People say that Italy in Russia means food, fashion and furniture. In terms of furniture, confirmation arrives from a Report 2016 of GruppoBPC International (an international network which helps companies to develop their businesses in the international markets) where importations in Russian market are worth 56% and Italy results the second partner with a percentage of 19% (according to Csil – Centre for Industrial Studies – 5% of Italian exportations).
Made in Italy furniture is quite successful in Russia thanks to the wide range of materials, design and references. Thus far Italian furniture products have mainly satisfied the upper segment of demand, generated by the highest concentration of wealth in the hands of who benefited from the post-Soviet market opening (magnates, businessmen, financial operators). It is no coincidence, in fact, that Italian furniture importations maintain their positions even after international commercial sanctions.
Today the most relevant opportunities derive from the mid-market demand (about 40% of market) linked to an increased access to consumer credit and to new construction planning and corporate tax incentives policies. According to GIM Unimpresa (Italian Association Entrepreneurs in Russia), construction and furniture market will receive an important boost from dismantled khrushchevki (big Soviet apartment blocks, 5-story building). This operation will provide 60 million square metres in three years for new constructions. Italian Institute for Foreign Trade (ICE) claims that new construction in the Moscow region will concern each year 7,5 million square metres for next decade.
Within this context, Italian companies will be eligible for advantages granted by Special Economic Zone (SEZ) both as regards taxation and some aspects relating to duties and administrative procedures. These areas are duty-free and corporate tax is 5% the first 5 years, until a progressive 10% in the next ten years.
Contract is closely tied to construction planning, too. According to information collected by the market expert Sabino Menduni, 3,02 million square metres of commercial constructions were allowed in the first 8 months of 2016: 795.000 m2 for warehouses, 645.000 m2 for production plants. 640.000 m2 for commercial spaces and 112.000 m2 for offices. This in addition to 2,7 million m2 already under construction.
Showrooms and architectural studios represent the best sales channel for Italian furniture at top of Russian market. Specialised importers and department stores in big cities manage their products for a wide distribution. Just like kitchens which constitute the only sector with a positive variation between January 2015 and January 2016. According to Federlegno Arredo (the research center for furnishing sectors) the percentage is +5,1%.
It is increasingly recognised the importance of online channel. A RBK report (Russian Information System) says that in 2016, 21,6% of Russian consumers bought furniture on Internet, with huge increases year after year.