Victor Mitin: "You shouldn't make sudden movements"

Conclude a supply contract with retail company - it's only half the battle. The main thing - organize work so that cooperation is mutually beneficial. With your gaze on principles, by which supplier relationships should be built and retail seller, shared the expert of the Russian representative office of Ara Victor Mitin.

— In what main causes of the crisis in retail trade - wrong approach to assortment, finance, strategic planning, sales analysis, work with suppliers?

- In fact, the situation does not depend on retailers, this is a general economic downturn: the ruble fell, people have less money, and the purchasing power of the population has decreased. We are going through the same stage as in the 1998 year. If you look at what is for sale, we can say that people began to spend money more carefully, and the best thing is that shoes that cost up to 5000 rubles per pair go away in retail. What is more expensive, of course, is also for sale, but on a disproportionately smaller scale. By the way, it is surprising that the luxury suffered, everyone expected that buyers of shoes in this segment would not reduce their costs.

—That is at the shoe there is no retail

- Many retailers experienced difficulties due to the fact that some of them developed on credit funds. Either for bank or commodity loans of suppliers. And sometimes, instead of paying suppliers, the retailer allowed the money received from customers to develop and open new stores. During the crisis, these people found themselves in a situation where, on the one hand, they have debts, and on the other, they have retail, which they are not able to contain. In addition, another problem is that before the crisis, all retail lived on a deferred payment. Usually it was 30 days, for some companies it reached 180 days. Now this practice has stopped, and this is another reason why retail was left without working capital. Now all manufacturers require prepayment, and retailers are simply not able to provide it.

What to do next? It is hard to say. Perhaps the wisest decision is to wait - do not make sudden movements, you just have to wait for the situation in the economy to change, supply and demand will be adjusted. When it will be clear which way the market will correct.

— And which are there any correction options?

- Reducing the number of models in retail outlets. People who bought shoes of the middle segment are unlikely to massively switch to the Chinese product, most likely they will buy not one or two pairs per season, but one. You may have to narrow the range in order to concentrate on those categories that really give momentum and on which you can earn.

— Will change average check?

- If we take our category, then, most likely, in retail it will be at the level of 4000 rubles per pair in the "Spring-Summer" season, 5500-6000 rubles for the "Autumn-Winter" season. All sellers either will (or should) be more careful about their orders, their financing, and the choice of the most liquid brands.

— By season shipments in February — March You already Did sellers become more careful?

- Yes, it became obvious at the beginning of February. There are clients who did not place an order this season; there are clients who cut the order to 30 – 50%.

The mood of sellers in January-February of the 2009 year can be described as a panic. The ruble is falling. Salaries are decreasing. Unemployment is projected to rise. Demand is falling. It is clear that all this was reflected in the orders. Now there is no panic, but the prospect of an early recovery in order volumes is not worth it. Since the last autumn-winter season, almost all sellers have retained large remnants. With these in mind, orders for Fall-Winter 2009 / 2010 were adjusted downward. In this spring-summer season, the remnants will most likely also be larger than usual, therefore it is difficult to expect any recovery on orders for the spring-summer 2010 of the year.

When planning participation in summer and autumn exhibitions, we take into account the possibility of reducing orders in volume. But the collection will not decrease. The question is what exactly will go on sale from it.

— What role in shaping shipments to the next season plays presentation EURO SHOES PREMIERE COLLECTION? how You can to evaluate the results of two presentations held in Sokolniki?

- EURO SHOES is interesting for manufacturers in that it is the first seasonal exhibition, it is here that you can understand whether customers have an interest in the collection. This is the first. And what specific models are of interest - this is the second. And then, by the time of the exhibition in Dusseldorf, you can adjust the assortment, make some additional models on pads that arouse interest. Although Ara will not make a special collection for Russia, they are trying to take into account all the wishes of Russian buyers at the company.

