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New Year Shopping With A Credit Card In Russia


Citibank Conducts Research into New Year Shopping Dynamics

Holiday seasons, especially New Year, have always been the peak buying time in Russia. Over recent years this rise has been occurring against the background of increased overall consumption driven by improvement of public well-being, expansion of retail chains, and development of card payments and consumer lending.

However, until recently there have been very few studies into consumer behavior of credit cardholders in Russia, which is somewhat strange as the growth of credit card usage is directly related to all the above factors. Besides, western analysts note that people spend, on average, much more on credit cards than when paying in cash or with a debit card.

How are people using their available credit limits in the run-up to New Year’s Eve? What do they buy and when? And who are these people? Citibank, one of the world’s largest credit card issuers and a major player in the Russian market, tries to answer these questions.

In its research, Citibank analyzed the consumer behavior of over 100,000 customers who actively used their credit cards throughout 2006. All of them live in Moscow and St. Petersburg. The research focuses on the most popular categories of purchases, such as clothes, electronics, cafes and restaurants, petrol, food, jewelry, luxury items, etc., covers purchases made in Russia and analyzed the dynamics of the total value of purchases in each category as a percentage change from the previous month.

One of the most popular shopping categories is jewelry, watches and luxury items. It is in this category that December saw the highest growth – over 125% among women and about 184% among men. It should be said that December is the only month noted for such unprecedented growth in this category; even in March, which is the second best month in this segment, the growth is smaller.

Another growth leader in December is toiletries and cosmetics, where purchases soared among both men (96%) and women (78%). This may be explained primarily by the fact that both men and women buy toiletries and cosmetics as the most popular and hassle-free gift. In the case of men, this is also attributed to the fact that they are less price-sensitive to this category of goods of which they have little knowledge.

A no less significant category is that of electronics, which showed growth not only among men but also among women in December (78% and 7% respectively). While the popularity of this category among men is quite expected, among women this is a new trend witnessed particularly in December – these purchases could be gifts for male friends, or such things as fashionable mobile phones for self or others.

Another popular category in December was that of purchases made at petrol stations. Their more than 51% growth among women shows that it was not petrol alone (among men, expenditure on petrol in that month even fell by 6%), but also purchases at petrol station convenience stores.

The following two categories are purchases associated with festive mood, entertainment and merrymaking, rather than with gifts. These are communication services and restaurants, cafes and entertainment. Women’s spending on telephone and Internet goods and services goes up 24% and that of men is up 11%. Most likely, this is also associated with “being in a festive mood” as people coordinate more extensively with their relatives and family over the telephone, try to contact those with whom they have been out of touch. Spending on restaurants, cafes and entertainment among men goes up 6% and among women is up as much as 18%. This means that people feel that the holidays are near at hand and begin to enjoy themselves more and to meet their relatives and friends more often.

Another significant expense item in the run-up to holidays is food and visits to supermarkets in general. In December, average spending among men goes up 25%, whereas women reduce their buying activity by more than 6%. Men seem to prefer to buy food for the holidays themselves.

The popular category of sports goods shows only an insignificant growth of about 3.5% among men in December, although November and October saw record spending in this category with an average growth of 25-30%. Among women, there are no changes in this category at all.

Important parts of New Year spending are purchases at department stores (an average growth among men and women about 20%). For example, purchases of leather accessories and bags among women increase by 20% and among men – by 30%.

The household goods category shows a reverse trend. People prefer to close all household issues before the holidays so that they could relax and forget about household problems. Therefore, in spite of a serious growth in expenditure on furniture, lighting, sanitary equipment and industrial goods in October and November (more than 30-40%), December sees the biggest drop for the year.

Clothes and footwear, one of the most money-consuming category for the Russians, shows a growth of 4.5% among men and just over 24% among women, which may be driven by seasonal sales. The growth rates, however, are incomparably lower than those in the spring and autumn months. Clothes are a much better gift for women than for men.

New Year’s Eve in Russia is primarily a family holiday, which justifiably leads to a significant growth of spending in such category as toys (by 127.16% among men and 120% among women). School items also shows a serious growth in December (by 48% among women and 121% among men – among men, December holds second place after September). Purchases of cinema tickets only grow among men (by more than 200%) and show a slight drop among women.

Both children and their parents are active consumers of sweets and confectioneries, and New Year holidays are the time of a real confectionery boom – spending on cakes, sweets and cookies among men and women go up by more than 2,000%. This category is an absolute growth leader.

Music and video discs continue to remain one of the best gifts in Russia (a 23% growth among men and a 5% growth among women in December). Growth in the books and press segment is much more significant – 60% among men and over 135% among women (Russia still is the most reading nation).

One of the most stereotyped categories of purchases in Russia, alcohol drinks, shows quite unexpected results – a very serious growth, but among women it is much higher (197%) than among men (138%).

A few interesting statistics about men: spending on arts throughout the year is their prerogative and in December this category shows an unprecedented growth of more than 388%. Spending on postal and courier services among men increases by more than 80% in December, whereas women make little use of them throughout the whole year. Women, however, spend times more than men on food delivery and catering services in December. It is also interesting that cash withdrawals among women go up 5% in December, whereas among men they go down by the same amount.

A few interesting statistics about purchases in specialized gift shops: while their growth is significant (just over 100% among men and women), it does not differ much from that in other holiday months of the year. However, expenditure on flowers increases considerably – by 30% among men and by 65% among women (the third result after March and August-September (the beginning of school year).

January accounts for most of the growth in purchases made abroad. In January, spending on clothes among men go up by 169% and among women – by 152%; spending on universal goods among men go up by 129% and among women – by 85%; spending at duty-free shops among men go up by 70% and among women – by 57%; spending on restaurants, cafes and entertainment among men go up by 154 and among women – by 150%; spending on jewelry, watches and luxury items among men go up by 134% and among women – by 214%.

New Year credit card spending considerably depends on the customer’s income and credit limit. Thus, in spite of the fact that growth has been observed in all segments, among people with a credit line of more than RUB 100,000 the growth is insignificant – about 4.5%, and in the segment of less than RUB 45,000 and in the segment between RUB 45,000 and RUB 100,000 the growth is equal and totals about 9.5%. In the case of wealthier people, however, the growth continues throughout January and adds another 3% to the December growth, whereas in the case of the other two segments it falls by approximately the same amount. This means that wealthier people continue to actively spend money on recreation, entertainment and purchases both in Russia and abroad, whereas the less wealthy begin to save.

Citibank began to issue credit cards in Russia in 2003 and has already issued over 350,000 cards. In 2005, Citibank was the first bank in Russia to offer a grace period on its credit cards, and in that same year it began to issue MegaFon-Citibank co-branded cards with a grace period. Today, Citibank boasts three successful co-branding projects. These include, apart from the MegaFon-Citibank card, a co-branded card issued together with Lufthansa’s Miles and More Frequent Flyer Program and a co-branded card issued together with, Russia’s largest chain of travel agencies. In 2007, Citibank was the first in Russia to issue a Cash Back credit card that offers a 10% cashback on all credit card purchases. All Citibank credit cards are also discount cards. Citibank’s discount program includes over 800 stores and restaurants across Russia and is expanding constantly. Citibank credit cards are offered in more than ten Russian cities to those who are 22 and over, and have a confirmed monthly income equal to or higher than RUB 9,000.


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