
products.
36% of smart home voice
assistant users make
purchases via their gadgets.
Smart tech that communicates with you is the future. Global
digital retailers as Amazon and Aliexpress have already
launched their own voice assistants; Yandex has developed
Yandex.Station smart speaker with Alisa voice assistant.
Adapting an online store to voice assistant requires an
integrated approach. Customers search products via smart
device through related phrases, synonyms in natural language.
Retailers need to optimise traffic-driving pages and product
descriptions with proper content to become visible in voice
search results.
23
 Who Where What How Why

Price, delivery speed and assortment are

the key drivers of consumer decisions

Figure 19. Ten key elements of a successful online shopping experience, %, 2018

Better
75
prices

Fast, reliable
71
delivery

Good
67
assortment

Convenient
66
payment options

Easy website,
62
mobile app

Good return
60
policy

Unique
44
assortment

More than
Trusted
43
brand

FREE
Loyalty
programme

Test / try and free

return options
41

41
70%
of respondents believe
that online retailers
should have better
Q. Which of these attributes would significantly
prices and faster
improve your shopping experience with online
retailers? delivery
Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019

24
 Who Where What How Why

Figure 20. Gender differences on successful online shopping experiences, %, 2018

expect mobile site want to have convenient

65% to be easy to use payment options 67%

want to have are happy to

44% test/try and free
return options
deal with a
trusted brand
48%

44% are interested in

loyalty programmes
need help from 30%
on-site
associates

Q. Which of these attributes would significantly improve your shopping experience with online
retailers?
.
Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019

Consumers want to be sure that all of the “must
have” elements of a good online shopping
experience are present before they even start to
pay attention to loyalty programmes and trust
the brand.
Most consumers choose retailers who offer
better prices and fast delivery. These two
elements are key in the competition with in-
store shopping.
Convenience is key to competing successful
with other online retailers. Consumers will
choose easy-to-use websites and mobile apps
with convenient payment options
Assortment is another important element. It
should be easy for consumers to find the item
they are looking for and cannot find in-store.
Online presence and further development of
ecommerce are crucial for retailer's growth.
Good price is number-one priority for an online
retailer excluding premium segment. To win
competitive advantage online, retailer should
provide customer with easy-to use mobile
shopping facilities and expand delivery
network of pick-up point and lockers to
ensure fast and convenient delivery options.
25
 Who Where What How Why

Fast delivery is a key determining factor

for online purchases

Figure 21. Important attributes for the delivery experience, %, 2018

Getting the product

74
as quickly as possible

Availability of
FREE 72
free returns

Knowing the delivery date

67
at the point of order

Being able to track

65
the delivery driver

Option to return items

59
to a store

Russian consumers like fast delivery and

believe it is more important than possibility of
free returns. To a greater degree than their

74
global counterparts, Russian consumers are
willing to pay more for same day delivery or for
specific 1-2 hour time slot for delivery.

Q. Considering the delivery process for online

orders, please rank the following statements in
order of importance.
Respondents: 696
%
Source: PwC, Global Consumer Insights Survey, 2019 of respondents think that
the most significant delivery
experience is to get the product
as quickly as possible

26
 Who Where What How Why

Figure 22. Longest delivery time residents are willing to pay for, %, 2018
A specific 1-2 hour time window of my choosing

Vietnam Australia
15% Russia 3%
12%

In a few hours or, maximum, the same day

Vietnam Ireland
36% Russia 14%
33%

1 3 27
Q. For the majority of your online purchases, what is the longest delivery lead time you are willing
to pay a charge for?
Respondents: 21,480
Source: PwC, Global Consumer Insights Survey, 2019

Choosing a specific delivery time is not
popular globally. However, 12% of Russian
consumers prefer this option. Fast delivery in
a few hours or on the same day is the most
popular type of delivery in Russia. Overall,
33% of Russian consumers are ready to pay
a charge for express delivery.
Along with speed, Russians also prefer to
have transparent delivery. Millennials are the
most concerned about the delivery details.
They want to have visibility of the product
throughout the delivery process, including
being able to track the delivery driver (76%),
to return non-fitting items (76%) and to
receive updates on the status of returns
(65%).
Around 63% of the Greatest Generation (52+)
want to be able to reserve products online for
collection in-store.
Companies that also have online and brick-
and-mortar stores in addition to their e-
commerce stores may be able to offer in-store
same-day pick-up. Organizations may also
want to consider the option of opening
distribution centers to fasten logistics
processes.
Retailers need to consider the traceability of
deliveries; besides, it reduces pressure on call
center. Among prevalent practices are sending
interactive SMS notifications on the status of
the delivery with clickable time and date
delivery options.

27
27
 Who Where What How Why

Pick-up and locker delivery is growing

quickly in Russia

Figure 23. E-commerce logistics market, by delivery channel, %, 2018

Self pick-up in store

29

Pick-up points/lockers 11 Self courier delivery

Since 2016: 17
+392% growth
+122% CAGR
26
17
Outsource courier delivery Russian Post Service

Source: E-Commerce logistics market, Data Insight, 2018

Consumer preferences for fast delivery and
specific delivery times have led to growing
demand for pick-up points/lockers.
According to the latest research of e-Commerce
logistics market by Data Insight, pick-up points
and lockers account for 17% of total deliveries
and show the highest growth rates. Delivering to
lockers or pick-up points is cheaper than using a
courier, which is one of key reasons for the
popularity of this channel.
In addition, consumers like lockers because
they are more convenient and there is no need
to wait for the courier. Customers can pick up
the order at any convenient time.
In response to consumer demand, leading
online retailers are opening new pick-up points
on their own or in partnership with logistics
companies.

