A new look at Giotto. Interview with the head of the company Vladimir Timofeev

The corner of the Russian women's shoe brand Giotto in the fashionable metropolitan department store Trend Island became the first application of a famous Moscow shoe factory to develop and promote its own brand.

Until now, the company has focused on sewing shoes for third-party customers and large retailers. Shoes Report spoke with the head of Giotto, Vladimir Timofeev, about its new strategy and the prospects for domestic production.

The Giotto company - founded in 1998, is a leading Russian manufacturer of women's shoes. The company has two production sites - in Moscow and Kaluga. Product output is 120-130 thousand pairs of shoes per year. Shoes under the Giotto brand belong to the “medium plus” price category; collections are presented on Lamoda, Wildberries. The Giotto branded corner is present in the Trend Island department store in the capital's Aviapark shopping center.

Vladimir, finally, our country has come to the need to develop domestic production, have you already felt support?

There is a lot of foam, but there is little use yet.

Did the state provide any benefits?

Well, yes, government support was expressed in tax benefits on wages, in the form of deferments. But everyone who took advantage of these benefits is now dealing with their tax debts. To the point that bailiffs are sent to companies. It is clear that the amounts were large and they did not have time to close them.

Are tax authorities now pursuing tough policies?

I can't say that. In recent years they have been quite loyal to us. Excesses are decisions of specific individuals, the head of the tax office, for example. Because, one way or another, everyone understands that if this is production, then the company will not go anywhere, it will still pay taxes.

But Ralf Ringer is currently in litigation with the tax authorities...

This is exactly the situation when a person should be given a Hero of Labor, but instead he is subjected to pressure, almost personal fines are imposed. That's bullshit! Berezhnoy (Editor's note: Andrey Berezhnoy, entrepreneur, founder of Ralf Ringer) raised several factories, created a huge number of jobs, and now, instead of helping him, they are hindering him. With us, either you enter into power and everyone pampers and cherishes you, or there are no such connections, and they begin to pummel you from all sides. Moreover, in the case of Ralf Ringer, there are a number of legislative acts according to which the tax inspectorate does not have the right to behave this way. But it is impossible to reach either the prosecutor’s office or any other authorities.

And on TV at this time they are talking about how import substitution is growing in Russia, and shoe production in Moscow has increased by 13%. Where did it increase? With today's labor legislation this is completely impossible. The ones who really survive are those who are on the shortcut, who somehow cheat. In such conditions it is extremely difficult to create a normal product. And Berezhnoy makes a high-quality product, leather shoes, anatomically correct. Why take it out? Impossible to understand!

Another negative is our cross-border trade. They have again legalized the tax-free import of goods worth a thousand euros. A Russian manufacturer must pay 20% VAT, but here you can take 50 people, each of whom will import goods worth 1000 euros, and now shoes worth 50 thousand euros are imported duty-free. Naturally, everyone who uses this mechanism wins. And the manufacturer must pay wages, all taxes, etc.

Plus, Chinese labor legislation is radically different from Russian. If you dig deep, we have an unenviable position. In Uzbekistan, VAT is already 12%. They decided that they would develop the industry and invest in it. They have benefits, you can absolutely calmly come to the Minister of Light Industry and agree on some tax breaks in one case or another. There you can agree and discuss, but here we cannot.

Now the colossal problem is that our market is flooded with low-quality products, which are much cheaper and outperform Russian-made products. It is difficult to compete with a Chinese product, which is created on preferential sites, with enormous subsidies from the state, and which is produced from low-grade synthetics. But the consumer doesn’t understand, he chooses the price. Today, a lot of shoes are imported that are technically incorrectly made. And if the block is created incorrectly, it affects the spine. Such shoes are imported in bulk, no one keeps track.

Giotto

There were a number of publications in the media that Giotto invests in brand development. Until now you haven’t invested much in your own brand, what has changed?

Indeed, for the last ten years we have been trying to sew for third-party brands of large retail. I myself prefer to engage in production rather than trade. But at some point the economic situation changed and retailers began to place more orders in China.

It's hard to blame anyone here. If we look at China, they have a more developed infrastructure and quite broad opportunities. In our country, if we take not only shoe tailoring, but also the production of all components - leather, bottom parts, accessories - they are limited. But I still think that for Russian retail it is not a problem to load all Russian production capacities. Because today, if you look at the statistics, our production volume of leather shoes is about 20 million rubles. per year, for a retail that sells hundreds of millions, this is not a volume!

Retailers could be a little more loyal to their own, but this is not happening. That's why a year ago we decided to slowly move Giotto forward. The same Berezhnoy is doing well today, thanks to the fact that he has developed his own distribution network, and we have now followed the same path. First, we have corners in the Trend Island department store in the Moscow Aviapark shopping center.

But you had shops?

Some time ago there were client stores. But now they are gone. For now we are represented in Trend Island, but it is still unknown when we will open the next site. It’s hard to compete with large retail today. In our niche there is Ekonika, which has become a real monster in shoe retail, and Mascotte, which has a very wide line, is actively developing. We don’t yet know how to compete with them. Let's try to promote our own brand and achieve recognition. And then we’ll start developing retail, because this is quite an expensive story. But now many Russian manufacturers have realized that they need to promote their brand and develop their retail.

Well, of course, recognition is very important, because even when you are looking for something on marketplaces, you type the brand name into the search engine...

That is, we need to create a loyal consumer, we are doing this now. This is also quite expensive. We have signed a contract with experts from the Be In Open Fashion Industry Forum, and they are working with us. They will study it for six months, conduct focus groups, etc. They will identify the consumer and develop a strategy.

