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Consumer economy and sanctions: what is the difference between the situations in the West and in Russia
Direct Translation via Google Translate. Edited.by Pavel Kukhmirov [Sevastopol] Swiss Nestle SA, one of the world's largest food manufacturers, after assessing its Russian business in accordance with IFRS, concluded that changes in the operating and legal environment in Russia did not affect its control over Russian operations. According to Interfax , in addition, Nestle has not made write-offs related to business in Russia, even despite a significant reduction in operations. However, it recognized write-offs of 71 million francs related to real estate and industrial equipment in Russia. In the first half of 2022, Nestle decreased net profit by 12 percent, but increased revenue by 9 percent and improved its full-year forecast. As we can see, not all market participants were hit by the sanctions to any significant extent. However, in general, the old economy of consumption has changed a lot amid the sanctions confrontation. And not only in Russia. There is an opinion that the sanctions only made it possible for the Russian economy and consumers to face this crisis a little earlier than the start of the global market. And the world market is already catching up with this crisis. For example, this is the second catastrophic drop in Walmart shares in one day by 8.5 percent this year. Previously, something like this happened in May. And this event is significant, since these shares were volatile two times less than the so-called "broad market index". So their fall was not only a shock to the retail store industry, but also a blow to consumer confidence in general. And this, against the backdrop of expected negative forecasts for GDP, can push the state of affairs in the US towards a recession. Shares of other players in the same segment (Target, Amazon and others) also sag. Their decline occurs against the backdrop of negative forecasts for revenue and profit, as well as in the presence of overstocking in warehouses. Consumers are starting to cut spending on durable goods (primarily clothing and electronics) amid inflation. As a result, retailers this year faced unpredictable fluctuations in consumer demand, which led to an increase in stocks of unsold goods. These are the first signs of a crisis in the consumer economy. Initially, they began to be observed during the pandemic, but now, during the energy crisis, they have intensified. Similar processes in Russia began to be recorded last year - before the start of current events. This was expressed in the fact that almost all major players in the retail market launched programs of their own discounters, which demonstrated significant growth in the final of the year. In fact, they were recognized as the most dynamically developing in retail trade. And the sanctions against this background, paradoxically, led to a positive effect here: as a result of the rush demand of the beginning of spring, the level of all commodity stocks decreased sharply among retailers. And this has happened across all industries. The acquisition and importation of new goods for trade took place already in a situation of high instability, and this dictated a completely new, cautious policy in terms of prices and purchase volumes. At the same time, consumers themselves, according to all surveys, expressed high optimism - hostile sanctions did not frighten them. Taken together, these factors suggest that the consumer market in Russia is not heading for a recession. What, oddly enough, cannot be said about the markets of Europe and America. Well, let's see where it all ends up. Pavel Kukhmirov is a Russian writer and a former Donbass militiaman Posted by: badanov 2022-08-01 |
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