Figure 24. Number of pick-up points or lockers opened in 2018

Lamoda KupiVIP Yulmart Aliexpress Mvideo Wildberries Citilink Utkonos

+56 +1120 +500 +1800 +33 +555 +600 +10

Jan 18 Mar 18 Apr 18 Jun 18 Jul 18 Sep 18 Nov 18 Dec 18

Source: Retailers reports, 2018

28
The growth of lockers and pick-
up points is one of the most
significant e-commerce trends of
2018.

Egor Pchelintsev
Advertising Director, Wildberries

Pick-up points and lockers delivery is a creditable alternative for

in-store pick-up or distribution center. Customers create demand
for locker delivery as it is close to home, easy-to-use and helps
to avoid time-consuming and unnecessary interaction.

29
Demand for both digital
and human in-store
experience
Key insights
Where
p. 32-33
Where are customers more
• Russia is one of Top3 countries by the share of consumers who enjoy
likely to buy grocery?
microtrips to convenience stores
How often do customers do
• 40% of Russian consumers buy products in nearby grocery stores on a daily
trips to the convenience
basis
stores?

Why p. 34-35

What attributes will make in-
store experience successful?
What do customers expect
from digital in-store
experience?
• Both traditional and technological elements are important for creating a good
in-store experience for a customer
• More that 52% of Russian customers believe that quick and easy payments
and knowledgable associates are key for creating a good in-store experience

30
31
 Where Why

Russians tend to make microtrips to

nearby stores, which is driving the shift
towards smaller formats

Figure 25. The share of the population who buy products at nearby stores at least once a day,
%, 2018
Middle East 43%

Active grocery store

40%
Russia 40%

consumers
Vietnam 39%
Brazil 36%
Poland 35%
China 32%
Indonesia 32%
Hong Kong 28%
Hungary 28%
Thailand 28%
Spain 28%
Ireland 23%
Japan 23%
Switzerland 23%

40
South Africa 21%
Netherlands 20%
France 20%
Malaysia
Denmark
Germany
20%
19%
19%
%
UK 18% of respondents buy products at
Philippines 18% nearby grocery stores every day
Belgium 16%
USA 16%
Australia 15%
Singapore 13%
Canada 10%

Q. How often do you make microtrips (less than five minutes) to grocery stores?
Respondents: 21,480
Source: PwC, Global Consumer Insights Survey, 2019

32

Figure 26. Russian food retailers LfL traffic, %, 2018
Da!
Perekrestok
Lenta Super
Pyaterochka
O’KEY -4,8
Karusel -3,1
Lenta Hyper
Source: Retailers reports, PwC analysis
Russia is one of the top three countries in terms
of the share of consumers who take daily
microtrips to nearby grocery stores.
More than half of consumers in the Siberian
Federal District and Southern and North
Caucasian Federal Districts take regular
microtrips to nearby stores.
The most active generation is Core Millennials
(27-31), 4% of whom take such microtrips more
than once per day.
These consumer preferences are driving the
shifts towards smaller formats in Russia. Most
retailers report positive traffic growth at these
formats.
O’KEY is developing a new compact city
hypermarket format (3,000-7,000 sq m). They
find such stores up to 10% more effective than
their traditional hypermarkets. In addition, they
are actively developing the DA! discount chain
Where Why
9,5
6,2
1,6
0,4
0,4
and planning about 170 new openings of this
format.
Magnit has decided against the further
development of its network of hypermarkets and
has reformatted some large-area stores into
large supermarkets.
Lenta plans to increase the number of
supermarkets and expand their retail space up
to eight times by 2020. Supermarkets will take
15-20% of total Lenta’s commercial space.
Most hypermarkets are now experiencing
negative LfL traffic. Retailers that traditionally
relied on hypermarket format are now tending
to shift their focus to smaller formats in
response to changing consumer behavior.
Russian retailers experiment with new smaller
formats as mini- and micro- markets, vending
machines, kiosks. 33
33
 Where Why

Easy payment, customisation and

knowledgeable associates are key for
creating a good in-store experience

Figure 27. Attributes that improve the in-store shopping experience for Russian
consumers, %, 2018
Digital experience Traditional experience

Quick and easy

Sales associates
payment methods
55 with a deep knowledge 52
(including mobile,
of the product range
contactless payment)

Ability to quickly Ability to quickly

and conveniently 48 and conveniently 48
navigate the store navigate the store

A fun experience A fun experience

via the store design 37 via the store design 37
or atmosphere or atmosphere

In-store Wi-Fi
35 Child-friendly area 22
with fast, simple login

Personalized offers Availability of

sent to mobile device 33 food & beverage 22
when in-store services in-store

Technology to assist
Exclusive services
the shopping experience
25 i.e personal shoppers 20
(mobile checkout,
and stylists
self-service scanners)

Virtual experience
of products and services 21 Inviting lounge/rest area 20
through AR technology

Q. Which of these attributes would significantly improve your in-store shopping experience?
Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019

In digital era, retailers have to meet technological demands of customers, but quality service
from assistants cannot be overlooked. Consumers interact with your brands through your
frontline employees, who embody your brand and the culture that shapes it.

