A discussion of consumer loyalty in the year 2000 among Russian immigrants to Israel requires a review of their consumer habits during the last seven years.
The first immigrants arrived in Israel without financial means, worried about the lack of jobs befitting their capabilities and training; but mainly worried about the tens of thousands of competitors, destined to arrive in their wake. At first, they had to work piecemeal at minimum wages. This required lower current consumption. Many businesses did not view them as a prime target market.
Within three to four years, a drastic change occurred in the purchasing power of these immigrants, who spared no effort to improve their economic situation, and in the financial situation of new arrivals. Many sold apartments, that had been bought at bargain prices as part of the post-Communist privatization, for tens of thousands of dollars. Moscow and Leningrad residents often received over $100,000 for their apartments. Others succeeded in transferring to Israel money earned in the liberalization chaos of Russia and the other former Soviet republics.
In 1993-1994, a new consumer sector formed, characterized by unique consumer habits. Many entrepreneurs from among the immigrants were the first to discover this sector and established hundred of businesses to supply the special needs of the Russian sector.
The standard of living of the CIS immigrants rose steadily: 85% found steady employment, more than 50% bought apartments, around 20,000 became businessmen, and thousands took courses in order to improve their employability.
How does all of this reflect on their consumer loyalty in the next decade? There is no single answer to this question. The Russian speaking sector is not homogenous. Besides the natural division by age, education etc. (similar to other population groups), there are differences, sometimes very significant, in the consumer habits of immigrants from the different republics, and even between emigres from different cities. However, most CIS immigrants can be characterized as: conservative, cautious, and loyal to the lifestyle they know.
- Being conservative, it can be assumed that they will be loyal to those businesses which give good service, even at the expense of price. Preference will be given to those earning their trust.
- CIS immigrants, especially the adults, will prefer to buy products or receives the services of Russian speakers.
- In our assessment, CIS immigrants will prefer brands produced and known in Western Europe or the US.
- It is reasonable to assume that demand will remain high for books, Russian cultural events, and musical instruments.
- We believe that by the year 2000, CIS immigrants will be very prominent travel-agency clients. Frequent trips are considered delayed compensation for all of those years during which they could not travel outside the Soviet empire.
- The standard of living will continue to rise, generating demand for quality, luxury products.
Dr. Michael Silverberg is an economic advisor; David Greenberg is an advisor to the Russian sector.