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Dead Season. What will turn Covid-19 quarantine for shoe retail
01.06.2020 12016

Dead Season. What will turn Covid-19 quarantine for shoe retail

Shoe retail resumes operations in Moscow and the regions, calculates losses, evaluates prospects. Two and a half months of downtime were a serious test for retailers.

Moscow shoe retail is preparing to resume trade. The companies are trying to provide all the conditions for the full-fledged operation of stores and have stockpiled masks and gloves for their dear customers, which are ready to issue if necessary for free. Everyone is in a hurry to resume trading right from the moment the ban was lifted, on June 1, but many are aleatherg themselves whether they can survive, how long they will last, and how many of the existing stores will have to be closed in the coming months.

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The period of self-isolation due to the spread of coronavirus in Russia was announced on March 28 and has been going on for two months already, but retailers note that the flow of customers in their stores began to decline as early as March 15 - because of the frightening information about Covid-19, people already tried to avoid visiting public places, shopping centers. So in fact, the downtime for traditional retail lasted 2,5 months.

Shoe retailers missed the spring season. During the period of strict quarantine, it was possible to purchase shoes exclusively online. Placing on Wildberries, Lamoda, AliExpress marketplaces for many brands made it possible to keep in touch with their customers. However, the demand for footwear has dropped significantly anyway. “During the period of the ban on sales in traditional retail, it was possible to buy shoes from the Unicel factory in the brand's online store, as well as on the Lamoda and Wildberries marketplaces. Everywhere we saw a slight increase during the period of isolation, but it cannot be called a breakthrough, ”says Alexei Denisenko, Development Director of the Unichel shoe factory. - Shoes are still a specific product, you need to try them on. In addition, during the crisis, in general, consumer sentiment changed: people began to save. "

Shop "Unichel" Shop "Unichel"

At the site of Wildberries, Russia's largest marketplace, in the footwear category, there was a significant increase in sales of rather specific models - house slippers, flip-flops, galoshes, so-called summer cottage shoes; during the period of self-isolation, Russian consumers also continued to buy sneakers (sales increased by 60%).

Some of the retailers managed to quickly rebuild and direct the flow of customers to their own online store. For example, for the Econika brand, sales of seasonal goods in its own online store in April-May 2020 increased by more than 4 times compared to the same period in 2019.

The MBT Shoes retail network (8 stores in Moscow and 4 in the regions) notes that their online store was able to provide only 15% of the previous turnover. “In general, compared to April last year, the company's turnover dropped by 85%,” says Svyatoslav Grishmanovsky, CEO of MBT Shoes. According to him, in April, sales were not very active, since this month people were as isolated as possible, there was no point in buying expensive high-quality shoes, since there was nowhere to go in them. And May was more active, as in some regions there were concessions for movement.

Some retailers noted zero sales during the period of self-isolation of the population. "The sales of our own online store did not grow, on the contrary, we did not have the opportunity to trade, since the goods displayed on the Internet site are the same goods as in our retail stores, access to which we had no access to," says Marketing Director of the Vera Victoria Vito chain (6 stores in Moscow and 3 in the regions) Larisa Vovdenko. At the same time, the costs of rent and salaries have not gone anywhere.

Business hit

According to the Russian Union of Leatherworkers and Shoemakers, about three quarters of retail turnover of light industry goods is carried out in Russia by small businesses. Shoe retail is mainly small enterprises, where the team of employees is practically a family. Keeping the team alive and fulfilling the commitments to the team turned out to be a top priority for many retail business owners. Of course, many counted on government assistance, for example, on the opportunity to receive preferential loans that would cover these costs, to compensate for the minimum wage for each employee ... And unfortunately, many did not receive any assistance.

“We didn’t fire our employees, everyone received a salary in accordance with the staffing table, the entire fixed part, we didn’t pay the variable as a percentage of sales,” says Larisa Vovdenko. - Of course, we counted on at least some kind of compensation from the state for a downtime in a pandemic. But alas and ah. Even the promised minimum wage could not be obtained for employees, since one of the conditions for paying such is the absence of tax arrears as of March 1, 2020. Our organization regularly pays all taxes, we pay millions in amounts. But we were fined for one of the taxes in the amount of 15000 rubles. As a result, we did not receive a subsidy from the state ”.