In-store retail is no longer about simply selling products, it is about experience and
atmosphere. Retailers should look onto creating a retail-tainment atmosphere by merging
experiences with shopping. This could be achieved by adding cafeterias, music experiences
or complimentary services inside the store as well as blending digital and physical
34 experience to satisfy the needs of a modern customer.
 Where Why

It’s good to have sales associates

with a deep knowledge of the Figure 28. Non-cash payments for goods
product range and services, T RUB, 2016-2018

I want a fun experience

53%
via the store design or
atmosphere
38%

I like personalized 19,5

offers sent to my 14,6
36% mobile device when 11,2
in-store

25% I want the store to

2016 2017 2018
have child-friendly
23% area
Source: Central Bank of Russia statistics, 2018

I want to have a virtual

experience of products
and services through AR Figure 29. Mobile payment use when
technology shopping in-store, %, 2017-2018

I want to customise
products in-store
+18 p.p.
57%
45
I want payments to
be quick and easy 57% 27

I’d like the use of 2017 2018

technology to assist 26%
the shopping Q. Which of the following payment activities have
experience you undertaken using your mobile, smartphone
or wearable device when shopping in-store?
24%
It’s good to have Respondents: 696
food and beverage Source: PwC, Global Consumer Insights Survey, 2019
services in-store
35
Growing influence of
sustainability
Key insights
How
How do consumers purchase
in a sustainable way?
How do they learn about
sustainable products?
Why
Who is interested in food
sustainability?
What for are consumers willing
to pay a premium when
purchasing food items?
Who is interested in non-food
sustainability?
What for are consumers willing
to pay a premium when
purchasing non-food items?
How to attract pro-sustainability
customers?
36
p. 38-39
• Global trend for sustainability highly influences Russian consumers as 83% of
Russian consumers claim to make purchases in a sustainable way
• Most common eco-shopping practices of Russian customers are to avoid the
use of plastic where possible (32%) and to protect the environment by
choosing sustainable products (31%)
• The majority of respondents use online channels to gain information about
sustainable product
• One of the most successful case of business model around sustainability is
VkusVill
p. 40-41
• Majority of Russian consumers are concerned about food sustainability as
86% of consumers are ready to pay extra amount for sustainable food
products
• The most pro-active generation is Millennials: 20% are willing to pay extra for
food sustainability
• Locally produced products attract customers the most (68%); more than 40%
of Russian consumers are ready to pay premium for sustainable packaging,
organic and eco-friendly food products
p. 42-43
• 79% of Russian consumers are ready to pay premium for sustainable non-food
products
• The main attractive practices of non-food sustainability is connected with
methods of production: over 77% of Russian customers will pay premium for
sustainable or ethical production of goods
• Customers tend to pay premium for production of brands well-known for
sustainable practices (42%) and retailers who make donations to charity (35%)
37
 How Why

There is growing interest for sustainable

products in Russia

Figure 30. Most common practices of sustainable purchasing in Russia, %, 2018

I avoid the use of plastic

32
where possible
I choose sustainable product
31
to help protect the environment
I choose products with a traceable
29
and transparent origin
I look for products with environmentally
29
friendly packaging
I buy brands that promote
27
sustainable practices

Q. Please indicate which statements best reflect how you purchase in a sustainable way.
Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019

Russian residents are increasingly concerned Russians tend to trust eco-bloggers and
with the irresponsible use of plastic and other influentals up to 3% more often than friends
unsustainable packaging. and relatives on sustainability agenda

83
Around 32% of Russian consumers actively
avoid plastic where possible and 29% either
look for eco-friendly packaging or try to find

%
less-packaged products. In addition, Russians
are more likely to care about the traceable
origin of products than their global counterparts
(29%).
of respondents care about
There is a growing interest in sustainable sustainability
products in Russia. Only 3% of consumers buy
eco-friendly products impulsively, whereas more
than 40% do some web research about eco-
friendly products and stores.

Most consumers use the Internet to find

information about sustainable products. Around
40% directly search for specific products, read
and watch reviews, and join healthy-lifestyle
communities.

38
 How Why

Figure 31. Sources respondents turn to for information about sustainable products, %,
2018

Search the web for specific products,

44
read reviews, buy in specialised stores
Watch reviews on online platforms,
read comments in healthy-lifestyle 37
communities
Look for a shelf
35
with eco-products in-store

Don’t search for eco-products

32
on purpose, if I see it - I buy

Follow advice
25
from eco-bloggers and influencers

Trust recommendations
22
from friends and relatives

I see that the product

3
is eco-friendly and buy it

Source: Ecological Union and Ecobureau GREENS – How do customers choose eco-products? 2018 (Moscow, Saint Petersburg)

Sustainability needs to become a core component of a strategy. Sustainable

practices are best to affect a whole value chain from producing and manufacturing, to
logistics and beyond. With the use of technologies organizations can upgrade majority
of business processes to sustainable network: AI can help changing product
development, blockchain can provide traceability, robotics and 3D modelling can
personalize unique models on-demand.

