Regarding the POLITICAL Aspects. The following chart is showing the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including politically motivated violence and terrorism. As we can see, it has been remaining in negative figures, so this means that it is unlikely that Russian’s government will be destabilized.
Moving on the ECONOMICAL perspective. This figure shows how Russia has grown and become more competitive in the last 5 years according to the World Economic Forum index, which is beneficial for IKEA. The Global Competitiveness index is composed of 12 pillars and some examples of these pillars are: Infrastructure, Macroeconomic Stability, Innovation, etc. Regarding the Russian’s GDP, as we can see on the Graph, it has decreased. This fact is beneficial for IKEA because lower income will lead the population towards companies that offer affordable prices such as IKEA’s. SOCIAL. People are savers not spenders: this means that generally Russians prefer affordable prices rather than high quality products that are too expensive. According to The Bank of Russia, these are the statistics of the share of money income in Russia. The total population of Russia is about 142 million people and according to this graph IKEA when targeting to middle class, can reach up to 85 million people and this chart shows us that 60% of the middle class in Russia has as much income as the top 20% (high class).
Moving on the TECHNOLOGICAL aspects, Internet penetration has been growing rapidly in Russia during the past few years reaching now 59% of the adult population. Globally, Russia ranks ninth in total e-commerce turnover with more than 11 billions pounds sales in 2013 and is the number one emerging e-commerce country in Europe ahead of e.g. Spain and Italy. Moreover, in Russia Home items are the fourth product most sold online and as the number of Internet users continues to grow, also the number of online buyers is expected to keep growing, which is great for the IKEA of Russia. In the following graph we can see that according to Statista the number of Smartphone users in Russia is constantly growing year by year, which is also positive for IKEA because of the growth of online buyers. Regarding the ENVIRONMENTAL, IKEA is accused of illegal logging in China-Russia border. However, IKEA has been working with the WWF to fight against this cause. IKEA’s forest projects aim to combat illegal logging, support responsible forest management and certification. The last part of the PESTEL is about LEGAL aspects in Russia. As it shows on the graph, Russian’s corporate tax rate has been stable for the past 7 years and according to the Deloitte study, the main profit tax rate in one of the lowest amongst major economies. It is also interesting to mention that IKEA had to drop a lifestyle website designed for Russian consumers due to LGBT laws. Regarding our generic growth. The main IKEA’s business idea is to adequately meet the needs of people offering products with good design at affordable prices, so that most of the population can afford to buy them.