Growth in the Russian toy business is low and is expected to accelerate slightly over the next five years.

The slow growth is largely due to Russia’s recent recession, which has led low-income families to withhold spending on new toys or games. There tends to be a considerable difference between the money spent on toys in rural areas and cities, and it is estimated that in Moscow about 25 percent more is spent on toys than elsewhere in the country.

The Russian toys and games market recorded total revenues of USD2,392.4 million in 2018, which equates to an average annual growth rate (CAGR) of 1.5 percent from 2014 to 2018.

Sanctions against Russia over Crimea have taken a heavy toll on the Russian economy.

Hypermarkets, super-markets, and discounters accounted for the largest share of the Russian toys and games market in 2018, generating revenues of USD314.6 million, or 13.2 percent of the market’s total value, through this channel. Online pure-play revenue in 2018 was USD275.6 million, representing 11.5 percent of the market’s total revenue.

While face-to-face shopping remains the most popular option, the online channel is gaining in importance and has now increased its share to just over 11 percent. Russian online retailer Ulmart has addressed logistical problems caused by Russia’s size to build an effective e-commerce operation in a country where Amazon does not have a presence. Wildberries is Russia’s largest e-commerce site and is growing rapidly. Its founder became Russia’s second-largest billionaire earlier this year after the company’s sales broke the USD1 billion mark.

The market is expected to accelerate, with an expected CAGR of 2.5 percent for the five-year 2018-2023 period, which should propel the market to USD2,713.2 million by the end of 2023.

To a certain extent, an increase in disposable income drives this growth. Growth has tended to be driven by an increase in franchise systems and interactive, technology-based toys and games, as well as a trend towards online shopping.