Businesses managing sustainability will not only build consumer loyalty but can also
command a price premium as consumers will pay a premium for a good experience.

39
 How Why

Making sustainable products a

cornerstone of a successful business
model

Figure 32. VkusVill sales profit, M RUB, 2013-2017

1 199
1 200

1 000 +74%

800 713

600
397
400

200

0
-14
-64
-200
2013 2014 2015 2016 2017

Source: Spark-Interfax, 2018

VkusVill grew out of Izbenka to fill a niche:
Russia had few convenience stores selling fresh
eco-friendly products. The company became
profitable after two years and has performed
very well (CAGR of 74%) since 2015. VkusVill’s
key to success was picking the right time to
offer Russians fresh and farmer-quality food,
combined with a distinctively progressive
approach to business.
In March 2018, VkusVill began working with
online grocery services and started to deliver
their products via SaveTime and Instamart.
Moreover, VkusVill decided to experiment with
the micromarket format. This initiative covers
customers who live and work in remote or
suburban areas.
Classical formats such as supermarkets and
minimarkets do not work in such areas, because
it is not cost effective. The concept of
micromarkets helps reduce costs & expenses
and increase operational efficiency. VkusVill
Micro has a smaller product range depending on
the location. The company is planning to open
micromarkets and vending machines not only in
traditional urban locations, but also in offices,
business centers and even metro stations.
Coffee House filled a significant niche in this
market by placing coffee machines at Moscow
Central Circle (MCC) metro stations. By the end
of 2018, Vkusvill and Coffee House plan to
install their vending machines at every MCC
station.

40
There are top two brands that respondents call
the most recognisable on the market for their
sustainable products: 4fresh (20% of
respondents) and VkusVill (also 20% of
respondents).

While 4fresh is a pure online retailer, VkusVill is

the leading eco-friendly in-store.
It promotes sustainable practices as:
• collection and recycling of batteries (10
tonnes per month);
• separated waste collection from customers
(800 kg of waste);
• paid plastic bags (57,000 customers bought
reusable bags, 15,000 stopped buying bags);
• installation of machines for PET bottles and
aluminium cans.
Source: VkusVill: Ecology summary, 2018

We are growing although our main idea has not yet been fully realised by us
or our competitors. We want to give customers the opportunity to buy fresh
products near their home, and there are many regions where this
opportunity is not yet available.

Business needs to be started in areas where the situation is deplorable. So

we originally started with dairy products. This is why people are waiting for
us in the regions. Many people in smaller towns do not have a single Dixy or
Pyaterochka store with fresh products near their home.”

Andrey Krivenko, owner and

CEO of VkusVill

41
 How Why

Consumers are ready to pay extra for

organic, locally produced food with eco-
friendly packaging

Figure 33. Respondents willing to pay a premium for sustainability when purchasing
food items: detailed, %, 2018
Locally produced 68
Sustainable packaging 46
Organic 46
Eco-friendly 43
Sustainably produced 38
Q. Which of the following are you willing to pay a premium for when purchasing food items?
Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019

Russian consumers are most likely to pay extra

86% of Russian consumers for locally-produced food, organic food and eco-
friendly packaging. Around 68% of Russians are
are ready to pay extra for willing to pay extra for locally grown products.
sustainable food products This is partly a consequence of Russia’s
continued urbanisation. Around 33% of Russian
consumers will pay a premium if retailers have a
strong reputation for sustainable practices.
Figure 34. Interest in sustainability among
generations (food), %, 2018
Young Millennials care about food sustainability
Young Millennials the most: they are interested in sustainably
20 packaged products (60%) and organic food
(23-26)
(57%).Young and Mature Millennials (44% and
Mature Millennials 41%) are more likely to trust brands well known
18
(32-36) for their sustainable practices.
Generation Z
17 Generation Z, more than others, is inspired
(17-22)
(38%) by retailers and brands that make
Core Millennials donations to charity. Generation X and the
16 Greatest Generation are the least interested in
(27-31)
food sustainability.
Generation X
15
(37-51) Russian customers are willing to invest in
The Greatest sustainable retailers. Transform sustainability
Generation 14 +2-3% efforts into a part of a brand identity. To meet
(52+) customer needs, retailers have to support
sustainable practices as switching to
Q. Which of the following are you willing to pay
sustainable packaging, developing
a premium for when purchasing food items?
environmental or charitable initiatives.
Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019
Many people want to engage with businesses
42 that align themselves with social values, such
as sustainability and local production.
 How Why

Russians tend to trust non-food brands

with strong reputations for sustainable
practices

Figure 35. Consumers willing to pay a premium for sustainability when purchasing non-
food items: detailed, %, 2018
Sustainably produced 43
Brands well known for their sustainable practices 42
Eco-friendly offering 36
Retailer/brand makes donation to charity 35
Ethically produced 34
Q. Which of the following are you willing to pay a premium for when purchasing non-food items?
Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019

