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Obuv Rossii to Launch an Online Platform to Deal with Suppliers, and to Turn its Stores into Offline Marketplaces
Novosibirsk, 26 November 2019: Obuv Rossii Group, the first publicly traded company in Russian fashion-retail, develops its business model and the format of dealing with the suppliers. The Group is planning to cooperate with new partners according to the principle of a marketplace and provide 30-50% of the sale space of over 700 own stores to third-party suppliers. The relationships with partners will develop via the Prodayom online platform that will be launched in December 2019. The retail stock will be expanded two times due to new categories: household goods, decorative cosmetics, and small household appliances. Such an operation model will allow the suppliers to increase their proceeds due to independent pricing and participation in the profit of the stores. Obuv Rossii plans to increase the conversion rate in retail by more than 1.5 times and increase the proceeds of the operating outlets by over 30% in the next two years. It will also allow the company to moderate the seasonality using new product groups.
The project is a part of the Company’s strategy aimed at the creation of an actual retail format and the integration into the multiservice and omnichannel retail space. The key aspects of the strategy include flexible and regularly renewed stock; high technology services including financial ones; integration into e-commerce logistics infrastructure; development of online order pickup points; improvement of own online stores; and the creation of an ecosystem to interact with customers and introduce new formats of dealing with the suppliers.
“Over the past two or three years, the Russian retail market has significantly transformed, classical approaches to trade are less efficient now. Retail becomes more high-tech, new formats appear. At the same time, consumer behaviour changes; consumers always need a new experience and positively accept all novelties in the stock. Taking into account these market trends, we have decided to upgrade our stores, to turn them, actually, into offline marketplaces. The task we have now is to expand the offer in our stores as much as possible to satisfy demands of our customers,” says the Anton Titov, CEO of Obuv Rossii Group. The stock diversification strategy has already proved to be efficient: the Group has successful experience in increasing the number of product groups due to clothing and accessory categories.
Obuv Rossii intends to work both with big and middle-size suppliers, regional producers. The Company plans to leverage the experience of its partners that are experts in their product categories. The suppliers will independently determine the price for products and participate in the formation of the assortment matrix. The Group will use a flexible approach when determining the footprint area too: every partner will be able to choose the regions and stores where they would like to sell their products. The suppliers will deliver their products to the Company’s central warehouse in Novosibirsk if they refer to trading throughout the whole network, or in a region remote for the supplier, or to the nearest regional warehouse, if they want to sell the products within the partner operation area.
On their part, the Company provides the whole infrastructure: a wide-area retail chain; developed logistics and a network of regional warehouses; IT infrastructure; connection to payment by instalments for customers. Interaction with the suppliers will be fully automated based on an online platform. Obuv Rossii partners will receive online reports about product availability in the outlets and about the sales process, will control all operations and take prompt decisions about products flow.
“Our company has a large territory of supply: we are operating all over Russia, but we have especially strong presence in the Urals region, Siberia and the Far East. In these regions, we have significantly increased the number of towns of regional significance where we opened our stores over the past two years. We offer our partners real, physical shelves, which guarantees them a certain sales level. We have fine-tuned all business processes and trading technologies, and our retail is characterised by a high IT integration level; there are up-to-date services in the stores such as instalment payments that allow attracting customers and increasing the proceeds. Therefore our competences and retail technologies allow small producers and suppliers to find their customer even in the most remote parts of our country,” says Anton Titov.
Obuv Rossii is already negotiating with both Russian and international suppliers and sees significant interest in cooperation in the new format. The stock of Company’s stores has over 10 thousand SKUs; due to transition to the new business model, the Groups expects a two-times increase in the product range. In the future, in addition to offline retail outlets, Obuv Rossii intends to offer their partners to include the online sales channel based on their own online stores.
Company profile:
Obuv Rossii (MOEX: OBUV) is a nationwide footwear company, the first publicly traded company in the Russian fashion retail. Obuv Rossii was established in 2003, it is headquartered in Novosibirsk and has a representative office in Moscow. The main Group business line is the production and sale of footwear and related goods. The Company manages 911[1] stores (172 operate as a franchise) under the brands of Westfalika (a monobrand store of classic footwear), Peshekhod ("Pedestrian") (a multibrand footwear supermarket), Rossita (a store for the whole family), Emilia Estra and Lisette (salons of fashionable footwear), in addition to developing brands of clothes and footwear for the active lifestyle brands of S-tep, All.go and Snow Guard. Furthermore, the Group also owns two manufacturing facilities in the Novosibirsk region.
In October 2017, Obuv Rossii raised 5.9 billion rubles in an IPO on the Moscow Exchange (ticker: OBUV), the issuer being OR PJSC, and in doing so became the first publicly listed company within the Russian footwear and fashion market.
In accordance with the audited Financial Statements under the IFRS Group, revenue amounted to RUB 11.55 billion for the full year of 2018, net profit was RUB 1.33 billion, and EBITDA was RUB 2.86 billion.
Website of the Group: www.obuvrus.ru; Internet stores: www.westfalika.ru, www.westfalika-home.ru, www.emilia-estra.ru, www.rossita.com, www.lisette.me.
[1] As of 26 November 2019.
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