Shoe retail: not in quantity, so in quality

In its latest research "Russian retail footwear retail chains", RBC.research notes that, despite the lack of saturation, the Russian footwear market is developing qualitatively.

This means that competition between retail chains is intensifying, weaker market players are being forced out either leaving the market altogether, or becoming part of a more successful company, and many shoe retailers choose qualitative rather than quantitative development as their strategy. It is worth noting that all this is happening against the background of the opacity and closeness of the market and the lack of deals for large lending to shoe retail operators.

Speaking about the non-transparency of the market, RBC.research analysts complain that a significant part of shoe retailers refuses to publicly provide information on the size of retail space, data on financial performance of their activities and even on the number of stores. Although there is more official and unofficial information than in previous years. Opacity is also characterized by the fact that a significant share in the structure of shoe retail in Russia is occupied by uncivilized trade: according to Rosstat 38, fairs and markets account for% of shoe sales. Such a high share of the shadow market suggests that the Russian shoe market is still far from European transparency.

However, the shoe market in Russia is developing, and this is largely due to a number of factors. Firstly, the increase in household incomes affects. It contributes not only to an increase in consumption in general, but also to a change in consumer preferences in favor of better products. At the same time, the culture of shoe consumption is changing: shoes are becoming an instrument of self-expression and a way to show one’s belonging to a certain social group. Buyers began to make more demands on the quality of shoes, breadth of assortment, style and compliance with fashion trends. Important for them is also becoming the level of service in shoe stores. In these conditions, trademarks that have established themselves in the market begin to play an increasingly important role. Finally, the development of a high-quality retail real estate market also contributes to the growth of a civilized retail shoe market.

Shoe consumption in Russia is growing: if on average in 2009 year it was 2,2 pairs per person, then in 2012 year consumption increased to 2,5 pairs per person. It should be noted that most of the audience are men living in Moscow, whose consumption level significantly exceeds the national level. However, according to the data of the international research company Synovate Comcon, in terms of shoe consumption, Russia still lags significantly behind the European and American indicators, where this indicator is 5-6 and 7-8 pairs, respectively.

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As for the retail market, it is distinguished by a low level of consolidation - a large number of small players and their relatively low turnover. However, there is also a certain development in the form of mergers and acquisitions. During 2001-2008, they were single and did not exceed two per year, and in the crisis 2009 they were absent altogether. However, since 2010, the number of such transactions began to grow again, and in 2012 it reached four. In particular, open sources note the acquisition of 40% of the Obuv.com shoe chain by August Meyer and Dmitry Kostygin, and two deals were made with online retailers: Ozon acquired the online shoe store Sapato, and the Rocket Internet company invested in the online shoe store Lamoda .ru about $ 130 million.

Another aspect of the qualitative development of the market is the strengthening of their positions by retailers through the development of production. According to the director of Obuv Rossii, Anton Titov, it is now profitable and necessary for network operators to create their own production facilities - this will allow companies to more effectively control quality, ensure the exclusivity of collections, save on transportation and achieve greater mobility when placing orders for footwear production. At the same time, shoe factories owned by retail chains have a guaranteed distribution channel. Let us remind you that in 2012 Obuv Rossii announced a full-cycle shoe production project in Cherkessk, designed to produce 1 million pairs of shoes per year. Another large Russian company "Monroe" in September 2012 opened a factory in Novosibirsk with a capacity of 1 pairs per day.

Analysts of the RBC.research company note that in the shoe retail market there is still a trend towards increasing competition between shoe chains by the number of stores. In 2012, the Zenden shoe chain opened more than 50 stores, and in 2013 plans to launch 80-90 outlets; Unicel expanded its network by 77 stores, increasing their number to 407, and in 2013 intends to open 50 more; In 2013, Obuv Rossii, mentioned above, plans to expand its retail network by 60 stores (mainly of the Westfalika brand) and enter new regions. However, in general, most companies set the task for the coming years not quantitative, but qualitative development of the retail network. The priorities are working with collections and increasing sales in existing stores. Some brands are already receiving the first results of this strategy: for example, in 2012, Ralf Ringer increased sales of women's shoes by 2,5 times. This leap is driven by the implementation of a new sales strategy announced in 2012, namely an increase in total sales through increased sales of women's and youth footwear. The long-term goal of the company's own retail network is to reach the average market sales of women's shoes - 70% of total sales.

Describing the situation of the shoe retail market in Russia, RBC.research experts note that the country's civilized retail is at the stage of development. Since 2008, the distribution of chain stores by federal districts has not changed much, and not one of the markets of Russian regions has reached its saturation. Taking into account the difference between Russian and foreign footwear consumption, we can conclude that the market of retail shoe stores in Russia still has very broad prospects for development.