EURO SHOES customers are comfortable with the fact that before exhibitions in Milan and Dusseldorf you can see the collections of European companies. But another moment becomes even more important: all retail companies are now striving to reduce costs, many are cutting them off due to foreign trips to exhibitions. EURO SHOES in this context makes it possible to place the necessary orders and save on trips to Europe.

For Ara, participation in last year’s August presentation was uniquely magnificent - the brand’s success and volume of orders exceeded expectations. At the February presentation, taking into account the panic that prevailed in the market, the number of orders was less. If we take as a whole the orders for the season collected at three Russian exhibitions, then all three orders were approximately equal. If we talk about new customers received at EURO SHOES, then newcomers came to us in August, and in February, we rather returned those who once worked with the brand, but refused for various reasons, and now decided to resume cooperation.

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— Do you expect you are an influx customers from the number those who worked with chinese shoes?

- There are such clients. I know that companies working with Chinese shoes, having introduced Rieker, which is the leader in sales among German companies, are starting to look at other European brands. How long this transition will take is hard to say. But at least before the crisis he walked.

— Do you expect you are an influx customers from the number those who want to change premium segment on average?

- Indeed, now entrepreneurs who are engaged only in Italian shoes are actively looking for a replacement with an assortment of more affordable prices. Italy is now either not for sale or sold very poorly. In some regions, the decline in sales reaches 70%. But even despite this, now is not the best time to abandon these brands - if you had an established client, built relationships with suppliers, then they should never be lost. And if people worked on a mix of Italian and German shoes, then most likely they will have a decrease in the number of Italian shoes, but to abandon it altogether, in my opinion, would be unreasonable.

— Why you don't thinkthat sellers can and do not set other european brands in your score, and open new?

- Almost unrealistic. Before the crisis, the time spent by the clientele in the new store took at least a year. Now, with sales falling by 30 – 40%, it’s hard to even say how long it will take. Currently, in principle, it is quite difficult to open a new store, even with those brands with which the seller has been working for a long time.

— How has the terms of payment for deliveries changed?

- The amount of prepayment increased to 30%. Why it has increased, it is clear - the manufacturer needs to insure itself against unsold stocks. By the way, from November to March we already had several cases of refusals from the order. Nevertheless, with the most reliable, with the most trusted customers, it is possible to maintain the previous working conditions.

— For unverified. At importers German clothing has a rating system for Russian retailers that affects on conditions order, prepayment size. Why shoe companies not create similar?

- If there was a single base where suppliers could share information, it would be useful ... Why did the retailer come to the supplier? Because he really wants to find something new. Or he came because he became a problem for the supplier ... And there were talks about creating such a base, but they remained just talk.

— Shoe collection speed is very important for shoe suppliers to shops. Which shipping method is most effective for you?

- There are different schemes. There are companies that pick up goods from the supplier’s warehouse, and most of them. It is clear that this is the most convenient option for the supplier. And there are suppliers who deliver goods to the customer, wherever he is. True, I know only two of these companies.

— Retailers often say suppliers should help to stimulate them sale their brands. Do I need to do it? And what, to your look, can it be expressed?

- Sales of the brand speak for themselves. If this brand is in demand due to the right price or some functional qualities, then the supplier should support the brand in the media. And to carry out some targeted actions in the store, in our opinion, is not entirely advisable. Efficiency is not obvious.

— But as you relate to the idea sales promotion using the systems Shop-in-shop?

- Again, efficiency is not obvious. In addition, many networks already have their own style. It’s hard to imagine a Shop-in-Shop in Carlo Pazolini or Tervolin, it will be illogical. The second point: imagine for a moment that in one store they decided to open their concepts Ara (white-red-gray branded equipment), Seibel (tree with green), Peter Kaiser (white with silver), Gabor (white with blue), Rieker ( tree with red). All together is unrealistically colorful. And most importantly - why ... If you can target advertising to the end consumer, carefully work with the collection and improve the quality of the shoes themselves.