You never dreamed: competition for buyers is a military operation of a new time
17.07.2014 4576

You never dreamed: competition for buyers is a military operation of a new time

The crisis, which has been talked about a lot and for a long time, has arrived, which was officially confirmed by representatives of the state authorities at the St. Petersburg Economic Forum. In these conditions, sales reduction is a natural process. And the figures of a drop of 10 - 20% announced by some market players indicate that the companies have succeeded in almost impossible: such losses are economically explicable and speak of the excellent work of the management team in maintaining brand loyalty.

Judge for yourself: according to Rosstat for January-April 2014, the growth of the market for non-food products amounted to 3.3%. But according to the results of the 2013 year, the retail trade turnover of non-food products increased by 4,4% compared to the 2012 year. In previous years, growth rates ranged from 8 to 15%. But the recorded minimal growth is offset by significant fluctuations in the exchange rate at the beginning of this year, which, when adjusted for inflation, sales figures mean the actual loss of most operators. Simple mathematical calculations show that the average loss of 20% is a natural phenomenon and independent of the management of companies in Russia.

The fact that such an incredible growth of the market can not continue forever, economists spoke at the first stages of the rise. But you quickly get used to the good, and already 4% of the growth of the past and 3% of this year are perceived by many as a fall of the market into a deep abyss. Add to this the problems with the exchange rate of the ruble, political aspects and unsettled sales of the winter season ... and now the abyss is beginning to seem like an abyss to many! It's time to take the decline in sales for granted and develop the right strategy for promoting your brand in the face of the economic and political crisis.

Who should live well in Russia ?!

According to data from sample surveys of household budgets recently conducted by Rosstat, people are now not inclined to spend the family budget on clothes and shoes. This trend was especially pronounced in cities - the main centers of consumer demand for quality products. The main share in the overall increase in spending on clothes and shoes was made by rural residents, who can hardly be classified as lovers of fashion brands. As a result, the share of shoe sales in the total retail turnover decreased. The most significant losses were suffered by the segment with price positioning from 30 to 100 euros for a pair of shoes in retail.

According to Watcom, a company that specializes in measuring consumer flows in shopping centers, from mid-March to mid-May, drop in consumer traffic in Moscow malls averaged 6,1%. Most strongly - by 11,5% - customer flow decreased in mid-April (545 people on 1000 sq. Versus 613 people in 2013 year). Thus, a drop in consumer traffic is accompanied by a drop in sales, as a result of which buyers lose their money, as they, like manufacturers, depend on consumer demand, which continues to decline.

The large number of players in the market and the constant increase in supply (large orders of collections in 2013 in anticipation of a market upswing) against the background of limited demand, the pace of which is not keeping pace with the supply due to falling income levels of the population, means that consumers at all levels become more sensitive to prices.

Extensive growth, financed by borrowed funds, has led most companies to a high level of debt in the absence of the expected revenue growth and high costs of maintaining the network. At the same time, during the crisis, consumer polarization is observed between economical and premium niche formats.

Expert Opinion

Natalya Igorevna Demidova, General Director of the National Shoe Union:

“Of course, the period of growth of the footwear market at a rate of 10-15% per year, which experts have noted since the beginning of the 90s. until almost 2008, ended.

The market is close to saturation, however, footwear is exactly the product that is used in harsh natural conditions and will always be needed. Soviet statistics characterized the consumption of footwear as 3,6 pairs per person per year. Shoe market experts believe that this figure is currently even higher - 4-4,5 pairs per person per year. However, the market share of smuggling is still high. The volume of smuggling in the consumer market has recently been growing again and is estimated at 35-45%. The National Shoe Union is actively involved in the development of all projects related to the reduction of the share of smuggling, which is the main source of dumping for both importers and shoe manufacturers. The experience of 2008 shows that falling sales are followed by growth, i.e. the deferred demand comes into force, if, of course, there is no war. "

Strategy and tactics

Well, if consumers change their purchasing behavior due to the financial crisis, then companies must change their strategy in order to satisfy new customer preferences.

