Vladimir Denisenko, Unichel: “If counterfeiting can be nullified, Russian footwear production will increase substantially”

The largest Russian footwear manufacturer, Unicel Shoe Firm, is finishing 2017 with good results: the production of footwear this year amounted to 3,1 million pairs with a growth rate of 112,9%; by the end of the year, 75 new stores of the brand network will be opened in Russia and Kazakhstan. On November 30, Vladimir Denisenko, CEO of the company, was named the winner in the Business Expansion nomination for professional and industry achievements of the annual regional Person of the Year award, which is unique in that the business community itself determines the winners. And literally on the eve of submitting this issue to the press, the governor of the Chelyabinsk region presented Vladimir Denisenko with the Order of Merit to the Fatherland II (President of the Russian Federation Vladimir Putin signed the decree on awarding on September 10, 2017). Vladimir Denisenko spoke about the development and plans of the Russian company, about the situation in the domestic footwear market in an exclusive interview with the chief editor of ShoesReport.

Vladimir Stepanovich, in November, Unichel celebrated the 85 anniversary. With what results did the company approach this date? What was the 2017 year like?

85 years - of course, a serious age, for a company whose dynamic development took place in new times. We went into restructuring hard, in fact the enterprise was on the verge of bankruptcy, as there were very large debts for import supplies. But we found the strength to overcome difficulties, at that time I was the commercial director, and in 1989 I was elected general.

And an active restructuring of everything began - a review of the assortment, quality standards for materials and finished products, the search for new suppliers of leather and components, equipment modernization, staff retraining, and the development of a branded retail network. Of course, I had to break a lot, including in the minds of people who worked in production, but we managed, almost without changing the team of managers and specialists, to gradually change everything. Drastically.

Every year we created up to 100 new jobs in production, adding volumes. Every year new stores were opened - according to 10-15, or even 20. A complete replacement of the fleet of sewing and lingering machines has been carried out; work is underway annually to update seasonal collections.

Today we produce 3 million pairs of shoes a year, in 2017 the growth in physical terms amounted to about 10%. The issue in monetary terms will amount to about 3,5 billion rubles. By the end of the year, we plan to open about 70 new stores. In total, according to December 1 data, the Unichel retail chain has 575 stores.

Huge network ...

Yes, no other Russian manufacturers have such a network. Of shoe retailers, such a large-scale retail is only at Kari, but they have products mainly of Chinese origin. We have 100% - our products made in Russia. We sell our shoes, as well as shoes of domestic manufacturers, we complete the range to the maximum with Russian brands.

This year, you have entered retail with new regions - which ones?

In the 2017 year, we came to Arkhangelsk, Syktyvkar (3 stores and everything started very well), St. Petersburg, Kirov and Yakutsk (according to the 2 stores), Vologda, Cherepovets, Astrakhan, Elista, Saratov, Engels, Petrozavodsk, Vologda ... Only last year we opened stores in Vladivostok, and now we are actively developing the network in the Primorsky Territory, where over the 2017 year Unichel stores appeared in Artem, Ussuriysk, Nakhodka. We continue to develop a lot in Kazakhstan, we already have 56 stores there, and today Astana and Almaty are a priority.

Very tightened their network in terms of design, external and internal, rebranded, introduced standards of visual merchandising. We constantly train specialists, make changes to companies that stimulate the work of staff. Now, for example, we will improve the premium payment system for trade, using the experience of other Russian companies.

In Russia, Unichel nevertheless remains a regional network, with little representation in Moscow. What problems do you face as a retailer in the capital?

Yes, we are poorly represented in Moscow - only 6 stores today. It all comes down to high rental rates. To maintain low prices for our footwear on the capital market, it is necessary that the rent should be no more than 1500-2000 rubles per 1 sq. M. In Moscow, this is unrealistic, we are offered not the most passable places at a rate of 3000-3500 rubles. Any store in our region - in Yekaterinburg, Chelyabinsk, Novosibirsk - looks better than in Moscow, because we are forced to take unclaimed and outwardly unpresentable areas in the capital. This situation does not suit us at all, so now we are looking for ways to solve it. We are teaming up with other manufacturers and will look for large premises in the shopping center (about 300 km), which could be rented, for example, for two, for a reasonable fee, and make flagship stores in the capital. This format would allow us to finally start expanding into the capital market. In the meantime, we are actively working in the Moscow region, where rental rates are lower and where our stores operate with good indicators, and we devote a lot of energy to northern and hard-to-reach regions where no one works. Nadym, Salekhard, Surgut, Kogalym, Nizhnevartovsk, Yakutsk - there are Unichel brand stores in these cities.

What difficulties do you encounter in the regions when developing retail?

Everywhere you need to find people, it all starts with managers. If we find a good leader - from a trade or just an energetic, smart and decent person and teach him everything, then you can be sure that success will be. The main thing in a person applying for a leadership position is a desire to work and decency.

Let's talk about production. What are the efforts aimed at developing your factories today?

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For the modernization of production and the acquisition of advanced equipment for the production of leather shoes. Through state subsidies, we leased Italian long-drawn out equipment, which is currently the most advanced in the industry, costing 200 million rubles, but this is really the most advanced, best in the world long-drawn out equipment that allows you to quickly work out and put into production hundreds styles and - most importantly - providing the highest quality tightening. On the same machine, you can tighten the boot and the boat, the computer remembers everything and stores in the memory 200-300 styles of pads. 

