Alphabet Partnership

Others in October last year, the trading network "Alphabet" gathered its suppliers with words "To survive, you have to work together, let's think about how this can be done." Company didn't close no one store and didn't fire no one employee. And when all companies began to wind down their network projects, "Alphabet" continued to open new stores. And this was well thought out and calculated politics. And now can already speak Aboutwhat if retail and supplier work together and competently, that's all obtained. About literate building partnerships we talked with general the director "ALFAVIT-CENTER" group of companies "ALFAVIT" by Andrey Shirokov.

— On what basis should the relationship between a supplier and a retail company be built?

- Cooperation can be varied in content, in forms, but in any case it should be mutually beneficial. Otherwise it will be work for one season. Now the best option is to reduce profits for both parties, to stop working on a large margin, which was before the crisis.

— Are suppliers willing to do this?

- Everyone acts differently. Our system of relationships with partners is built on the principle of maximum transparency in doing business, we do not have a shortage of models, but we are ready for any suggestions. And at the same time, both parties must work for the result.

- So everyone understands the result differently. For the manufacturer, this is the circulation per model, for the seller - a variety of assortments, for the buyer - the ratio of price and quality.

- Our main competitive advantage is a multi-brand format, a wide range of products, low favorable prices and well-known brands. Some vendors say, “You have too much range,” but that's what people come for. The second important point for us: we are updating the model range very quickly, we do not have last year's models. We are working on new fashion collections. We try to sell the old ones without being greedy.

— Has your supplier base changed since October ?

- Partly. Some suppliers got scared and didn't trust us, and the relationship was temporarily terminated. But we are not parting with anyone, just a pause. On the other hand, we started working with a lot of new suppliers. The work with suppliers has changed, internal costs have also changed, we have reduced costs in all areas. Under the new conditions, it was necessary to create a different model of work, which we did. In October, in order to save the season, managers from all departments of the company came to the office only once a week, and spent the rest of the time in the salesrooms. It was not easy, but nevertheless we understood how lemonade can be made from lemon even in such conditions. We have made a decision not to use the word “crisis” in the company, for us it is “a time of new opportunities”. We have big plans, the crisis forced us to examine them more closely, under a magnifying glass with tenfold magnification.

They began to count everything up to a penny, from paper consumption in the printer to logistics, but nonetheless, all plans turned out to be real and viable. Yes, in some stores sales decreased slightly. We are more attentive to them now, but on the whole, sales are stable throughout the network. There has been a positive trend in sales growth compared to the pre-crisis level.

— The traditional anti-crisis measures most companies employ include intensive sales, reduced purchasing, product line changes, staff reductions, and price increases. Have any of these methods proven effective for you?

- We did not cut purchases. There was no staff reduction, job responsibilities changed. Intense sales, I consider an act of despair, this is a too straightforward way, you cannot make money with it. In children's shoes, we tried to add models of a lower price range. And it didn’t work: the parents didn’t buy cheaper shoes for their children. Whether the preferences of buyers will change, how they will react to price changes, it is difficult to say now. Because the structure of the price tag itself is still uncertain. Let me explain why: this season, retail works with supplies in which the exchange rate was set at the rate of 23 rubles per dollar, and with supplies in which it has already grown to 32 rubles per dollar. Therefore, it is difficult to say something definite, the goods are different. We have noticed an upward trend in purchases of artificial leather footwear. But this does not mean at all that we will reduce the number of genuine leather models in new collections.

Fortunately, our work was originally built on the basis of a serious IT platform, and our automation now solves many issues that usually require a lot of time and meticulousness. For example, reporting: for some companies, an accountant spends 5 working days on a report, we just need to click one button and after 5 seconds you will get all the necessary results.

According to Andrey Boykov, the head of the ALFAVIT group of companies, in the conditions when everything was good, our competitive advantages worked, but weakly. We have traditionally sold footwear at a low markup.

This was (and remains) a fundamental moment. We had another task - to sell a lot. By the way, we are loved by suppliers because we rely on fast turnover of models and their novelty. "ALFAVIT" is very strongly focused on fashion, five years ago we had Rostov manufacturers of men's footwear in our assortment, but they did not change the models, and we just saw from statistics that they began to sell worse. Accordingly, their share began to decline.

And now everyone is forced to switch to low trading margins, but some simply will not be able to do this without the tools that we have created. We provide fast turnaround not only due to the low margins, but also thanks to a powerful IT platform that gives us complete statistics. We order by groups and see how a particular group grows from season to season. We order not just women's shoes, it is divided into several categories. With a nursery it’s even more difficult. In men's shoes, the sizes are relatively small, but try creating an assortment matrix from 17 to 40 size!

— By the way, you say you have unique technologies for assessing product sales. What is this system?

- When the store is large, other tasks arise before it. If you have 50 sq. m of retail space, you can go to the trading floor and manually calculate how much and what it costs. And what if you need to count 5000 models every day before opening? When there are thousands of them, the model may simply not be taken out of the box and it will remain in the warehouse. To prevent this from happening, we make an inventory of showcases. Showcases are scanned twice a week using electronic barcode scanners and compared to the list, and then everything becomes very clear. For example, there should be 5000 SKUs, and 4990 items are displayed, and with the help of scanning literally in a matter of minutes you can understand where and what is missing and where to get it.

