“For ourselves, we set a plan for growth by 2019 at least 15%” - such a completely unexpected positive assessment of the brand's sales development Geox in Russia gave in a short interview Shoes Report general manager Geox Russia Sergeй Shuvalov... Despite the complete uncertainty of the situation, the overall drop in traffic in traditional retail this fall Geox records an increase in sales in its stores in Russia.
Shoes Report: How much did sales drop in traditional retail this fall compared to the fall months of last year? How much has online sales grown?
Sergey Shuvalov: You will be surprised, but our offline retail sales have not dropped! On the contrary, contrary to expectations, after the abolition of self-isolation, sales in our own retail began to grow compared to last year. And I'm not talking about gross sales, but about like-for-like sales. We ended August with a result of + 32% compared to last year, September + 28%, October + 24%, and this despite the average drop in retail network traffic over these months of -17%. We believe that our end customers are tired of making purchases over the Internet, on a psychological level. Customers simply need emotions and the opportunity to feel, touch, try on the product for themselves, as well as receive competent advice from the staff at the points of sale.
And we achieved this result despite serious aggressive promotional activity from online retailers. The completely “not winter” weather also did not affect our sales. Rather, it influenced, of course, but not as significantly as it usually happens in practice. We are sure that in more difficult weather conditions our sales would have been even higher.
There is no Geox own online store in Russia yet (the opening is planned for 2021), but partner online sales are also showing very good results. Of course, online sales took off in the spring, when it was possible to record three-digit growth figures, but in the fall the result of online sales was much higher than last year, although the growth rate slowed down compared to the spring trend.
SR: Did your retail chain shrink during the pandemic and how much?
No, we have not closed any of our retail stores. At the same time, I would like to note that we did not stop our development. Between June and early November, we opened new Geox stores, both partners and our own. We opened our new flagship Geox store in the Atrium shopping center in Moscow, a new Geox Kids store for children in the Gallery shopping center in St. Petersburg, an updated children's store in the Grand Canyon shopping center in St. Petersburg, and a new outlet in New Riga. We are also going to launch another GEOX kids store in the Mega Teply Stan shopping center in December. We also planned to open at the end of the year and in January-February 2021 in the regions - in Kaliningrad, Ufa, Samara, Kazan and other cities that are significant for us.
SR: Were you able to adjust the rent amounts due to quarantine at any points?
We want to express our gratitude to all our landlords. Which despite the dire situation. Quarantine-related and full lockdown met us halfway and provided huge discounts or absolutely free rent for the quarantine period. In addition, many of our landlords have provided us with loyal rental rates for the period after the end of quarantine until the end of 2020, and even for 2021. I would also like to point out that our franchise partners have also received very good proposals to reduce rental payments. As a brand, we care and help our partners. Therefore, in many cases, we have negotiated loyal rental rates for partners on behalf of the Geox brand.
SR: What business development actions prompted the current crisis?
As they say, any even negative news and events from a certain angle can be considered as positive. From everything you can draw conclusions. We assessed the structure and business processes of our company GEOX RUS and found those points that need to be adjusted or optimized to reduce our costs. We reviewed business processes in our own retail, and also began to revise our franchise network. What is not being done is all for the best. We have found many opportunities for new growth with our partners after the end of the pandemic, and even now. All our partners who strictly follow our standards, assortment policy of their own retail show very good results, those who, unfortunately, are careful about changes, are afraid of new initiatives and do not follow our rules, cannot show successful results. In this case, we decide to close such stores or change partners. We are always open and broadcast sales figures to our partners, and, of course, we want our clients to be successful as well.
Unlike many market players, we have not stopped our investments in marketing support for the Geox brand in Russia and also require marketing activity from our partners in the regions.
We did a very good job with our assortment, taking into account the difficult situation with the spring-summer 2020 collection and the availability of leftovers, we have adjusted the collection of the current autumn-winter and balanced our assortment in the next spring-summer 2021 season, while focusing on new lines in the collection and brand new models. In addition, we have fixed a preferential ruble / euro exchange rate for spring-summer 2021, which will be at least 17% below the market rate.
Naturally, we will make every effort to launch our own online store, which, according to the assortment policy, will fully correspond to our offline retail stores. The launch is planned for 2021.
SR: What are your forecasts for the development of the situation in the footwear market?
What can I say? The strongest survives. If you organize business processes correctly, optimize costs, follow strategic plans and tactical execution, then you can "steer" out of any situation. We are absolutely positive about the sales of the next year and 2022. We understand that some market players will reconsider their sales strategies, new store opening schedules, their collections and their tactics of market behavior.
The main forecasts that are present in the market tell us that the market will be able to reach the previous level of sales (before the pandemic) only in 2022, but we are looking at the development of our brand with great positiveness in 2021. For ourselves, we set a growth plan for 2019 of at least 15%.