Russians are more willing to pay extra for

sustainability when it comes to food products.
79% of Russian consumers are
However, for non-food items, Russians tend to ready to pay extra for sustainable
trust brands well-known for sustainable non-food products
practices (42%) more than for food items
(33%).
Figure 36. Interest in sustainability among
Likewise, Russians are interested in whether generations (non-food), %, 2018
their non-food retailers make a donations to
Generation Z
charity (35% against 28% for food products). 19
(17-22)
Russian consumers tend to base their opinions
on the retailer’s mission and values when Mature Millennials
buying non-food items, as it’s more difficult for (32-36)
19
them to track the sustainability of non-food
goods. Young Millennials
18
Generation Z is the one of most attentive (23-26)
generations to sustainability issues for non-food
Core Millennials
products. Most of all, they deeply trust brand 16
(27-31)
manufacturers who are well-known for their
sustainable practices (47%).
Generation X
16
(37-51)
Consumers trust brands with third-
party certifications and eco-labeled The Greatest
products. They can check Generation 11 +3-8%
sustainability of a product using brand (52+)
new Russian mobile app EcoGuide.
Q. Which of the following are you willing to pay a
premium for when purchasing non-food items?
Respondents:696
Source: PwC, Global Consumer Insights Survey, 2019

43
Strong shift to digital
communication
channels
Key insights: advertising
Where
What types of advertisements
have an impact on the
consumers?
What
What types of personalized
advertisement do Russian
consumers find the most
influential?
How
How does personalization
influence retailer's operating
performance?
44
p. 46-47
• Russian consumers find both traditional and innovative advertising influential:
39% indicate the impact of TV, whereas 27% are attracted by interactive social
media advertisement
p. 48
• Among personalized adverts Russian consumers mostly like interactive social
media ads (27%)
• 26% of respondents are influenced by personalized advertisements they get
via e-mail
• 19% of respondents appreciate personalized direct ads of their favorite brands
or products
p. 49
• Personalization leads retailers to increased conversion, average check and
revenue
• By 2020, 15% increase of digital business profits will be caused by smart
personalization engines
Key insights: social media
Who
How do customers use social
media channels?
How does social media change
consumer behavior?
How many consumers use social
media?
Who is easy-to-influence in social
media?
What
In which categories of goods
social media influence purchase
decisions the most?
Which categories are better
perceived by different generations
in social media?
What online entertainment
services do Russian users prefer?
How often customers use
entertainment platforms?
p. 51
• Russian consumers are "silent viewers" - they read reviews more often
than share comments
• More than 30% of Russian customers were influenced to buy a product
after reading positive reviews, finding shared offers/promotions, seeking
for inspiration
p. 50
• 94% of Russian customers use social media
• Reviews have a great impact on customers: 50% of Young Millennials
aged 23-26 have been influenced to buy a product after reading positive
reviews on social media
• Men write reviews, but reach to them less often, while women rarely
write reviews but more influenced by them.
p. 52-53
• 52% of Russian customers are sure that social media influenced their
purchase decisions in clothing and footwear category
• Matures feel the impact of social media on purchase decisions in
majority of categories: travel, food, recipes and dining-out, technology
and beauty and cosmetics
p. 54-55
• 80% of Russian consumers are active users of online entertainment. Most
popular services are movies and music streaming platforms
• The frequency of entertaining platforms usage in high in Russia: more
than 32% of consumers use them on a daily basis
45
 Where What How Who

Digital advertising market is growing

rapidly but Russian consumers find
traditional channels also influential

Figure 37. Most influential types of advertisements, %, 2018

traditional innovative
Interactive
Traditional TV ads 39 27
social media ads
Product placement Personalised ads
18 26
in movies, TV programs via email
Ads with celebrities 17 Sponsored ads
20
on social media
Traditional print ads 15 Direct ad to offers for
19
Personalized favorite brand
15 Location-based
leaflets via letter box 11
personalised ads
Q. Which types of advertisements do you find most influential? - Ranked top 3
Respondents: 21,480
Source: PwC, Global Consumer Insights Survey, 2019

Both traditional and innovative ad channels are
important for Russian consumers. They are
highly influenced by both TV ads (39%) and
social media ads (27%).
Innovative ads are better perceived by
younger generations. Around 47% of Young
Millennials are influenced by interactive social
media ads. Generation Z enjoy being able to
buy products with a phone by hovering over
an ad.
Generation Z also has a very sensitive
relationship with brand names. They often
make product choices based on the
company’s reputation and slogan. They are
also highly influenced by product placements
in movies, television and other media.
According to the Russian Association of
Communication Agencies, 2018 was the first
year when companies spent more on Internet
advertising than TV advertising. As CAGR data
show, the Internet advertising market has
increased by 21% since 2013.
PwC Media Outlook predicted that the Russian
TV and Internet advertising markets would be
the same market size in 2018. However, the
decline of the TV market proceeded faster than
expected. Internet will continue to be the most
attractive ad channel.
For this year TV advertising remains important
channel for reaching our to the broad audience,
but clear digital shift makes retailers invest
more in social media interactive advertising
with instruments of personalization.

