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Amid global gloom, more Russians have cash to shop
By Karl Emerick Hanuska
MOSCOW, Dec 31 (Reuters) - The slump after September 11 left U.S. shoppers and others worldwide pinching pennies ahead of the Christmas and New Year holidays, but more and more Russians are spending gleefully as their economy resists the gloom.
Russians hand out their presents at New Year, still their biggest holiday. The Orthodox Church celebrates Christmas on January 6.
The fledgling market economy might seem an unlikely oasis of stability but high prices in 2000 and early 2001 on oil and other key exports have fuelled economic growth, filled government coffers and created better jobs that are helping to create a class of more deep-pocketed consumers.
"We've got extra cashiers working all shifts. The number of customers coming through the door has been tremendous," said a Moscow manager for the Ramstore hypermarket chain, owned by Turkish conglomerate Koc Holding.
"There has been no slowdown in spending since September 11. If anything, sales have only picked up and continue to do so as the holidays get closer."
After expanding at a post-Soviet record of 8.3 percent last year, Russia's gross domestic product in 2001 is expected to have grown more than 5.5 percent despite lower oil prices now.
Stronger growth translated into a 9.1 percent rise in the average income in 2000, with a similar increase predicted for 2001.
Vast numbers of Russians still live near or below the poverty line, but rising affluence among much of the population has fed retail spending across the country.
SPEND IT IF YOU'VE GOT IT
While there are concerns about what lower crude prices could mean in 2002, Russians who have been hardened by years of crises seem generally unconcerned and are flocking to the shops in droves to spend some of their new-found wealth.
The spending spree is most evident in the capital Moscow, by far Russia's wealthiest city, which accounts for 30 percent of retail spending nationwide and where the average annual income of nearly $6,000 is many times the national average.
It took Marina, a university student and mother of a young son, all of 10 minutes to make her biggest purchase of the holiday season -- a $1,000 television for herself.
"I feel bad about what is happening to other people, but job losses and terrorist attacks are no reason for me to stop spending," she said, handing a cashier a stack of crisp roubles.
Many other Russians appear to feel the same -- the glittering shopping malls, supermarkets, and boutiques that have sprung up in recent years in larger cities like Moscow and St Petersburg are brimming with shoppers.
In Moscow, spending is rising at about 10 percent a year. Major construction projects have sprung up across the city, where retail space per capita is only about 10 percent of that in London, to meet demand.
The Swedish home furnishing giant IKEA has benefited from the buoyant consumer mood. Some 45,000 people visited its second Moscow store in one day when it opened this month.
People queued for hours in sub-zero temperatures to get into the $45 million store, which will see a neighbouring 90,000 square metre (968,800 square feet) shopping centre open a year from now.
RUSSIANS TRAVELLING ABROAD
Despite concerns internationally about the threat of terrorist attacks, Russians are finding no reason to stay at home during the holidays and have booked trips to beaches or ski resorts that for many have become traditional.
Flag carrier Aeroflot is seeing robust demand, with key international routes sold out during the peak of the season as Russians take advantage of big discounts offered by hotels and resorts hit by a tourism slump.
"Russians are not easily shaken," an Aeroflot spokeswoman said. "If anything I think the very grim last few months around the world has only made people more determined to enjoy the holidays this year."
Many Russians, who spend up to 80 percent of their income on consumer goods compared with 30 to 40 percent in the West, are also experiencing the joys of buying on credit for the first time.
Options are available to pay on credit for everything from apartments to kitchen appliances and holidays.
"Demand for credit has surged over the last few weeks. People are using the New Year holiday as an excuse to buy something nice for themselves or their families," said a manager from the M. Video electronic goods shops near the Kremlin.
"For most people buying on credit with us, this is the first time they have ever bought on credit. I think that it is a sign of confidence in Russia and their own situations."
A slide in the rouble that has seen the currency recently drop to record lows on the back of falling oil prices has also helped holiday spending.
With many people expecting the rouble to tumble even further, some think they are better off putting their savings into something tangible rather than see them depreciate.
"Who knows what tomorrow will bring," said Marina as she prepared to carry her new television from the store.
"In 1998 during the financial crisis my mother lost her savings in a bank collapse. If you've got the money you're better off spending it now."
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