MBT Shoes Store MBT Shoes Store

Svyatoslav Grishmanovsky calls the aid from the state a fiction: “Thank you for keeping taxes on payments,” he says. - Like most in this sector, we did not have reserves and savings. They fed the team, tenants, paid for utilities, communications, point security services and so on from a stream of receipts from an online store, thanks to the most loyal customers. " He notes with regret that during the quarantine the company had to part with two sellers: “We tried to keep the rest of the team. The salary was paid on time, of course, "everything was cut" by agreement. We spent all the money that came from online sales. "

With most of the lessors of retail real estate, the company managed to find a compromise option for discounts, but in general, no one canceled the lease for months of downtime. In order not to lose stores, MBT Shoes had to abandon the office lease, as the property owner did not go to a meeting in negotiations to reduce the rental rate. “We paid the full rate and left in the midst of a pandemic, otherwise we would have paid fines, since the law on the relationship between the Tenant and the Landlord was not yet considered in the Duma at that time,” says the head of MBT Shoes. - We did not fall under any programs for wages or loans, I think, like many, because the state has appointed "Jesuit" selective OKVED. Perhaps somehow in the future we will be able to prove our case. The tax office perfectly sees all our registered cash desks with the transfer of checks and payment of the trade fee from all stores. The bank did not provide any credit, even reduced the overdraft. As I understand it, we will have to pay the state trade tax for the months of downtime ”.

Among shoe retailers, retail companies, which were included in the list of strategic enterprises, were in a more advantageous position. Thus, according to Aleksey Denisenko, thanks to the status of a backbone enterprise, the Unicel company was able to use a credit line for employees' salaries. Apart from Unicel, the list of backbone enterprises includes shoe manufacturers Parizhskaya Kommuna, Yegoryevsk-Obuv, Obuv Rossii, Faraday, and Kari, GC Zenden, Sportmaster, Detsky Mir, who sell footwear. "TSUM Trading House", online retailers LaModa and Wildberries. The status of a backbone retailer also allowed for the lifting of the ban on retail trade. For example, Kari stores in some regional shopping centers continued to operate during the quarantine period. Detsky Mir Group has temporarily suspended the work of 62 out of 729 stores of its chain in Russia.

After quarantine

Vera Victoria Vito Store Vera Victoria Vito Store

From June 1, when the shoe retail will finally resume its work in Moscow, the store staff will meet their customers fully armed, that is, in masks and gloves, as well as with the necessary supply of disinfectants. Despite the difficult business situation, retailers are ready to incur additional costs to ensure the security measures put forward by Rospotrebnadzor.

“At the request of Rospotrebnadzor, the supply of masks and disinfectants should be in each store for 5 days, and some shopping centers require a whole month,” says Larisa Vovdenko. - In view of the fact that it seems that such restrictions will be extended, we decided to purchase reusable fabric masks, in addition to disposable ones, which are much easier to breathe, and after washing with soap or powder they can be used again. Of course, we will withstand the requirement to replace masks every three hours.

The directors are also obliged to monitor the condition of the staff, measure the temperature and prevent employees from working with the slightest suspicion of infection.

We think for now how to make the markup, because the movement in the store is not going according to plan, and communication is mainly not at the cash register, but in the trading floor. But instructions are given on maintaining social distance, we will try to comply. ”

Salon of shoes "Econika" Salon of shoes "Econika"

Nikolay Moskovkin, Commercial Director of the Econika chain, said that Econika stores have already been opened in 14 regions of the Russian Federation, and now all Moscow brand stores are opening from June 1. “We adhere to a strategy of opening stores as soon as possible, while ensuring the necessary security requirements, both for the client and for our employees,” he says. 

Ekonika notes that those regional salons, which were the first to resume their work, show positive dynamics - “clients have missed live communication”. But whether it is worth expecting high consumer traffic in Moscow in the first weeks of June remains open to question. After all, the residents of Moscow continue to have restrictions on their movements and are officially allowed to make only two trips a week.

“It seems to me that freestanding shopping will now be more difficult to lure people. First of all, they will go to shopping centers, where there is more choice, ”Larisa Vovdenko says. Some of Vera Victoria Vito stores in Moscow are just open in the street retail format. She estimates the consequences of the pandemic for her business as catastrophic: “the goods were purchased but not sold, resources were depleted for salaries and rents. Despite the fact that it was possible to negotiate a lease on various sites for discounts from 50 to 100%, can we survive the big question. ”

MBT Shoes Store MBT Shoes Store

Svyatoslav Grishmanovsky believes that the first month after the quarantine will be indicative of the viability of MBT Shoes retail outlets. “We will cut off from ourselves those stores where people will not go, after permission to open in the first month. Write termination notices and exit ethically. What remains will remain. Consumers will decide. Now we are "at the crossing" and we will sum up the results on losses when we cross the current, "he sums up. Marina Shumilina

Shoe retail resumes operations in Moscow and the regions, calculates losses, evaluates prospects. Two and a half months of downtime were a serious test for retailers.
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