Our second know-how is an internal revaluation, we work with a product according to a very complex system. Many chains do a reevaluation once a season: they put it in, bargained out and then everything is poured into the sale. We do a revaluation every Monday, depending on the degree of demand for the product. Revaluation is closely related to inventory: the second task of a storefront inventory is to see which price tags need to be changed due to the revaluation. As a result, we can guarantee suppliers that their collections will be on display and that they can track the sales of their collections in real time. In addition, every Monday after revaluation, we send all our suppliers a sales report that assesses sales in pairs, in amounts and profit per pair. Again, both us and the supplier only need a few minutes to understand how things are going and whether we need to take any action to stimulate sales.

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— Are reports in demand from suppliers?

- In fact, everything depends on the supplier manager who is responsible for working with our company. The approaches can be different. Let's say, according to the report, we see that we no longer have any model. We call the supplier: "Is there?" He says no and hangs up. And the other will look and say: “There is no such one at the moment, but there is on the same block with a flower. Will you take? "

Why don't other retail chains do this ? Why do n't they try to change their operations?

- Because everything costs money. Even networks much larger than ours are not ready to invest in an intellectual product. For understanding - only our IT department costs about $ 40-50 thousand per month. Why do we sell our software products? Because in fact it is such a headache that very few people decide on it, even with money. This system is administratively complex.

Another point: children's shoes, for example, bring little profit. Even such a large network as "Tsentrobuv" has an assortment of children's footwear up to a hundred models and only two or three trade marks. There are few suppliers, the conditions are more stringent, and it is not easy to collect the required range. And if we take into account only the sales statistics, then it would be much more profitable to halve the area allocated for children's shoes, put women's assortment there and make money on it. But we will never do that, because we position ourselves as family stores. And we believe that the family format is our competitive advantage, which allows the whole family to save both money and time.

— How is your delivery organized?

- An order with agreed dates is formed for each supplier. And for each article from this order there is a deadline for delivery to the "Alphabet". Each article is accompanied by a photograph of the model, information on the number of pairs ordered, and the price. All discrepancies between price or quantity are automatically identified. If the delivery is late, then we call on the phone and either refuse the models, or individually decide on the delivery time and price changes.

In season, it is always a very lively job.

The next step: distribution to shops. Each pair from the delivery must be barcoded, put everything in handles, put in a pile, taken to the store, there all this should be documented. And due to the fact that it does not make sense to send a whole box to some stores, we sometimes do half a box, and this also needs to be taken into account. That is, the daily work at our division office is colossal. Success is not only in intelligence, but also in the great work of the employees of the logistics department.

To some, our dimensional accounting seems very difficult, but in business there are no trifles. For example, one of the suppliers sends us two boxes of shoes, which we have in the top positions of the rating. And a few minutes are enough for our manager to look at the situation in the stores and beautifully distribute them among all: this store has a model of size 44, this one - model 39. As a result, we get an ideal picture of constant sizing sub-sorting.

We work in the same way with leftovers. Having a sizing and model accounting, at the end of the season we can beautifully redistribute the leftovers. We consolidate the rest from 28 stores and distribute them among three, collecting the full size range. And it is good for us - we don’t need to make an additional order for “embossed” sizes, and the buyer is good - there is no situation in stores “Sorry, your size is not available”, and the supplier is good - this way the value of the goods increases. There is a chain store for sales. This is why we develop, not die.

— Retail companies, in an effort to reduce costs, begin to change their organizational structure, incentive systems, and purchasing practices, but often encounter employee resistance to the changes. Do you have any strategies for overcoming this resistance?

- Only involving. Systemic changes require systemic work, shared participation, even if the key decision is made by one person. This year, for example, we sent a catalog of one of the suppliers to all sellers so that they would rate all models on a 10-point system. Then, in the office, we made a selection of the most popular models and decided which ones suit us and which ones don't. What did you get in this way? At a minimum, the sellers saw the entire range of the supplier. As a maximum, they were imbued with these models even before deliveries and before the start of the sales season, and responsibility for the selected articles appeared.

— What promotions can you run with suppliers now?

- In fact, with a well-thought-out system of purchases and sales with daily accurate tracking of results, the need for standard incentive promotions disappears. We believe that there is no need to stimulate anything: make a normal price, and customers will be drawn to you. We sell normal brands at low trade margins. And a person, coming to us, understands that he does not overpay.

Although we, for example, love to hold lotteries in our stores together with suppliers. But this is, rather, an element of the game. Because trading just like that is boring. This year we opened a store of a new format for us "Alphabet-Style", which contains the brightest collections of Italian footwear brands with a worldwide reputation. We make fresh orange juice as a gift to each customer. It is unlikely that this influences the decision to purchase, but it cheers up and ultimately increases the likelihood of the buyer returning to us.

In fact, we strive to work together with suppliers, so we always balance our needs with supplier recommendations. We are open to communication and new ideas. And we believe that now we need to meet more often, talk more often, create joint projects, go beyond the “buy-sell” relationship, be more flexible. Because you can't come up with a universal algorithm: "Guys, we do it this way and nothing else." For us, everything changes, we adjust to the situation if there is a need for it. You cannot limit your consciousness - this is also one of the key principles of the ALFAVIT company.