Vitaly Stepin, Deputy General Director of Baden:
“In 2016, we will expand our retail space”
Baden responded to the crisis by launching a new brand Fassen. The collection, in the production of which artificial leather is used, is aimed at the consumer who is not ready to spend more than 5 thousand rubles on the purchase of winter boots, and at the same time wants the shoes to look stylish and serve for a long time. Vitaly Stepin, Deputy General Director of Baden, told SR about the impact of the crisis and new opportunities.
Shoes Report: How does the current economic crisis, which is especially acute in Russia, affect the business of your company, and what steps are you taking to overcome the crisis?
Vitaly Stepin: The current crisis is protracted. It is already clear that in the next two or three seasons the situation is not normalizing. Purchasing power is falling, all players in the shoe market are forced to work to reduce the cost of their products, and we are actively moving in this direction.
So far, in the manufacture of our shoes, we have used only natural materials, and now we have launched the new Fassen brand, for which artificial leather has been used. This is done, first of all, in order to reduce the cost of production. It is obvious that today, the main consumer is not ready to pay more than 7 thousand rubles for a pair of winter shoes.
At the same time, Fassen is produced in the same factories as Baden, and we adhere to our high quality standards. Already now, we presented at the Euro Shoes exhibition the first Fassen collection, which includes more than 1 000 models and includes a full range of women's model and casual shoes. The nearest delivery dates for this collection in retail are August 2016 of the year.
The Fassen brand is designed for the consumer with middle and low incomes. But in view of the changed economic situation, I think that many of our regular customers, who have been adherents of the Baden brand for a long time, will now be able to choose something from the Fassen range for themselves. Those who prefer footwear made exclusively from natural materials will continue to buy Baden.
We also worked on the cost of Baden products. We began to use natural wool more actively, which is not inferior in quality to fur, but much cheaper in production. We also paid close attention to the choice of leather, choosing an option with a good price-quality ratio and began to actively use split leathers that behave perfectly when used in the winter season. Our consumers' incomes are falling, and we cannot but take this into account.
Shoes Report: What do you think about the possibility of import substitution? Will the footwear industry develop in Russia?
Vitaly Stepin: Much will depend on the duration of the crisis. If the crisis lasts more than two years, then we can expect the development of Russian production, and first of all, in the segment of men's shoes. It requires fewer components to make, and it is easier to model. Already now we can see from Dagestan and Rostov manufacturers that in Russia it is possible to produce men's shoes of decent quality. And if the crisis situation is protracted, Rostov and Dagestan factories may take up the issue of women's shoes. Although its production is more complicated, it will take longer to master. However, price is everything!
There is another obstacle to the revival of the shoe industry in our country - this is the weak development of the leather industry. And if we are talking about import substitution, it is logical to assume that shoe manufacturers will use domestic raw materials in their work.
But the range of leathers produced in Russia is very narrow and of low quality, more suitable for the production of casual shoes. It is almost impossible to find Russian leather to create a model assortment. If we are talking about making a men's shoe, then you can get by with the use of inexpensive medium-quality leather, since the top of a men's shoe consists of small parts, when cutting which it is possible not to use areas with defects. And in the production of women's boots, the upper parts are large and very high quality leather is required for their cutting, and there are often simply no alternatives to imported raw materials. I believe that for the full development of the footwear industry, the accompanying leather industry should also actively develop.
Shoes Report: What company news, in addition to launching a new brand, are you willing to share?
Vitaly Stepin: I think that this year, in connection with the launch of the Fassen brand, we will also expand our retail space. At the moment, our retail network, which is developing through franchising, has more than 50 stores. Largely due to the presence of branded retail, we have the ability to quickly respond to market demands. The launch of the Fassen brand is a response to the request of our retailers who are well aware of the tastes and needs of the end consumer. I must say that retail is now becoming more loyal to artificial leather shoes and those who previously refused to sell such a product are now ready to put it on their shelves.
Shoes Report: It will be a difficult year for your business or vice versa - can it bring new opportunities for development?
Vitaly Stepin: For us, this crisis made it possible to enter a segment in which we were not previously represented; it is more capacious. Even at our booth at Euro Shoes, we can see that we have expanded our space, we have a lot of buyers who come precisely for the new brand. The competition in this segment is high, but I think that with our rich experience in the shoe business, we can count on success.
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