Giotto

Will you continue to produce women's shoes under your brand?

Yes, sewing both men's and women's clothes is not my option. We have occupied a certain niche in women's high-quality shoes, and that is where we sit. The way we created the collection ourselves is how we create it. We try to stick to the so-called modernized classics. Going into something extravagant is a risk. Now the trends are 10 cm stiletto heels with a very elongated last, but there are actually few consumers of such shoes.

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Now there is a trend for “Cossack” boots...

We also have “Cossacks”, but this is such a conditional trend... For the last few years, everyone has been using short lasts. And then the trend began to lengthen the lasts, the toe parts became a little more aggressive, the bottom details became a little more elegant. In general, now the collections of shoe brands offer a wide variety of models, and we make a fairly wide offer. This year, our low-shoe group did well - a short round last, a classic slightly thicker sole. But the more square-shaped, rough silhouette, which is supposedly one of the trends, also sold well, but in a completely different way.

Today there are very few quality products on the market. That left Ekonika, which has now released a strong collection. It already contains models that can be seen in the collections of brands that set global trends.

And Carlo Pazolini?

Carlo Pazolini has reduced the number of stores. Although the brand is now represented on marketplaces, and the brand has crazy recognition, overall the business is declining, although it’s a shame.

How have you survived the pandemic?

We survived and received some government subsidies. The pandemic was precisely the turning point when we started thinking about our own sales. Because as soon as the pandemic began, all the wholesale customers waved their hand at us and said we don’t need it. I'm not talking about large retail, but about small shops. We were left with wholesale products in the warehouse, without money, the factories stood still. But somehow we managed.

Our government mechanisms still don’t work. We hear from everywhere that the state is investing billions and trillions in the industry, but where are they? I asked for support - I need space. Renting in Moscow is a disaster, the cost is enormous, and it is very difficult to find premises of our format. But no, we were offered preferential loans at 6,5% per annum secured by real estate as support. Well, where do we get real estate from? We’re not the “Paris Commune”, which was privatized?

And the Ministry of Light Industry organizes some forums all the time. We need to speak there and talk about all this...

Today, the shoe industry accounts for less than one percent; no one sees it and no one understands it. The global trend is that globalization has not worked, and production needs to be localized. But as always, we will jump into the last car. - The development of the footwear industry in our country is far away! So far, there is no government program to support Russian shoe production. It is believed that we would rather bring cheap goods from China, Pakistan, India...

Someone has to write such a program, who knows how to do this?

It’s not difficult to gather a group of economists who will calculate and write everything. There must be political will. You can even bring up the works of the last Soviet economists, who already said all this, but no one listened to them. While we are winning in foreign policy, our domestic policy is greatly sagging. Shoes are fully funded by the state order, and we ourselves sew shoes for the army, everything is great here. As for civilian shoes, the general concept is “speculators will bring them, we’ll buy them.”

Now they seem to have started talking about creating shoe clusters in Rostov and Dagestan. But in our country, such clusters are created for one purpose - to collect more taxes. So far nothing sensible has been offered.

There is an industrial cluster somewhere in Moscow; rent on its territory costs 8000 rubles per square meter per year! And in Italy, 10 euros per square meter, and this is at a completely different level of economy! We need to create normal clusters, and not be guided by the goal of robbing the unfortunate people who are somehow trying to produce something decent on their knees.

In Rostov they produce a fairly high-quality, technically correct product. Yes, they use cheap leather, cheap materials to produce the soles, but these are still not low-quality products that we get from abroad for two pennies!

So I need to replace 50% of my equipment fleet. But the loan is offered on the condition that 50% of the equipment is Russian. But we don’t produce this! They offer leasing on unacceptable terms; Russian shoe manufacturers do not earn that much and will never recoup this leasing. At least they would give me the opportunity to buy equipment and pay for it within ten years...

All these benefits can result in colossal problems. Therefore, we sit, repair the equipment that we have, and maintain it at a good level. We try to produce good quality shoes and are glad that we have decent tanneries, such as the Yaroslavl tannery, where good specialists work.

Giotto

What about the rest of the components?

We use Russian components to the maximum, even if imported materials are used in their production, due to cheaper labor here, they are still cheaper. We use domestic parts for the bottom, soles, and zippers; we order them in St. Petersburg.

Intergluing, toe materials, backdrops, braids, glue, threads - all this is imported, since it is not produced in our country. But for some items, we are now switching to Belarusian products - they have learned to make them quite well.

It’s expensive to produce complex soles in Russia, due to the fact that there is no full-fledged shoe industry. Plant workers have few orders and they cannot buy special equipment, they do everything “on their knees”, it turns out well, but the cost is high. Therefore, we have reduced shoe models with complex soles.

After the pandemic, have people started buying shoes online more actively?

Marketplaces work well. Of course, a lot of goods are spoiled and a lot is stolen. At the beginning, we placed our first line on Wildberries, and it sold us well. But gradually, due to the requirements for constant discounts, this platform turned almost into a stock one. The current Giotto collections are now presented on LaModa. Old collections are on Wildberries. Sales on LaModa have been good over the past two years.

We tried to enter Ozon, but they also have a discount policy, which simply kills the brand. We refused, even though they were ready to buy the goods. We also have wholesale clients in different regions. But regional clients have become lazy and mostly prefer to develop through franchising. It’s convenient; if you take a brand franchise, you get a full range, merchandising, and equipment. In a word, you spend money with guaranteed results. In this regard, the number of small sellers has greatly decreased; it is difficult for them to compete with large retail; they have different entry prices and completely different volumes.

Interview: Marina Shumilina