Nobody in Russia has such streaming equipment like ours (in St. Petersburg there are 2-3 machines, and we have 18 sets). We have excellent machines for heel shoes, thanks to which we make women's boats and heel assortment, which no one else produces in Russia on such a large scale. We have no equal in school shoes, we have a magnificent collection and the lowest prices in the country. Italian shoe-makers often come to us, and we have often heard from them that our equipment is no different from any Italian factory.

What is the size of the Unichel team?

Three production sites (in Chelyabinsk, Orenburg and Zlatoust) employ 2500 employees, mostly women, and about 2500 more in trade. Thus, with almost 5000 people, we are the largest shoe holding in the country.  

You have repeatedly at various levels raised the topic of counterfeit as the main problem of the Russian light industry, it occupies more than 30% of the market. This is unfair competition that prevents the industry from developing. These are shoes made of low-quality materials with harmful, poisonous substances. What to do about it?

23 million pairs of leather shoes are produced in Russia today; Unichel produces 10-12% of the total volume of Russian leather shoes. According to 20-30 statistics, million pairs of leather shoes are imported. But someone buys and wears leather, and someone - "supposedly leather."

According to official figures, today counterfeit accounts for 34% of the shoe market, this is 150 million pairs. The budget is losing a lot of money (about 200 billion rubles a year), and most importantly, this product poses a real threat to people's health. Previously, in Soviet times, shoes were always checked for formaldehyde content, but now such a check is excluded, only leather is checked. How so? This is the same poison, poison, and our children wear these toxic shoes.

In Russia, huge shopping centers are clogged with counterfeit goods; they grew all over the country like mushrooms after rain. People buy this “pseudo shoe”, which costs 300-400 rubles, because many simply do not have money for normal leather shoes. The situation is the same with clothes: low-income families are forced to buy cheap synthetic products for children, and then we hear about the growth of allergies and leather diseases.

What needs to be done at the state level to make a difference?

The first is to work out the issue of returning a criminal article for smuggling, which was removed from the Criminal Code of the Russian Federation to the administrative code. Administrative responsibility involves only the imposition of fines, which does not frighten companies that bring tons of smuggling to Russia.

The second is to create a quality control system for light industry products for the content of harmful chemicals, and at this time to consider the possibility of applying European experience to the Russian Federation. This is a REACH consumer goods quality control system (Registration, Evaluation and Automation Chemicals - the EU regulation governing the production and circulation of all chemicals, including their mandatory registration, from 1 to June 2007. - Ed.)

Thirdly, to conduct an awareness-raising campaign with the population about the dangers of counterfeit products to human health and life.

Your forecast for next year: what will it be for the shoe market in Russia?

The volume of production will continue to grow - by 5-6% per year, and low-cost segments will grow. The introduction of shoe labeling should support domestic manufacturers and honest importers and help reduce the share of counterfeit products on the market. Currently, the Ministry of Industry and Trade is working on a state program for the development of light industry, I believe that this program should have a separate program for leather shoes, stimulating their production and supporting manufacturers. In Russia, it is necessary to increase the production of leather shoes (primarily children’s shoes), which only one in three Russians can now afford to wear (for most, it’s just expensive). Everyone will benefit from this - tanners, shoe makers and end users. If it is possible to bring counterfeit to nothing, in the next 3-4 years, Russian footwear production will increase significantly. Our manufacturers are already proving that we can make high-quality, beautiful, safe leather shoes and increase production, but we need to create favorable conditions for this.

Joint-Stock Company “Unichel Shoe Firm” - Russia's largest light industry enterprise, today is a kind of cluster, combining many industries.
According to Rosstat, Unichel is one of the top three largest shoe manufacturers in Russia. The company ranks first in the country in terms of production of genuine leather shoes. This is the only enterprise in the territory of the Russian Federation that produces such a wide range: men's, women's, school, preschool and small children shoes for boys and girls, sports and indoor shoes.   
Unichel is one of the most titled enterprises in light industry. In December 2015, the factory received the state "Quality Mark", established by Roskachestvo (Moscow). In March, 2017 became the winner of the Golden Spindle National Fashion Industry Award, which is the highest recognition of professional achievements in the formation and development of the fashion industry in Russia.
Today, Unichel is the most equipped shoe company in the industry. Over the past five years alone, over 700 units of high-tech equipment (mainly Italian and German manufacturers) have been purchased, which has improved the quality of products.
The company has 9 sewing, 28 billet threads, 4 direct casting threads and 12 sole casting machines. In March 2016, a new stream for the production of shoes by direct casting opened, which allowed us to expand the range of our products, including shoes for medical institutions.
Unichel independently produces insoles, soles, shoes, has its own cutting facilities, its own heat and energy workshop, its own gas boiler house and transport company in 100 units of equipment. This can be considered a unique case in the global practice of shoe production.
Despite the scale of production, not a single pair of shoes is produced outside the ordering system. Shoes are supplied to stores operating under the Unichel brand, today there are more than 570.
To control the quality of products, the company operates a testing laboratory, which is equipped with modern high-performance equipment and measuring instruments - all this makes it possible to quickly and reliably analyze products. Each finished pair of shoes before being sent to the warehouse is tested by specialists of the commercial quality department. During the inspection, they check the correctness of the tightening, the strength of the seams, the color gamut matching in the pair, which eliminates the presence of marriage.

This article was published in the 153 issue of the print version of the magazine.