Food Industry News

How to fix the price tag and not go broke

"Chip» Fix Price network, open more 2 thousand stores in Russia, that all the goods are sold at the same price -. 50 rubles. How to fix the price tag and not go broke, I told RBC CEO Fix Price Dmitry Kirsanov.


- "Chip» Fix Price of chain stores that absolutely all the products are sold at the same price - 50 rubles. How do you do it?

- If I tell you all the details, it will be a course for competitors, it turns out that they develop a product portfolio strategy. It's simple: we define the items that we need, are in talks with the production, place orders, receive the goods, provide logistics and do everything that the price on the shelf was 50 rubles. Without crime.

At the same time we do not have products that we sell in the negative (sometimes sell other networks of the goods at a low price with a loss to themselves, and compensate the losses due to high prices for the rest of the range -. RBC). Each product we want to make. Just for some products we earn a little more, because the market allows for some - a little less.

- There is an opinion that this is some kind of run-off goods with sales.

- Lots of 10 position (total range -. About 2 thousand kinds of products, SKU -. RBC) falls [of waste]. You should be aware that dial stock items in 2,1 thousand. Shopping is almost impossible, but we try not to deviate from the general [for conventional reteyla] technology in the formation of the matrix, because the matrix do their leave us more for each store. But sin is not to make money, when there is such a product, if it is not contrary to our principles on the assortment and pricing strategy.

- You have a lot of food in stock?

- The share varies from month to month - 25-27%. We sometimes call this the "assortment of refueling": drinks, confectionery, conservation. Products from the refrigerator (yoghurts, milk, etc. - RBC) - this is a new category, we have been experimenting for a year and are slowly introducing it. We polled to see that our consumers really want more and dairy products. There is nothing complicated, there are no short terms of storage. We work with large producers - Ehrmann, Wimm-Bill-Dann, Ostankino.This particular yogurt and milk can be stored at a temperature of plus 25 degrees in the trading floor. So this is a bit of a marketing move: consumers respond better to the refrigerator.

- What product categories that have the biggest share in the turnover.

- Drogerie (cosmetics, perfumes, pharmaceuticals without a prescription -. RBC), clothing, toys, stationery best selling product -. Package "T-shirt" I do not remember exactly the number. Pens we sell about 100 thousand. Units per day. The pantyhose is one of the items sold at 20-30 thousand. Units per day. Beer - also about 100 thousand bottles a day..

- Do you feel some psychological price barrier for a buyer, you can not cross?

- In our opinion - 50-55 rubles.

- Is there a foreign network, you initially have a sample? Maybe even something to beat it in the end?

- I assume this responsibility I will not take - to compare what we have is better, worse. We have traditionally tried to look at colleagues, competitors, all looking to market and are looking for the best ideas. Something tried to adapt for themselves, and if there are any errors, try not to repeat them. Why I'm better than the US Dollar Tree Stores? I do not know, maybe I'm worse. At least, we do not have so many stores like theirs.

But we are the leaders among the price of this format worldwide. In America trade by $ 1, 70 ie rbl., The same range. In Europe, there are shops TEDi, Euroshop, they sell all for € 1, 80 ie rubles. In England - one pound, it is generally scared to count. In Japan, Daiso has a network, but I have not seen them, have not been there.

- When you start to build a network, yet guided by the Western players?

- We do never copied, and tried to adapt the idea for the Russian consumer. The idea is good, but a completely different range. Overseas, European consumers, for example, went crazy with the cards, candles, Easter goods. Our consumer prefers to buy essential items: a range of drogerie, some household items that have not yet matured to the decor, it has a completely different mentality.

There are companies to which we went to visit, discuss, share experiences, defines the possible variants of cooperation. This small European network.

- What kind of collaboration it?

- A Quadro Capital (the founders of the network foundation, "Kopeika" Sergei Lomakin and Artyom Khachatryan, as well as former managing director of Troika Capital Partners Giedrius Pukas,. This fund sovladeet network Fix Price - RBC) - the same fund investment in retail, they are considered different investment alternatives, including in neighboring countries. Sometimes Fund colleagues invite us to assess the performance a small retail chain.