46
 Where What How Who

Figure 38. Advertising market distributed by media channels, %, 2018

TV
40

9 Out-of-home

4
Press
4
43 Radio
Internet

Source: Russian Association of Communication Agencies, 2018

Figure 39. Media channel market size Figure 40. Internet advertising market
forecast in Russia, B USD, 2018-2022 growth in Russia, B RUB, 2013-2018

250

200 CAGR: +21%

150
5,0 5,4
4,5
3,9 3,6 3,7 3,9 100 203
3,3 3,3 3,4 166
136
50 97 112
77
0
2018 2019 2020 2021 2022 2013 2014 2015 2016 2017 2018

Internet ads
TV ads

Source: Russian Association of Communication Agencies, 2018

Source: PwC Media Outlook Russia, 2019

47
 Where What How Who

Personalization is one of drivers for

creating customer experience

Modern consumers prefer not to use one-size-

fits-all products. personalization is the key traffic Segmentation of target audience is vital for
driver for online retailers as it helps customers effective e-commerce personalization.
to quickly navigate through the website and find Personalization is no longer about static
what they need. For online retailers, customers' profiles, it combines different
personalization is not an option. It is an agile metrics as: location, weather, current
imperative for successfully converting traffic to and past browsing and searches, purchase
sales. personalization can be achieved with the behavior, cart contents, age and gender, time
help of data, analysing customer behaviour and habits, likes in social media etc.
purchase histories, search queries, personal
information, geolocation data, etc. Big Data and
machine learning can generate important
market insights to help outperform competitors. Figure 42. Personalized advertising types
Apart from optimising business processes, Russian consumers find the most influential,
technology can help to keep consumers on the %, 2018
site and monetise content. Social media ads that
27
Among personalized adverts, Russian allow me to interact
consumers tend to prefer social media ads that Personalised
26
allow them to ask questions or access further advertisements via email
information (27%). Around 26% of respondents Direct ad about my
are influenced by personalized ads they get via 19
favourite brand or product
email, while 19% appreciate highly personalized
direct ads from their favourite brands. Location-based display ads 11
Figure 41. Personalization formats and
types used by marketers, %, 2018 Virtual personal shoppers 9

Banners 45
Q. Which types of advertisements do you find
Call-out messages 40 most influential? - Ranked top 3
Respondents: 696
Inline content 38 Source: PwC, Global Consumer Insights Survey, 2019

Survey questions 36 According to the latest Evergage study, 98% of

marketers strongly agree that personalization
In-page edits 30 helps to advance customer relationships, with
74% reporting it has a “strong” or “extreme”
Pop-ups 29 impact. Nearly 9 out of 10 state that their current
and prospective customers expect a
Information bars 25 personalized experience. The most popular
format for personalized ads is the banner ad (see
Modals 16
Fig. 40). Around 40% of marketers use call-out
Other 6 messages. In addition, more than 30% use inline
content, survey questions and in-page edits.
Source: Evergage, Researchscape International. Trends in
personalization, 2018
48
 Where What How Who

Personalization leads retailers to

increased conversion, higher average
checks and greater revenue

Russian retailers are actively using

personalization tools on their
Create ‘magic moments’ for consumers. websites. Among prevalent good
Companies can delight people by delivering ‘magic practices are offerings for
moments’ in their shopping experiences when what personalized best-selling products,
they want or need is available at just the time they displays of similar products based
want or need it. on previous choices and purchases,
Big Data and machine learning technologies help and personalized cart pages. These
organizations to identify the consumer, determine his tools are helping to increase
behavior and potential interests. conversion rates, average checks
and sales revenue.

15% growth in digital business profits by 2020 will be driven by smart personalization
engines that can recognise customer intent - Gartner
Table 1. Selected cases of using personalization in Russian online stores, 2018

Average Estimated
Conversion
Retailer Instrument of personalization check revenue
rate change
change change
Personalized best sellers +10% -6% +4%
Aizel Similar products based on
+10% +1% +11%
previously viewed items
Personalized cart webpage +12% +4% +16%
Zarina Similar products on selected
+16% -1% +15%
product webpage
Petrovich Personalized related products +2% +4% +6%
Personalized related products
Mamsy +2% +3% +6%
excluding bestsellers
Popular products from
+6% +2% +8%
categories of customer’s interest
MaksiDom
Personalized related products
+4% +0.2% +4%
excluding bestsellers

Bosco-Online Conversion RPE

Personal mailing via email with CTR change
and Bosco- rate change change
brand recommendations
Outlet +187% +213% +1,939%
Source: Retail Rocket personalization cases, 2018

49
 Where What How Who
Russian users are “silent viewers” – they
read reviews more often than they share
their own comments
Figure 43. Russian consumer behaviour in social media, %, 2018
Bought a product, following positive reviews
Purchased products following offers shared by others
Sought inspiration for purchases
Chatted with friends & family
Recommended brands/products to others
Complained about a product or service
Bought a product following an endorsement
from an influencer/celebrity
Made a purchase directly through a shoppable post
Do not use social media
Q. Thinking about social media channels and how you use them, which of the following activities
best describes your online behaviour?
Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019
Around 65% of consumers believe that their
behaviour is influenced by social media while
reading and posting reviews, following
promotions and influencer endorsements, and
sharing opinions through different channels.
Russian users tend to be “silent viewers”. They
read reviews more than their counterparts (by
6,6 p.p.), follow endorsements from an
influencer (by 2,9 p.p.), browse media to seek
inspiration (by 0,3 p.p.) or use social media to
keep up with friends (by 3,5 p.p.).
Russians are less likely to share their thoughts
and recommendations about products via social
media using tags, comments or links (by 2,3
p.p. below the global average).
50
39
31
30
29
21
20
17
16
6
It is uncommon for Russians to make
purchases directly through a shoppable
Internet posts. Only 16% of Russian
consumers buy items through posts, compared
with 21% of global consumers.
Social media has great power as consumer
trust reviews more than descriptions that come
from organizations themselves. Businesses
need to encourage feedback from customers
and learn to deal with negative reviews.
What is more, replying to customers' opinions
and taking their complaints into consideration
make them feel like company is adapting
business to consumers' desires - which helps
to build loyalty.

