Russians shoe Poles

The largest Russian footwear retailer, Tsentrobuv, is trying to launch its Centro network in the markets of Poland and Ukraine

Seven Centro brand stores opened in the second half of this year in Poland, six more in Ukraine, Tsentrobuvi CEO Andrei Nesterov told Vedomosti. In Poland, he said, the network operates on a franchise: “We don’t want to take much risks and are exploring the market.” Next year, according to him, the company intends to bring Centro to other markets in Eastern Europe - the Baltic States and Slovakia.

In Europe, there are virtually no shoe retailers that work in the same format as Centro, says Nesterov. This format is called fast fashion and is aimed at an audience of 17-25 years. Closely following the latest fashionable models, Tsentrobuv quickly copies them and launches them in Chinese design at a very affordable price. A pair of women's shoes is in Centro 300-400 rubles, boots are about 800 rubles, bags are from 400 to 600 rubles. “The strength of Centrobuvi is not only in the format, but also in a very high expertise in working with Chinese suppliers, in established deliveries. In terms of purchasing power and the final price that the network can provide in retail, it probably has no competitors in Europe, ”says Mikhail Burmistrov, director of Infoline Analytics.

“Tsentrobuv” is the first Russian shoe retailer to step further than the CIS, Burmistrov says. An electronic store chain Eldorado tried to work in Poland: in 2000, it opened a hypermarket in Warsaw, but two years later sold it to the German Media-Markt. In Western Europe, according to Burmistrov, only one Russian retail company is well represented - re: Store Retail Group, which has 25 single-brand stores with Apple appliances in Germany, Norway and Denmark.

“The average check of European stores is about the same as in Russian, revenue per square meter is higher, but the structure of margins and costs is completely different,” says Tikhon Smykov, CEO of re: Store. In Europe, he said, rental costs are lower, infrastructure is more affordable, but personnel are noticeably more expensive. “The competition in European retail is much higher and therefore profitability is lower than in Russia, about two to three times. There EBITDA margin in 2-3% is the norm, as for Russian networks it is in 6-8%, ”he explains.

Spreading business from high-income Russia to low-income Europe, the Russian retailer can pursue representative goals - to acquaint investors with their business, said TKB Capital analyst Natalya Kolupaeva. "Tsentrobuv" does not hide that it wants to conduct an IPO - in London or Hong Kong. “If investors recognize the brand, know that the business geography includes Europe, understand the format the company works in, this will simplify communication and can help make a successful placement,” Kolupaeva said. About this newspaper Vedomosti.