- Quadro - the main owner of Fix Price?

- Part Fix Price belongs to the management company, and some - other private investment funds.

- In management, including you - collectively less than 10%?

- Less than 5%.

- It is known that the Lomakin and sovladeyut Khachatryan and other networks, such as "coin". You do not have any network of partnerships?

- We are trying to find common interests. For example, the dairy category, we, together with the "coin" develop.

- So you are in negotiations with the supplier say at once that take the goods to the two networks?

- Yes. Another "coin" we are helping to imports, and they are us - with local suppliers. But overall the staff we have.

- How active Quadro Capital participates in the management?

- At the board level. They maintain strategic decisions, such as the development of new areas of business plans for the following periods. The operational management of the home were not observed. For operational decisions they have top managers who must work to increase profitability.

Fix Price

The first stores of the network were opened in 2007 year. The main owners are the co-sponsors of the Kopeika network Sergei Lomakin and Artem Khachatryan, 10 top managers have a small stake, including the CEO Dmitry Kirsanov. The network's revenue in 2015 year, according to its own data, amounted to 61,2 billion rubles. in view of VAT. The network for two consecutive years is included in the rating of RBC "50 the fastest growing companies". Initially, the network traded an assortment of 30 rubles, by February 2016, the value of goods on the shelf had increased to 50 rubles. About a month ago, Fix Price began testing three more fixed prices for 55, 77 and 99 for a limited range.

One price

Inventor format stores, which are all sold at the same price, according to Frank Woolworth. In 1877 25 year-old Woolworth, who worked in the New York store Augsbury and Moore Dry Goods Store, invented expanded unsold goods on the table marked "All 5 cents." Sales proved popular and buyers and shop vendors. In 1878-m Woolworth opened a store at the same price - Woolworth's Great Five Cent Store in Utica, NY.

"WAITING FOR OUR SUPPLIERS depreciation of the euro"

- You have mentioned the major suppliers, but if you place an order for production, then perhaps using their own brands (private label)? So do the other networks: as a rule, the STM - the cheapest products in its category, because their price is not laid down the cost of promoting ...

- In [third-party] brands - Limited representation [in the Fix Price]. For example, the detergent "Biolan" [produced by "Nafis Cosmetics"] we have today, but tomorrow we can not put him, and Freps [en Fix Price Brand] always will be. Actively [third-party] brands began to appear [on the shelves Fix Price] only the last two years. Until companies apparently realized that the consumer is now in first place votes purse.

- Do consumers have become buy less branded products because it saves?

- According to our observations, consumers priority role does not play the brand, and the price of goods, great packaging. For example, there is a popular offer - three packages dish detergent for 50 rubles. With brands such works generally: we often plant in range of the brand, when we know that the price of one hundred percent will be considerably lower than the market, while the consumer perceives this as a promotional item. But such a proposal is not always possible.

We respect brands, but do not really like to sell them, because they sell brands - is not earning, they sell everything. But in some categories there are bright brendozavisimost, these products have nothing to replace. These categories can be counted on the fingers, for example, personal care products, creams, toothpaste.

- How many of your sales come from STM?

- 60%.

- What is the current share of imported products?

- Now - 50%.

- In your presentation a year ago we talked about 70% of imports.

- We try to respond quickly to any changes that occur within the company and outside: in the world and in the country. Changed the structure of the purchase. It became clear that some of the import goods, we can not bring, so that the cost will be more 50 rubles. We are changing the assortment, procurement geography.

With the change in the exchange rate that it became more profitable to buy in Russia, there are more offers from Russian manufacturers and importers, even because they are trying to get more money into circulation. For example, the number of offers from publishers of books have increased by approximately half, because they drain more than anyone else.

- And yet - how to buy imported goods at such exchange rates?

- We are working on hedging of currency risks, enter into transactions on currency forwards. If we do not do it, then the price of the goods would be now in the area of ​​70-80 rubles.

