MLP Partners with Retail in Russia Forum
On March 21, the 16th annual Retail in Russia Forum was held, bringing together more than 150 representatives from both online and offline trade. This was the third time that MLP Management company supported this forum.
“The Retail in Russia Forum is an event that traditionally gathers the leaders of the retail market. This is not the first year that retail representatives have been increasing their share among tenants of sites under our management. Therefore, this year we did not stay on the side, but rather supported this event. We believe that we should be close to our customers, that we should understand their industries’ development trajectory and what difficulties they face. We need this to promptly and competently respond to changes in their business processes, which to some extent affect the operation of their distribution centers,” reported Gleb Belavin, the Deputy Director General of Tenant Relations at MLP, to Vedomosti on the company’s annual participation in such events. “Moreover, the topics discussed in the framework of the Forum were really interesting and relevant.”
In his opening speech, Andrey Spivakov, First Deputy Chairman of the Board, Chief Executive Officer of Sovcombank, noted that despite talk of the “calcification” of Russian business, the retail industry remains the most open and ready for new trends. George Pataraya, a partner for KPMG Russia and CIS, briefly described the difficult situation in which modern retailers have to work: Russians’ incomes are not actually growing, real commodity turnover is decreasing, the industry is experiencing “increased attention” from the state, which is expressed in tax increases and activities related to introducing additional labeling for goods. “The consumer wants to buy quality goods as cheaply as possible,” says Pataray’s analysts. “When choosing a product, almost 60% of respondents say that they will check prices online before they buy.” Customers look at promotions and go where the price is better. In this regard, the conference participants wondered what awaits the industry tomorrow? Will retailers satisfy the demand for ever-cheaper goods or will a bright future come with new, advanced technology and all kinds of sales channels? How can banks help retail with this? In turn, a representative of the banking sector provided data from Sovcombank, according to which, in the accounts of their 2.5 million customers are 100 billion rubles in undrawn balances. And the bank is prepared to give retailers access to it: 72% of the cards issued to Sovcombank clients start being used almost instantly, customers make at least 11 purchases per month for them, and this figure has all the prerequisites for growth.
In turn, Yulia Lazareva, X5 Retail Group Development Director for the Perekrestok network, said that the retailer’s success today depends on how flexible it is in responding and adapting to the situation’s volatility. “There should be a whole complex of weighted measures. We cannot say that traffic grows only due to the fact that the company has been growing extensively for a long time, that is, it has increased the geography of its presence. ” You don’t have to give a client a discount, or “sell a ruble for 90 kopecks,” but you have to give the customer a valuable proposition that he will appreciate, and then he will become your regular customer, deciding for himself that it is this company and this store or this supermarket, etc., that satisfies his needs. Therefore, according to Lazareva, Perekrestok has no goal of increasing the share of promotions, it will maintain the historically established level of 35%: “We clearly monitor so that no promotion cannibalizes the client’s organic behavior.”
According to Ruben Harutyunyan, President of the Henderson-Russia Group of Companies, any offline brand in the fashion segment should today also be represented online, and vice versa: online-only stores should open real boutiques or corner shops. According to Henderson’s statistics, more than 80% of customers order something on the Internet that they physically tried on in a store. The company has a click and collect service: the customer can order the product online and come to the store in half an hour to get it. According to Harutyunyan, the retailer who makes this “hybrid model” the classiest model for consumers will emerge the winner of the competitive race.
“Whatever words we use now, hybrid interaction or cross-selling, everything, in essence, boils down to a rather simple fact: the client needs to be offered a brand,” stated Vugar Isaev, Chairman of the Board of Directors of the Snezhnaya Koroleva (Snow Queen) company, in a summary of his colleague’s presentation. A brand, in his opinion, is competence in producing and selling some product at the same time. Will new technology help with this? Time will tell. Among all the digital economy’s projects in retail, in Isayev’s opinion, the labeling project is of fundamental importance. It will contribute to creating a catalog, which will allow the product to be described once in a comprehensible way using industry-standardized characteristics: "This could never be done by any relevant ministry." It will also help to formulate the correct document management in all Russia’s regions.
The Center for the Development of Advanced Technologies is creating the mandatory marking system. Its CEO, Andrey Kirillov, is encouraging retailers to view this project not as an additional burden on the market, but as a new mechanism for the industry’s digital transformation. “What is labeling? How does it work? Any time an item is produced in the product category that is subject to labeling, a code [...] is applied to each item; in essence, this code is the same as a digital signature. After the first transfer of ownership of the manufactured goods occurs, it is immediately reflected in the information system. All movement of goods along the logistics chain, by legal entities, everything is encoded in the system. At the checkout when selling to the buyer, this unit of goods is ‘brought out’ [of circulation] by the cashier by scanning the code,” stated Kirillov in describing the system’s operation. Thus, he noted, the manufacturer has fantastic amounts of information: not only where his good was produced, but also when it reached the point of sale and where it was sold to buyers.
Summing up the speeches of his colleagues, Sergey Belyakov, Chairman of the ACORT Presidium, expressed confidence that market concentration is ahead for Russia. Small companies will not be able to compete in deliveries and sales for good-quality products with national leaders; accordingly, the number of companies in the field of trade will be reduced.