2D. I. Barkan, S. I. Kiryukov
Collection of educational cases. Experience Russian companies., SPb, 2003 - p. 55-92
Learning objectives of the case
The case is recommended for discussion in study groups:on the topics "Environment" and "Strategic Opportunities"
The analysis of the work on the case pursues the following educational goals:
1) to give students an idea of the history of the development of the Pyaterochka network and methods of conquering regional markets;
2) identify the key success factors of the Pyaterochka network in working with regional partners;
3) analyze the decisions related to the choice of the region, the definition of the commodity and pricing policy retail network;
4) evaluate the effectiveness of the regional strategy used by Pyaterochka and formulate an alternative strategy for regional development.
Problem situation
Agrotorg LLC, the largest Russian retailer, faced the need to develop an alternative strategy for regional development, taking into account the specifics of the regions and increased competition.Directions of case discussion
1. Introducing the case into the consideration of the audience, the teacher, first of all, does short review the general state of the retail market in Russia, and here it would be appropriate to cite some figures from republican and regional statistics. Further, the teacher especially dwells on
the role and significance of retail chains both in developed market economies and at the present stage of development of Russia.Some of the figures and facts of this kind are given in the case study, however, they can be supplemented and expanded, for example, through relevant information from the practice of such largest foreign chains primarily food retailers like Wal-Mart, Safeway, Aldi and others.
2. Turning directly to the essence and content of the case, the teacher should note the special role of Agrotorch LLC and the Pyaterochka system in the development of food retail chains, point out the undoubtedly leading role of the company and emphasize the fact that the first Russian chain Pyaterochka managed to reach the milestone of $ 1 billion in annual turnover already in 2003. The teacher draws attention to the twofold significance of this fact, since already starting from the tenth to twelfth numbers of the "table of ranks" of American networks, they all lie within the turnover range from 1 to 8-10 billion dollars.The teacher emphasizes the fact that the largest Russian banks have repeatedly admitted in interviews with their leaders: the network becomes especially interesting for a large investor only when its turnover exceeds 500 million dollars, and for Russia this figure has actually been overcome. only Agrotorg LLC (although several other networks have approached it).
3. Finally, before moving on to a careful reading of the case by students and textual comments on specific elements of the case, the teacher should note the special importance of regional expansion for any serious network retailer and emphasize that Pyaterochka's growth rates in the past two years and its experience accumulate in many respects precisely in various Russian regions. Finally, in concluding this introductory part, the instructor draws the students' attention to the fact that this is certainly valuable experience and the relevant aspects of the network, and then begins to work with the audience on the issues. This work can be of a team nature or carried out in dialogue or individual modes. During the lesson, students make notes, to which they consistently return during the discussion of different parts of the case.
Issues for discussion
1. How would you formulate the development strategy of the Pyaterochka chain up to now? Formulate alternative strategies for the future development of the Pyaterochka network.2. What is the specificity of Russian regions? What indicators are used to assess the market capacity of the regions?
3. Describe the main formats of food retail. Why does the Pyaterochka chain think that it does not have serious competing formats in store trade?
4. Does franchising really provide rapid growth in store numbers and turnover without significant investment. List the main elements of the franchise in retail and the specifics of their use by the Pyaterochka chain.
5. Describe the scheme for the retail network to enter the regions: what decisions are made, when and why? How is the search for partners to organize a network and ensure supplies in the regions?
Question 1. How would you formulate the development strategy of the Pyaterochka chain up to the present moment? Formulate alternative strategies for the future development of the Pyaterochka network.
The experience of the Pyaterochka chain development shows that the decisive factor in ensuring victory in the competition is the efficient use of time. Therefore, even using similar means, competitors will not have time to catch up with Pyaterochka in terms of the number of stores and the chain's turnover in the foreseeable future. We draw the teacher's attention that the main factors for the successful growth of the number of Pyaterochka stores are given in the text.
According to the authors, retail company working nationally or international markets, may have two or more names to identify the direction of its development. (The trainer can use the example of the Spanish group Inditex, which has seven different retail brands in its portfolio: ZARA, Massimo Dutti, etc.)
