Hryvnia devaluation provoked the growth of sales of household appliances and premium alcoholic beverages

Hryvnia devaluation provoked the growth of sales of household appliances and premium alcoholic beverages
Some retailers this season has finally lived up to they name
Photo: Konstantin Melnitskiy

The sharp growth of the dollar has delivered an unexpected surprise for retailers. Fearing a sudden increase in prices, consumers are sweeping alcohol, jewelry and household appliances off the shelves of supermarkets. Retail chains decided to benefit from the hype and quickly jacked up their prices. “I’m changing the price tag for the second time today, though you can still buy a refrigerator at the old price, while I go out to have a smoke,” a seller at one Foxtrot store in Kyiv told a journalist of Capital. The co-owner of the chain Valeriy Makovetskiy was unavailable for commentary. The growth of sales is situational, market experts warn. In 2015, retail sales will sharply fall.

Unexpected presents

This year New Year’s sales began in retail chains selling household appliances and electronics a week earlier than usual, says Manager of the Assortment Management Group of the Eldorado chain Vyacheslav Sklonniy. “In the period December 12-18, we sold practically two times more household appliances compared to the same period last year,” he says.

Sellers of household appliances are not the only ones who saw a growth in sales.

“Some restaurants are trying to purchase more imported alcohol, which is why in the first half of December sales grew by 10% compared to the same period last year,” says Director of the Vitis Group distribution company Serhiy Mazur.

Ukrainians are also actively buying jewelry: the sales grew 10% compared with other months of this year, according to the owner of the Zarina chain Natalia Netovkina. “However, it is still a long way to go to reach the level of last year’s sales,” she says.

Co-owner of Zeebra (Butlers, accessories chain Six and I am, cosmetics Glossip, clothing Peacocks) Dmytro Yermolenko says the sales of goods for households grew 18% since the start of December compared to the same period in 2013. “Compared with November the sales increased by two and a half times,” he adds. 

Hysterical shopping spree

In December of this year many retailers did not expect to benefit from the traditional New Year sales. The sharp devaluation of the hryvnia to a new historical low of UAH 22/US $1 on the black market within several days is a bounty for retailers. “If it weren’t for this situation, the sales would not have been so high,” says General Director of the Allo chain Valeriy Zolotukhin.

Consumers prefer goods that they had planned to buy earlier, says Dmytro Yermolenko. “In some cases consumers are ready to borrow the amount they are short of in order to buy something that they need,” adds the expert. He explains that this is why the sales in clothing stores did not increase. Meanwhile, the sales of TV sets and also large household appliances such as refrigerators, washing machines, etc. are breaking records.

Retailers had a very difficult year as the people’s purchasing power sharply dropped with the devaluation of the hryvnia. That is why retail chains are trying to benefit from this sudden upswing in demand. For example, the average prices of household appliances and electronics increased since the beginning of December by 5-15% and jewelry – 5‑7 %.

No illusions

High sales before the New Year give retailers a great opportunity to improve their financial standing before the forthcoming difficult year. “There is no reason for optimism, because in 2015 sales will be lower than this year,” admits a director of a chain of construction supermarkets on condition of anonymity. Yermolenko agrees with him saying that during H1 2015 the majority of chains will be fighting for survival.

This is particularly due to the continuing rise in prices. Mazur says that imported alcohol beverages are currently sold based on the exchange rate of UAH 14.5/US $1. “We are reacting to the actual rate,” he said. Netovkina adds that prices for jewelry will increase by another 10% and household appliances and electronics – by 10-15%. Many Ukrainians are likely to reject the idea of buying goods at such high prices. Retailers will begin to close unprofitable outlets and reconsider their assortments in favor of inexpensive products.

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