Young Millennials are highly influenced
by social media content
I use social media
channels to complain
about a products or
services
I recommend brands/
products to others
via social media (i.e. tags/
comments/sharing links)
I have been influenced to buy
a product or service following
an endorsement from
an influencer/celebrity
50% ofservice
Young Millennials (23-26) have been influenced to buy a product or
following positive reviews they have read on social media
Men tend to write online reviews more often (by
3 p.p.) and post recommendations and
comments about product (by 8 p.p.) than
women. As mentioned earlier, men are also
more sensitive to products advertised by
celebrities or influencers.
Women tend to be “silent users”. They are
more likely than men to browse media to get
ideas and inspiration (by 7 p.p.), take
advantage of offers and promotions made by
other users (by 4 p.p.) and make purchases
based on positive reviews (by 6 p.p.). Men tend
to write more reviews but are less influenced by
other reviews, while women rarely write reviews
but are more influenced by them.
Young Millennials are highly influenced by
social media content. Half of them look for
shopping inspiration and buy products based on
positive reviews. Generation Y actively uses
social media channels to complain about
products and service (24%).
Generation Z and Generation X are more likely
to use social media to keep up with friends and
family (32% and 54%, respectively).
Where What How Who
I browse social media
channels to seek inspiration
for purchases
I recommend brands/products
to others via social media (i.e.
tags/comments/sharing links)
I have been influenced to buy
a product or service following
positive reviews I have read
on social media
Social media are among the most frequently
visited websites (SimilarWeb 2018: YouTube
(2nd), Facebook (3rd), Instagram (6th) Vkontakte
(9th). More retailers are using social media
platforms as sales channels.
As social media becomes a marketplace,
organizations should cultivate socially
active communities.
Some companies are taking notice of the
potential for using social channels to build
communities and eventually translate those
relationships into sales. For example,
Instagram now is a full-value Internet store with
the possibility to make direct purchases. This
service is now available in the US in pilot form,
but Russian retailers should be ready to present
their products on such platforms in order to be
competitive.
Partnership with blogger or influencer helps
promoting the product as 17% of Russian
customers have been influenced to buy a
product, following an endorsement from an
influencer.
51
51
 Where What How Who

Social media mostly influenced consumers’

purchase decisions in fashion category

Figure 44. Categories of goods in which consumers are influenced the most by social
media, %, 2018

Fashion
52
(clothing and footwear)

Technology 39

Travel 35

Food
29
(recipes, dining out)

Health & wellness 28

Sports and leisure 24

Beauty and cosmetics 21

Do-it-yourself/
14
home improvement

Q. In which of the following categories do you feel social media has influenced your purchase
decisions most?
Respondents:696
Source: PwC, Global Consumer Insights Survey, 2019

52%
of respondents believe that social
media has influenced their decisions
to buy clothing or shoes

52
 Where What How Who

Russian consumers are influenced by social

media the most in three shopping categories:
Millennials purchasing desicions are following
clothing and footwear (52%), technology (39%)
the trend of a "healthy lifestyle": they often
and travel (35%).
look for cosmetics, health, fashion looks. It is
an element of image in their social media
Older generations feel the impact of social
accounts. Matures are easily impacted by
media in most shopping categories: travel
social media due to novelty of social media
(55%), food (43%), technology (32%) and
information channel.
beauty and cosmetics (18%).
Organizations should segment audience by
Generation Y are the most affected by social
their interests, deeply analyse clients' profiles
media in clothing and footwear (55%) and
and offer them unique products based on their
health and wellness (29%).
choice.
Generation Z is mostly driven by social media
in sports and leisure (34%) and DIY/home
improvement goods (26%).
Figure 45. Categories of goods in which consumers were influenced the most by social
media, by generation, %, 2018

41

55
55 43
31
32 29
15
35 30 27
29 29 23
54 18
33 33 34
22 21 26 12
6

Fashion Travel Food Sports and Technology Health & Do-it- Beauty and
(clothing (recipes, leisure wellness yourself/home cosmetics
and dining out) improvement
footwear)
Generation X Generation Y Generation Z
Source: PwC, Global Consumer Insights Survey, 2019

53
 Where What How Who

Most of Russian residents consume

online entertainment content on a daily
basis

Entertainment platforms usage develop a clear

habit: either customer use them every day or
don’t use them at all. Russians stream movies
Russia ranks 8th 80%
and music with less frequency than global in online
consumers. Still, 35% of consumers in Russia entertainment are active
stream some kind of media entertainment
engagement rating users
every day. In addition, 32% tend to play
videogames once a day or more.