It is also pertinent to recall that the giant Wal-Mart has a different brand name for the so-called "neighborhood stores" of the retail format. It is not excluded that the Pyaterochka chain will use a different name for the hypermarket, especially since its experimental and very promising project Karusel has already acquired the right to exist. The instructor may ask students to come up with one or more names for the emerging hypermarket network. The teacher must remind the listeners of the very concept of retail strategy and, taking into account the link to the textbook "Fundamentals of retail" (Levy M., Veitz BA 2000. Fundamentals of retail. St. Petersburg: Peter), propose to formulate the strategy of network development as a general plan expanding the traditional retail strategy.
Question 2. What is the specificity of Russian regions? What indicators are used to assess the market capacity of the regions?
The specificity of Russian regions is determined by the main factors of the formation and development of the regional environment and the special mentality of the inhabitants of the regions, which may have a certain value in the perception of new formats of trade and the establishment of partnerships. The text of the case contains a list of the main factors of the attractiveness of the regions, which highlights the indicators used to assess the capacity of regional markets for individual product groups and for retail in general. In marketing practice, the most widespread indicators are those that determine the value of the purchasing power index (consumer index of a region), so listeners are invited, based on the available information, to make an idea of the attractiveness of individual regions and the values of their market capacity. Regional risks are considered in sufficient detail in the quarterly reviews of the Expert magazine, and the teacher, having previously explained the task to the students, summarizes the available information and invites students to highlight the key risk factors for the main regions.
Question 3. Describe the main formats of retail food trade. Why does the Pyaterochka chain think that it does not have serious competing formats in store trade?
The main characteristics of retail formats in relation to the food sector are given in the text of the case in a scattered form. The listeners are invited to summarize this information and form a "portrait" of a typical economy class supermarket and justify the choice of such a trading format. The most difficult issue is the lack of competitive formats. The text contains sufficient grounds to prepare various answers to this question, taking into account the specifics of regional trade.
Question 4. Does franchising really provide rapid growth in store numbers and turnover without significant investment? List the main elements of the franchise in retail and the specifics of their use by the Pyaterochka chain.
The issues of franchising in retail are considered in the text of the case in sufficient detail, and on the examples of several network
retailers. Trainees should have no difficulty in preparing detailed answers to these questions. Since the experience of using franchising in retail is relatively new, modeling the situation for the future can present some difficulties. Therefore, the authors recommend giving a variant forecast for three, five and seven years for the development of retail networks with the predominant use of this form of network development.
Question 5. Describe the scheme for the retail chain to enter the regions: what decisions are made, when and why? How is the search for partners to organize a network and ensure supplies in the regions?
To prepare an answer to this question, the teacher can use a variety of statistical data given in the text, and a special method of "cutting off" part of the material (the scheme of penetration and conquest of regions) from the attention of the audience. Instead of a ready-made penetration algorithm, students are invited to form a mini-program of such an exit themselves and determine the main decisions: where, when, how, at what expense and with what effect the company will conquer the regional market. The issue of choosing a partner is extremely important. Preparing an answer to it can include the most important provisions from the text of the case and generalize all those significant methodological developments that the listeners learned from their acquaintance with the material.
Case 6. IT strategy of JSC "Baltiyskiy Zavod"
A. K. Kazantsev 3, E. E. Minevich, L.S. Serova
Collection of educational cases. Experience of Russian companies, St. Petersburg, 2003 - p. 93 - 130
The case is recommended for discussion in study groups:
♦ in the course “ Strategic management» - on the topic "Structures of organizations"
The case can also be used: for discussion in study groups in the specialty "Management of the organization" in the courses "Information technology management" and " Information management».
In the course "Management Information Technologies", read for all specializations of the specialty "Organization Management", the case can be used when considering the following topics:
♦ Systems approach to informatization of the enterprise.
♦ Assess the information needs and resources of the organization.
♦ Tasks of information management and their place in enterprise management systems.
