Russian Tool Market: New Growth Points and Development Prospects

Today, international manufacturers can see availability of free niches in the market, demand on the construction market, gradual recovery of the automotive industry and other wide prospects for their rapid development

The past three years have not been the easiest for the Russian market of tools. First the coronavirus pandemic, then the sanctions - all this, of course, became a serious challenge. However, now it is gradually coming to life. Moreover, the most active players from China, Turkey and India managed to seize the moment and secure the vacant market segments.

Russian tool market

At the end of 2021 - beginning of 2022, the share of imported power tools and garden equipment on the Russian market was about 30%. During the year, this indicator remained approximately at the same level, however, the shares of different market players changed significantly. So, if in December 2021 - January 2022 Dewalt, Makita, StanleyBlack & Decker, Metabo, Stihl occupied 4-6% of the market, and Bosch's share was approaching 10%, now these manufacturers account for a significantly smaller volume - about 1%. At the same time, sales of Xiaomi, Realme, Tecno, Infinix, DEKO almost doubled. Demand for tools on the Russian market has changed its vector over the year. According to sources from several large retail chains, if in March-May 2022, due to the departure of Western brands, buyers literally swept their products away from the shelves, now interest has shifted towards Chinese manufacturers, especially those producing models for the mass consumer.

An interesting feature of the current situation is the collaboration between Russian and Chinese brands. Local companies form their products taking into account the needs of Russian consumers, combining the efforts of Russian and Chinese engineers, as well as partner factories located in China. Moreover, consumer confidence in Chinese products is growing in the automotive industry, in the segments of household and garden equipment, electronics and power tools.

Of course, the situation with the search for a replacement differs depending on the segment. If in the segment of household tools, Chinese products have generally managed to replace the departed brands (primarily due to the combination of sufficiently high quality and reasonable prices), then in the segment of professional tools there are not so many alternatives to the departed brands.

According to one of the largest online hypermarkets, VseInstrumenty.ru, in 2022 Russian companies increased their purchases of building materials, fasteners and office supplies. The company's turnover in the B2B segment in 2022 amounted to 59.3 billion rubles including VAT. The number of active clients increased by 20%. The growth was due to the expansion of the client base and increase in its activity.

According to the results of the year, the categories of building materials (+200%), electrics and lighting (+106%), fasteners (+102%), as well as office goods (+96%) were in the highest demand among B2B clients at the end of the year.

According to Viktor Govor, Director of Corporate Sales at VseInstrumenty.ru, last year was quite active in terms of demand among manufacturing enterprises, as new opportunities for import substitution appeared for local companies. The highest growth rates today are shown by Moscow and the Moscow region, St. Petersburg, as well as the territories of the Volga Federal District, the Southern Federal District and the Northwestern Federal District.

Reasons to enter the Russian market

Availability of free niches in the market

The departure of a number of European, American and Japanese manufacturers opened up good prospects for new market players, especially taking into account the construction boom and the gradual recovery of the auto industry. The release of new models of simpler tools that combine functionality, quality and reasonable price will definitely be positively received by customers.

Moreover, the expansion of the range of tools stimulates the development of the market due to competition. Another point of growth is related to the tightening of control over the supply of a number of products (including power tools) to Kazakhstan, which will lead to an increase in the cost of models imported through parallel imports from European and Japanese brands. At the same time, tool manufacturers from countries that have not joined the sanctions, which are ready to offer products of comparable quality at a more attractive price, will benefit.

Demand on the construction market

According to experts of the Stroitelstvo.ru magazine, the demand for tools has doubled in Russia over the past 10 years. One of the reasons for this phenomenon is the growing pace of construction, both housing and infrastructure. So, in 2022, according to Rosstat, the commissioning of housing in the Russian Federation overcame the mark of 100 million square meters, reaching 102.7 million sq. m. In addition, 137 large enterprises, a section of the M-12 Moscow-Nizhny Novgorod-Kazan highway, bridges in Arkhangelsk, Blagoveshchensk and Surgut were put into operation last year. Moreover, the President of the Russian Federation set an ambitious task for the Russian construction complex - by 2030, annually put into operation 120 million square meters of housing. The prospective construction of the Power of Siberia-2 pipeline should not be discounted either; its design is currently underway. Such results are difficult to achieve without high-quality fasteners, fittings, installation and assembling systems, various tools, without which civil and infrastructure construction is impossible.

Gradual recovery of the automotive industry

The auto industry is gradually recovering: the former Renault plant in Moscow began producing Chinese JAC crossovers under the Moskvich brand, the Mercedes-Benz plant was bought by Avilon and is preparing to produce premium Chinese cars, the Avtotor plant in Kaliningrad has also reorganized to produce Chinese sedans and crossovers. As new models are launched, the demand for both fasteners and tools will grow.

ToolMash will be the first step to enter the Russian market

Participation in ToolMash will allow international manufacturers and suppliers to present a wide range of their products, to secure the status of a reliable partner and a proven market participant. In addition, exhibitors will be able to speak live about their new products and innovative solutions, hold negotiations, establish contacts with decision makers, expand the sales horizon, conclude new contracts with Russian and international companies. In addition, participation in the ToolMash exhibition is a powerful informational occasion that will increase brand awareness on the Russian market.