The largest Russian shoe seller, CenterObuv, is suing landlords across the country: since the beginning of the year, 160 lawsuits have been filed against the company for a total amount of about 230 million rubles.
In general, a lot of proceedings are related to the requirements for the company to pay off the rent arrears. The main amount of overdue payments for CentrObuv was formed in the period from November 2014 to March 2015. In addition to landlords, companies from the logistics sector, manufacturers of packaging, advertising banners and other counterparties are suing CenterObuvu.
“When such difficult times come on the market, it becomes more difficult for all parties to negotiate with partners: everyone has their own interests,” says Alexander Shindyapin, director of the CenterObuvi marketing department. Negotiating prices with landlords is “an organic process for any retail chain, especially a large one. We believe that it is necessary to reduce rental payments, but the partners do not agree with us, ”he explains. According to him, the retailer continues negotiations with contractors, including about fixing the rate to determine the rental rate. But in case of failures in the courts, the company has the means to pay off debts, the manager says.
According to TsentrObuv's data, the total number of Centro and TsentrObuvi outlets in Russia is 1 (including those that operate under a franchise). According to Shindyapin, at least 114 percent of them are owned by the company itself, the rest is a franchise. The company does not disclose the number of points to rent, the average rental rate and other commercial terms.
Now "CenterObuv" is not looking for new locations for its stores, experts say. According to Svetlana Yarovaya, head of street retail at JLL, the company has not been considering new sites since about mid-2014.
Aleksandra Romanenko, senior consultant at the Magazin Magazinov consulting company, knows that TsentrObuv has completely reduced the development department. But, according to her data, landlords testify that the company has begun to “slowly close debts”. “The first quarter was difficult, like everyone else's,” Shindyapin comments without naming numbers. But the sales in May offer hope that the market will improve, he says.
The brands of the middle and low price segments have survived the previous economic crisis with less losses, says Galina Kravchenko, director of assortment and trend forecasting at Fashion Consulting Group. “Now the lower segment is also experiencing a drop in traffic,” she says. There were already enough players in this niche, and after the crisis new ones appeared, for example, Kari, Obuv.com, the expert notes.