5 June 2019
Ostentation is Out for 21st Century Eco-Friendly Affluent Russians
Gone are the days when newly rich Russians dressed primarily to impress, with super yachts and supermodels deemed lifestyle essentials. Instead, their focus is now on discreet wealth, bespoke quality and environmental responsibility.
Back in the 1990s, the sight of newly mega-rich Russians flaunting their mysteriously sourced gains aboard their Cote d'Azur-moored super yachts, with a clutch of stunning models brought along as deck candy, was one of the era's defining motifs. Fast forward some 20 years and Russia's affluent classes have changed significantly, with their lifestyles and preferences quite different to their pre-millennium counterparts. Indeed, so dramatic is the transformation that it is one that seems to fascinate market-research bodies both within and without Russia. Given the level of disposable income available to such individuals, as well as the clout they wield both as opinion-formers and trendsetters, this preoccupation is perhaps wholly understandable.
While obviously marked out by their wealth, Russia's moneyed elite have a lot of other things in common. Typically well-educated, they spend freely on cars, real estate and consumer electronics items. They have an active social lifestyle, which straddles fine dining, attending cultural happenings and major sports events and travelling abroad several times a year. By many standards, entry into the ranks of Russia's moderately wealthy comes relatively cheap, with the per-head household monthly income needing only to be around the US$1,100-1,700 mark. This, though, is well above the country's average monthly income of $730. In terms of where such individuals live, by and large they are to be found in any Russian city with a population of one million or more, although they also favour the more suburban districts ringing Moscow, St Petersburg, Kaliningrad and Sochi.
Overall, such individuals account for about 10% of Russia's population and, although they most commonly reside in the larger cities, they can also be found in relatively small towns (circa 100,000 residents) in natural resource-rich regions or close to the seaports in the Russian Far East and the Black Sea Basin.
Contemporary affluent Russians are far harder to identify than their highly ostentatious brand-fixated predecessors. These days, those Russians with a relatively high level of disposable income are prone to wear a mish-mash of brands, with luxury items often mixed with mid-market or even mass-market clothing or accessories. This has made it all but impossible to gauge an individual's wealth and standing solely by assessing their chosen wardrobe, with suits, shoes, watches and even cars no longer surefire indices.
This is, in part, down to the fact that Russians are no longer logo-fixated and won't necessarily invest in premium brands if they are confident they can find comparable quality elsewhere. Indeed, the flashy dressing and conspicuous wielding of trophy accessories, which so characterised the nouveau riche Russians of the nineties, is considered vulgar by the current generation, with such displays of wealth seen as verging on ill-mannered.
While conspicuous consumption was very much the pre-millennium mantra for Russia's rich, in the cold grey light of the early years of the 21st century the focus is now far more on responsible consumption, a far less gaudy and far more environmentally minded philosophy. This shift, while closing off certain opportunities for brands, has opened fresh new possibilities across a range of sectors, including clothing, footwear and accessories.
The shift is perhaps best encapsulated by the current car-buying preferences of affluent Russians. Tellingly, it is topped by the more environmentally responsible marques, notably Toyota and Nissan, while Volkswagen – a brand whose fraudulent emissions claims has made it anathema to the more socially responsible consumer – languishes way down the list.
In addition, more and more wealthy Russians are opting out of car-ownership altogether. Instead, they are subscribing to car-sharing schemes – which, in Moscow at least, include access to top-of-the-range models from Bentley, Mercedes and BMW. The more athletically minded environmentalist, meanwhile, can also opt to forego a car in favour of renting a bike from the local authorities, while those inclined to do a little less legwork tend to favour a privately rented electric scooter or gyro-scooter.
Neither has the food sector proved to be immune to the changed preferences of wealthy Russians, with specialist farm fresh and vegan outlets now to be found in the wealthier quarters of many cities. For their part, most of the larger supermarkets have also attempted to ensnare such high-minded consumers, largely by conspicuously stocking premium-priced organic items.
Even among ordinary Russians, recycling has become a pressing priority, with the country's more affluent citizens even more mindful of the issue. As a result, high-end purchasers want their goods presented in biodegradable packaging or, when possible, with no packaging whatsoever. They also favour purchases of upcycled items or products made from recycled materials. And they tend to take their own reusable plastic bags with them when shopping and are willing to pay a premium for more environmentally friendly plastic bags when making a purchase.
In order to understand this new generation of wealthy Russians, it is worth bearing in mind that they don't primarily spend money in order to purchase goods or secure services, instead they are driven by emotions and a desire for new experience. They also see their time as a precious commodity, with any waste of it seen as comparable to purchasing a substandard product or receiving shoddy service. Interestingly, it is a commodity that seems more highly valued by men, with males far more likely to invest in "premium" experiences – such as luxury travel, high-adrenalin activities or immersive VR environments – than women.
For existing or aspirant suppliers of goods and services to Russia, keeping this particular demographic in mind could pay dividends on a number of fronts. Firstly – and most obviously – these are people who can easily afford imported items and who tend to buy them in substantial quantities on a repeat basis.
Then there's the fact that such consumers tend to be innovative and adventurous by nature, characteristics that make them very open to trying new products and services. Finally, it should also be remembered that many of these individuals consider themselves cross-disciplinary professionals, a standing that sees them interact, both in the real world and online, with a variety of people across the whole social strata. This, then, gives their preferences and opinions considerable weight with potential purchasers at every level of Russian society.
Leonid Orlov, Moscow Consultant