In 2016, Baden will expand its retail space

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 is the current economic crisis, which is particularly acute in Russia, affecting your company's business, and what steps are you taking to overcome the crisis?

Vitaly Stepin: The current crisis is protracted. It's already clear that the situation won't improve in the next two or three seasons. Purchasing power is declining, and all players in the footwear market are forced to work to reduce their production costs, 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?

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Vitaly Stepin: Much will depend on the duration of the crisis. If the crisis lasts more than two years, we can expect Russian manufacturing to develop, particularly in the men's footwear segment. Fewer components are required for their production, and they are simpler to design. We're already seeing from manufacturers in Dagestan and Rostov that Russia can produce decent-quality men's footwear. And if the crisis is protracted, Rostov and Dagestan factories may also begin producing women's footwear. Although their production is more complex, and it will take longer to master the technology. Nevertheless, 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, other than the launch of the new brand, are you willing to share?

Vitaly Stepin: I believe that this year, in connection with the launch of the Fassen brand, we will also expand our retail space. Currently, our retail network, which is developing through franchising, comprises over 50 stores. Largely thanks to our branded retail presence, we are able to quickly respond to market demands. The launch of the Fassen brand is a response to the needs of our retailers, who are well-versed in the tastes and needs of the end consumer. It should be noted that retailers are now becoming more accepting of faux leather footwear, and those who previously resisted selling such products are now willing to stock them.

Shoes Report : Will this be a tough year for your business, or could it bring new opportunities for growth?

Vitaly Stepin: This crisis has given us the opportunity to enter a segment we weren't previously represented in; it's a more expansive one. Even our stand at Euro Shoes shows that we've expanded our space, and we have a lot of customers who are coming specifically for the new brand. Competition in this segment is fierce, but I think with our extensive experience in the footwear business, we can count on success.