The production of consumer goods and the consumer goods market itself are among the most profitable branches of the modern Russian economy. The level of consumption in comparison to income in Russia is higher than in European countries and the USA. In other words, citizens prefer to spend their money rather than to save it for the future due to their skeptical expectations regarding the likelihood of their being able to save it.

The Russian consumer goods market is one of the largest in the world. In 2011, its volume exceeded 350 billion euros, which ranks seventh in the world and third in Europe in terms of absolute volumes. Russian products account for the most significant amounts. In our country, a number of branches of consumer goods production are developed, such as the food and textile industries, furniture production and some others.

Historical Background

The development of consumer goods production in Russia started in the eighteenth century. Until that time, all production had been limited to craftsman enterprises distinctly linked to a territory (i.e., they were oriented to the market of a specific location or town). After the reforms of Peter the Great, manufacturing rose, producing (among other things) goods oriented towards the consumer market. But at the same time, as a result of the inculcation of a European way of life, imported goods flooded the country, simply because their analogues had not been produced in Russia for a long time, or had been of poor quality.

Nevertheless, outside of the luxury products branch, the production of consumer goods developed very actively, although sometimes it was rather specific. For one thing, the textile industry (represented by wool, linen and other manufactures) developed mainly due to government orders, and open sales remained in second place.

Changes came in the second half of the nineteenth century, together with a heavy growth in the economy, among the leaders of which was the consumer goods branch. The Russian consumer goods industry became one of the leaders in the world, and in many markets (especially Asian) competed on roughly equal terms with the products of the world’s leading economies. In 1887, the consumer goods industry accounted for 32.4% of the total volume of industrial production (by 1900, this indicator was reduced to 26.1%). Herewith, the majority of the enterprises in the consumer goods industry was located in the central part of the Russian Empire, in the provinces of Moscow, Tver, Vladimir and St. Petersburg.

During the same years, the food industry also developed actively, and large enterprises were established that manufactured sausage products, confectionaries, beverages and many other products. Alongside this development, a great portion of both the food and consumer goods industries was still accounted for by semi-craftsman enterprises. The level of mechanization at the majority of enterprises was far from sufficient, and manual labour prevailed. This fact worsened some of the specific indicators of Russian products, but it was almost inevitable, since the market was characterized by the oversupply of a cheap labour force derived from former serfs who moved to the towns to earn money.

In general, by the First World War the Russian consumer products industry had reached its heyday. But the war and the following revolution led to a decline in this sector of the economy. This was related to the disruption of industrial chains, the physical destruction of a number of enterprises, interruptions in transport communications and the common severe economic state of the country, due to which the population sharply decreased its purchasing volumes for all but the most necessary products. In 1921, the volume of production in the consumer goods industry was less than 10–15% of the pre-war level.

But with the announced NEP policy, the production of consumer goods started to rapidly be restored, since their production (as a rule) does not require long-term investment and is regained rather quickly. Herewith, consumer goods were demanded in all situations, except for the most critical ones. As a result, by the middle of the 1920s the consumer goods industry had already reached the pre-war indicators. This was achieved, among other reasons, due to the construction of new enterprises (at the initiative of the government, as a rule).

In the 1930s with the beginning of industrialization, the consumer goods market entered a state of stagnation. Production growth could not keep pace with consumption growth, especially because almost all resources were being used for the development of heavy industry and transport, and the consumer goods market had become a non-priority.

Such a situation remained unchanged for many years. For one thing, in the 1950s to 1980s, many new enterprises were constructed, especially in the food and consumer goods industry, but serious deficits were observed for many commodity items. In fact, such deficits were not observed only for products, which were poorly demanded due to their low quality and bad consumer properties.

Among the examples of enterprises built in the consumer goods branch during this period are:

  • Cotton plants in Kamyshin, Engels, Kherson, Barnaul (the second plant), Dushanbe (the second stage of the plant), Cheboksary, Yartsevo, Omsk, Gori and Kalinin;
  • Wool plants in Minsk, Bryansk, Krasnodar, Ivanovo, Sverdlovsk, Kansk and Chernigov;
  • Silk plants in Krasnoyarsk, Naro-Fominsk and Leninabad;
  • Linen plants in Zhitomir, Rovno, Velikiye Luki and Panevėžys;
  • Knitwear plants in Cheboksary and Ufa;
  • Leather and footwear plants in Ulyanovsk, Ulan-Ude, Velikiye Luki, Dzhambul, Voroshilovgrad, Tallinn, Novosibirsk, Orel, Voronezh, Kamyshlov and Baku.

Herewith, hours-long queues for some types of consumer goods products were a widespread and daily phenomenon. In spite of the measures taken, this poor situation with regards to the provision of consumer goods remained until the breakup of the USSR.

 
 

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