OREANDA-NEWS. Sberbank Investment Research, the research department of Sberbank CIB, is publishing its seventh survey of the pan-Russian consumer, the Sberbank CIB Ivanov Consumer Confidence Tracker, which monitors consumer spending, savings and confidence trends across the country.

The seventh tracker indicates a recovery in the consumer confidence index, with the overall score rising to -11% from -13% in November thanks to improving employment trends and readiness to spend on durables amid prevailing macroeconomic uncertainty.

The main findings of our survey are shown below:
* The index of conditions for big purchases improved from -23% in November to -17% in March 2014. This may be explained by people's desire to protect their savings from RUB devaluation. Interestingly, savings trends unveiled greater propensity to save: 18% of Ivanovs believe that it is a favorable time to save money now compared with 16% in our previous survey.
* Unemployment rate in our sample retreated from 9.9% in September to 9.1% in 1Q14, whereas the net hiring index bounced from -34% to -32%, which coincided with improved growth expectations for the companies where Ivanovs are employed. We also marked an increase in average wages from R26,400 in September 2013 to R28,600 in March 2014. One of explanations that we can provide is the deferrals of annual bonuses that are usually paid in December but were delayed last year and apparently paid out in 1Q14.
* Amid shaky economic environment, the number of price-sensitive customers grew from 63% in September 2013 to 68% in 1Q14; 55% of respondents mentioned switching to cheaper staple products over the last 2-3 months. As a result, food expenditures as a proportion of the Ivanovs' budgets declined from 40% to 39%, it allowed to increase savings ratio from 10.6% in September to 11.5% in 1Q14.
* Increased devaluation concerns (mentioned by 29% of respondents vs. 18% in Sept 2013) saw Ivanovs converting their savings into currencies: a typical respondent has bought \\$788 in FX YTD and may buy \\$692 going forward to reach their target share of FX-denominated savings. It means that FX purchases are more than halfway done, assuming a commensurate pace of purchases, demand for hard currency from households should dry up by the middle of the year.
* X5 Retail Group's average ticket showed tentative signs of improvement, growing from R 292 in 4Q12 to R296 in 4Q13 with increased spending on fruit and vegetables. Store visit statistics shows that Pyaterochka's traffic improvement of 4Q13 was sustained in 1Q14 due to ongoing assortment expansion and store renovation, while Karusel finally delivered traffic improvement as well. In our view, this should offset the still negative trends at Perekrestok stores and allow X5 Retail Group to show an overall positive sales performance in 1Q14.
* Increased propensity to spend on big-ticket items has a positive read-through for M.Video. As a reminder the company enjoyed a LFL bounce to 7% in 1Q09 (vs. 0% in 4Q08). This time, the economic situation and consumer sentiment are slightly different and it is hard to expect a similar magnitude of pickup, but we are still looking for positive LFL sales growth versus the -1.8% posted in 4Q13.

This proprietary publication includes a headline consumer confidence index and also provides a set of leading indicators for the most important trends exhibited in the country's rapidly growing consumer sectors (retail, banking, telecoms, media, IT, real estate and transportation).

The survey is executed by market research agency Cint on behalf of Sberbank CIB and is now conducted quarterly under a methodology that closely mirrors that of the State Statistics Service's quarterly survey and EU confidence assessments. However, our survey is expanded to encompass a wider set of questions relevant to Russia's middle-income consumers. The survey sample is 2,300 people, aged 18 to 65 and living in 164 cities with a population of over 100,000 inhabitants. The tracking error is below 2%.