According to a study conducted by the reputable analytical agency Kieth Roberts in 2010, “companies that during the crisis remain at the same level or even increase marketing expenses do not lose their money and market positions, but rather get profit and significantly increase their share in the market at the expense of those who reduce their costs of promotion and marketing. ”

According to Barry Nielson, when developing strategies for behavior in a crisis environment, company policies are fundamentally different. “Large companies, market leaders, prefer to move in the general flow and are slowly adapting to the new situation. While progressive companies are trying to maximize their ability to adapt to changing conditions and significantly strengthen their position in the market. "

According to the well-known consulting company Roland Berger, now many Russian companies are only taking “quick response measures”: they close unprofitable stores, cut staff (by 20-30%), cut their assortment (up to 50%) and even freeze their investment plans (by 30- 50%). All measures taken are aimed at short-term improvement of liquidity, however, such hasty decisions without a serious assessment of the feasibility can lead to a crisis of confidence, loss of customer loyalty and negatively affect the company's competitive position in the medium term.

We conquer the territory

And what should European shoe manufacturers working in the Russian market do? If we accept the existing statistical “picture of the world”, which we spoke about at the beginning of the article as a given, then we should evaluate any promotion of shoe products on the Russian market as a strategy in a zero-sum game. Winning a single player automatically leads to a losing competitor. At the international marketing forum, Alexander Levitas, a business coach, a specialist in guerrilla marketing correctly noted: "There is less money in a falling market, they just have different owners."

In a falling market, it is important to keep the customer. Competition is escalating. Therefore, any means go in. In other words, today for a Russian buyer it is necessary to wage a real war.

Ferrell & Hartline experts argue that: “If companies want to achieve their goals, then they need to draw up a development plan or a so-called“ road map ”- to indicate the direction, choose a vehicle and set the desired speed ... To successfully overcome crisis trends and strengthen their positions in the market, companies need a holistic concept: it is necessary to develop and implement a holistic anti-crisis program, including both strategic and operational and financial aspects.

Only a manufacturer professionally oriented on the ground can wage a “war” for a solvent buyer using non-trivial and multi-pass strategies. In business practice, this means transforming a simple promotion strategy into a strategy of building relationships with solvent buyers who are able to conduct aggressive and focused promotion campaigns on the Russian market. And such building relationships is already actively conducted by many market players. And then there’s no time to talk about valor and honor: while competitors are sending invitations to the showroom to show the new collection, others are tickets to Tunisia reserved in the name of the buyer. Where does a retailer tired of instability and increased balances go? It’s easy to guess.

Of course, the easiest way is to go along the path of lowering selling prices for products, in order to partially compensate the buyers for their losses during the crisis period and give them some freedom of maneuver in pricing. However, one should not get carried away with this, since price measures for sales promotion are effective only in the short term.

In addition to purely financial relationships, it is necessary to build purely human ones: a buyer must become your like-minded person

There is a huge field for maneuver. Start with standard, but reliable marketing solutions: participate in exhibitions, business forums, implement an individual approach to each buyer, accepting invitations to any events where your communication can turn from business into informal. “Lick your client. Use all possible loyalty programs. Offer your customer a unique service. Add value to your business by creating a pool of profitable customers. You gave the goods, received the money. What else can you offer the client? To help with the search for the necessary information, or with the holding of trainings for employees ... Look for any ways to increase the loyalty of your customers, ”advises Alexander Levitas. You must be where your customer is. And it doesn’t matter if this meeting promises you one or ten deals. In conditions of economic instability, you simply do not have the right to neglect any opportunity to get a client.

Only such active strategies can destroy the existing equilibrium and turn the “zero-sum game” into a real expanding market with high growth rates.

There are good reasons for such forecasts. Despite the flow of negative economic news in the first quarter of 2014, residents of Russian cities, the main consumers of shoes, are counting on the growth of their income. According to surveys of urban residents carried out by the Romir research holding in April 2014,

68% of respondents hope that their families' incomes will increase in the next six months, and only one in ten fears their decrease.

We are sure, like any crisis, the current one is a temporary phenomenon. And the way out of the poor economic situation is just around the corner. But to sit aside, waiting for better times, means to lose touch and customers. The one who, using all possible means of marketing, will move his business forward will win.

The crisis, which has been talked about a lot and for a long time, has come, which was officially confirmed by representatives of state authorities at the St. Petersburg Economic Forum. In these conditions, sales decline - ...
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