October 5, 2016 / 10:10 AM / 3 years ago

Discount-tracking app thrives from Russian slowdown

MOSCOW (Reuters) - A mobile phone application that helps Russian shoppers find the best discount deals in supermarkets has reached more than two million users, tapping into a new mood of thrift after the worst economic crisis in years hit Russia.

Natalia Shagarina, inventor of Edadeal mobile phone application tracking down discount deals in supermarkets, demonstrates the application at a cafe in Moscow, Russia, October 4, 2016. REUTERS/Maxim Zmeyev

Natalia Shagarina conceived the app while she was on maternity leave in 2012 as a niche product to allow women at home with young children to stretch their household budgets by tracking down discounted goods.

But the economic crisis, caused by low oil prices and made worse by Western sanctions imposed on Russia over the conflict in Ukraine, created a market for anything that allows people to save on their shopping bills.

“I was inventing a niche project ... but people started to use it widely,” Shagarina told Reuters.

“It turned out like with Viagra whose inventors had thought they were developing a medicine solely for people with vascular problems,” said Shagarina, 36, who previously worked for Russia’s biggest Internet group Yandex.

The Russian economic crisis led to a slump in gross domestic product of 3.7 percent in 2015 and steep falls in real income. However, it has thrown up opportunities for some businesses. Sales of vegetable seeds are up as more Russians grow their own food, budget supermarkets have expanded, and fast food chains are performing well.

Shagarina’s app, launched in 2013, covers promotions at 160 retail chains across Russia. Called Edadeal, it has been downloaded 6 million times and has around 2.4 million active users who shop with it at least once a month.

It has attracted investments from Yandex which bought 10 percent of its shares in 2015, providing funds for development. Yandex keeps financing the start-up by giving it loans which may be converted into equity.

Shagarina said she is considering international expansion, possibly in the Netherlands.

German group Bonial.com operates similar apps in several markets, including Germany, Brazil and the United States. The group launched a Russian version, but it is no longer operating.

A Nielsen survey showed that 62 percent of Russian consumers pay attention to special offers and 33 percent seek them out.

Shagarina’s app allows users to search for discounts on food and household items within selected product categories, for chosen brands or in stores near their homes.

Shagarina said the start-up’s audience has been rising by half a million people every six months. Middle-income consumers account for 65 percent of users, and around one quarter are men.

“I open Edadeal in the evening, do a list and go to several stores where they have the products I need with deals,” said Sergei, 37, a manager at a Russian firm, whose monthly income dropped to 50,000 roubles ($800) from 150,000 roubles.

“I almost stopped buying goods at full price because it does not make sense.”

($1 = 62.4400 roubles)

Reporting by Olga Sichkar; Additional reporting by Anton Zverev and Anastasia Teterevleva; Writing by Maria Kiselyova; Editing by Christian Lowe and Alexandra Hudson

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