Our major lenders - Sberbank and VTB - Opening of multicurrency credit lines, we have them choose the right moment. We try to live so that the ratio of debt to EBITDA should not exceed 1. Therefore, carefully and anxiously watching the credit portfolio. Sometimes we try, if possible, early extinguish.

In recent years, actively use the yuan: have begun to pay in that currency in 2015 year, but we have become more stringent in its negotiating position.

- Chinese companies are probably the main suppliers for Fix Price?

- On the market there are stereotypes and traditions, when, for example, the distribution companies, which bring goods from China, sell it at a premium 100-200%. We, bringing goods themselves excluding such intermediaries can give the best price on the shelf that do. Same thing is happening in the Russian stock - eliminate unnecessary links in the chain, already at this you can earn.

In China, of course, the main share of purchases is done. Basically - household products, stationery, haberdashery. Our clothes are very much working with Uzbekistan. Previously carried unique products from Italy and Spain, for example, pasta and olives, but of course it's very point of purchase. If the goods are not under sanctions, they can bring, simply does not allow the euro. The price has doubled.

- That is the European goods have now almost no?

- Their share declined, but still we carry. Chocolate, Confectioner we carry from Poland and Belgium. Our suppliers are waiting for depreciation of the euro, writes periodically offers. We are not ready yet.

- Do you also work, for example, with the European Procter & Gamble?

- Yes. We agreed with the Russian office. And, in my opinion, from Poland or the Czech Republic brought the goods. They consider our network as a good platform for the sale of waste, for example, when they updated the line.

- How many are planning to open stores in 2020 year?

- We estimate our potential in 5-6 thousand stores in Russia. We plan to maintain the pace of opening - 300-400 stores annually. We built an easily scalable system and in a short time we can adjust the development of the network. Everything depends on the current economic situation and the company's financial capabilities. We do not want to run ahead of the locomotive and deteriorate our performance from the point of view of the loan portfolio or debt to EBITDA, especially in a crisis economy, because it is very dangerous. I want the company to develop steadily. In the current year, while we plan to launch 300 new stores, in 2017 we have 300-400 points.

- How many points is closed in a year?

- About 50-55 stores we closed for the year. This is mainly due to the economy. With rents generally in 2015, the one problem: someone is willing to take probation for 100 rubles, while others - for the 1 thousand rubles...! Someone starts to recalculate the amount on the dollar - it wants the same $ 10 thousand, as before.. Investing in the purchase of real estate does not make sense, because the business should be easy: to be able to withdraw and move to the next building. We do not have any stores in the property, and it is a position of principle.

- How much is to open a store Fix Price today?

- 5,5 million rubles. This network revenue 2015 year was just over 60 billion rubles. VAT, rising to 2014-mu - about 25-30%.

- You seem to have plans to open abroad?

- Set up shop in Georgia, there had already left the goods. This year opened franchise stores in Kazakhstan and Armenia. We conducted a rapid analysis of the territory, we have realized that it is precisely those countries where the buying behavior is not much different from the Russian. Just as in Belarus. All the countries of the former Soviet Union, we are interested to develop.

In total we have act 411 franchise stores, and the entire network -. 2,1 thousand Somewhere we will redeem the shops of the partners, which is not present. The new foreign projects we agreed that next year will look.

- What is your scheme of work with the franchisee?

- We have two franchise programs, both interesting. Lump-sum payment of about 300 thousand rubles, plus royalties -.. 3-4% of the turnover. As part of the retail business is a small entrance fee. Partners we sell goods with a minimum mark-up, which pays for our logistics costs, earn royalties. In those stores, which we plan to buy, we have 25-percentage. In the second scheme, franchise - without the right to repurchase shops, I call it a "perpetual franchise" - a little more fee and other markup.

- A 411 of franchise stores, which are now, since there is an agreement to repurchase?

- Roughly 300.

- What about the far abroad?

- Fix Price - international brand, is registered in almost all countries of Europe and Asia. But as for the development plans in other countries, it is an open question.

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