The most active users are men. They watch

movies on streaming services stream music
and play online games more than women (by 5
p.p., 8 p.p. and 18 p.p., respectively).
Generation X
(37-72)

stream music via music

streaming services (82%)

Generation Z I stream movies using movie

(17-22) and TV streaming services
(79%)

I play multi-player, online games

(85%)

I obtain online
entertainment content through
pirate sites (64%)

Generation Y
(23-36)

I stream movies using

movie and TV streaming
services (84%)

I stream music via music

streaming services (83%)

54
 Where What How Who

Figure 46. Top 10 countries which residents

are active online entertainment users, 2018
To engage multichannel consumers, retailers need
China37.9% 95% to develop multichannel marketing. Online
25.7%
entertainment platforms could be the right channel
Vietnam 11.7%92%
24.8% for reaching out to the broad audience.
Indonesia 87% Businesses may consider entering into
28.7%
23.9% partnerships with big entertainment platforms
Philippines 13.0%87% to attract customers with pleasant offers.
34.4%
Hong Kong 87% Case study:
27.5% • MVideo offered customers a one-year
Brazil 11.9%87%
28.5%
subscription to ivi.ru with Smart TV install;
Middle East 86% • Yandex offers free delivery from Beru for
12.6%
Yandex.Plus users (if the order' total sum is
16.7%
80% Russia 13.4%80% more that 500 RUB).
Malaysia 79%

Spain 74%

Figure 47. Frequency in using online entertainment services, %, 2018

35 daily
I stream movies 31
using movie and TV weekly
17
streaming services 17 monthly
never
32
I play multi-player, 25
online games 19
24
34
I stream music 34
via music streaming 16
services 19
14
I obtain online 19
entertainment content 18
through pirate sites 50

Q. How often do you use the following online entertainment/streaming services?

Respondents: 696
Source: PwC, Global Consumer Insights Survey, 2019
55
How to adapt business
to changing consumer
preferences?
57
Six imperatives to improve customer
experience

PwC recommends taking six concrete actions to start improving customer experience. If you can
take action in these six ways, PwC believes you can begin to shift your focus to consumer-centric
vision, which better recognises and reflects the central role of today’s digitally empowered
consumer.

Investing in employees can yield a better customer experience

Customer experience exists in a feedback loop with employee experience. An

organisation trying to improve customer experience without considering the crucial
role of employees is missing an integral part of the equation. By mapping out the
connections among culture, critical few behaviours and business outcomes,
company can easily identify where employee experience has the biggest impact on
customer experience: 52% of respondents believe sales associates with a deep
knowledge of the product range highly improves the in-store shopping experience.

Building communities under your brand vision

Fusing the customer experience and employee experience is a lot easier when both
groups are highly motivated to be associated with the brand or organisation. It’s
important to figure out what employees and customers care about and to
communicate your shared values: 42% of respondents are willing to pay a premium
for non-food products made by brands well-known for their sustainable practices.

Build on magic moments along the customer journey

In an age of ever-expanding digital options, consumer loyalty can and does vanish
with the touch of a button. To minimise that possibility, focus on magic moments that
earn loyalty over time and create a relationship that endures beyond the next
product search. Almost 20% of respondents appreciate when ads linked to their
interest directly send them to a favourite brand and 11% like to see shopping
opportunities depending on their location. PwC has developed systems to track,
measure and display the key components of customer experience so you can gain
insights that will help you know where to focus your resources in order to get the
best results.

58
Understand your customers based on their behaviours

Consumer insights enable far greater personalization than the old-school paid
media approach of segmenting customers by demographics alone. Demographics
can’t tell marketers how, when, where and why consumers shop. Behavioural and
attitudinal attributes can. Armed with that information, you can bring together all of
your commercial investments—including promotions, content, e-commerce and
advertising—to deliver seamless, end-to-end experiences tailored to a specific
shopping context. Around 39% of Russian consumers believe personalized
advertising is the most influential: they like to interact with a single click and receive
personal compilations and product suggestions.

Treat consumers’ data with respect and deliver value in exchange for it

Customers want the companies they interact with to protect their personal data, and
PwC research indicates that they’ll take their business elsewhere if they don’t trust
that a company is safeguarding it. Anticipate this demand and rethink how you use
consumer data, how much control you give consumers, how you value data and
how you’ll deliver value by using it. Consumers are making it imperative for
companies to be transparent about their data policies and proactive about
publicising the value they offer in exchange for it. Yet even as companies
encourage consumers to entrust them with their data, only 30% include proactive
management of cyber and privacy risks in their digital transformation plans “fully
from the start,” according to PwC’s 2018 Digital Trust Insights.

Win the customer journey

Today there are more trips, more choices, more of everything. You can win over
customers on-site or via e-commerce by understanding what they are trying to
experience and then making it easier for them to accomplish that goal through
things such as ease of navigation, breadth and quality of selection, price, quality of
advice or exclusivity. For instance, by connecting consumers’ online research with
their in-person visits, you can win the trip and deepen loyalty. And winning the trip
isn’t just about stores and retail; it applies to every company in hospitality, financial
services and healthcare.

59
 Key contacts

Martijn Peeters
Partner
Retail & Consumer Leader

martijn.peeters@pwc.com
+7 (495) 967 61 44

60
61
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