In the course "Information Management", read for the specialization of the department, the case can be used when considering the following topics:
♦ Strategic and operational aspects of information management.
♦ Principles of information resource management.
♦ Formation of information systems design models.
In addition, the case can be considered in the courses "Production management" and "Operational management" in MBA programs.
Learning objectives of the case
The case is designed to study the general trends in the development of information technology in large companies, the formation and implementation of information strategies of industrial enterprises.Analysis and work with the case within the framework educational programs pursues the following goals:
♦ acquisition of skills to analyze the situation in information sphere firms, assessing the state and problems of development of information systems as the most important strategic resource of the firm;
♦ study of the features of the formation and research of alternative options for information strategies of the company;
♦ consolidation of project management skills in a specific area of information technology.
Problem situation
At the beginning of 2004, JSC "Baltiyskiy Zavod" in the process of intensive development information system and expanding the areas of use of information technologies faced the need to form a strategic concept and select directions for the development of IP,its functionality and scale to maintain the leading position of the enterprise.
Directions of case discussion
Recommended areas for discussion of the case in study groups are: developing a concept for analyzing the existing information systems of the enterprise, studying the strengths and weaknesses of managing the information resources of the enterprise in the past, setting targets for the development of the information system of the enterprise in the future, forming alternative strategic options for the development of the information system and choosing an effective direction information development of the enterprise. To select the most promising option for the functionality and scale of the enterprise information system, it seems appropriate to use a SWOT analysis of the enterprise information system, the development of a parametric matrix of strategic options for its development, the formation network diagrams planning of work on the expansion of the system, the use of techniques strategic analysis critical success factors.Criteria for Analysis and Evaluation
To form options for the development of the information system and assess each of them, it is proposed to use the following criteria characteristics:
1) structural characteristics of the information system: functionality, scale and method of formation;
2) parametric characteristics of the choice of objects for expanding the information system of the enterprise;
3) critical success factors for the formation of economic parameters for assessing the information system.
Issues for discussion
1. Conduct a SWOT-analysis of the strategic information system of JSC "Baltiyskiy Zavod".2. Give a comparative assessment possible options expansion of production facilities of the information system.
3. Build a typical network model of work on the objects of expansion of the information system and calculate its parameters.
4. Determine the factors and performance indicators of business process automation according to the given fragments of their formation.
Question 1. Spend SWOT -analysis of the strategic information system of JSC "Baltic Plant"
|
Strengths |
Weaknesses | ||
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■ Integration ■ Full-scale ■ Customizable to the specifics of the enterprise ■ Flexibility ■ Availability of implementation technology ■ Availability of positive domestic and foreign implementation experience ■ Availability of implementation infrastructure ■ Freedom in choosing the performance indicators of the enterprise and methods of calculating them ■ It is not required to carry out reengineering of business processes before implementation |
■ High price systems and the need for significant initial investment ■ The length of the period and the high labor intensity of the processes of implementation and adaptation of the system ■ Long-term dependence of the enterprise on development consultants ■ Lack of consideration of the specifics of shipbuilding, working on orders ■ The system is focused on the availability of a stable regulatory framework production | ||
|
Opportunities |
Threats |
||
|
■ Unlimited possibilities in expanding functionality, objectivity and scale ■ Objective requirement continuous improvement management systems and business processes of the enterprise ■ Enhancing the intellectual component of the enterprise management system ■ Prospects for the globalization of business processes of the enterprise and the development of international cooperation |
■ Increase in absolute and relative costs for Information Technology in the enterprise budget ■ Dependence on implementation infrastructure ■ Resistance from personnel and management |
||
Question 2. Give a comparative assessment of possible options for expanding production facilities of the information system.
Expansion of production facilities of the information system (IS) is determined by the production structure of OJSC “Baltiyskiy Zavod”. It is recommended to use the rank method and the selected criteria for evaluating objects. The highest or best value of the parameter gets the maximum rank (the maximum rank is equal to the number of objects). As a scale of qualitative indicators, following values: "High" - 3, "medium" - 2, "low" - 1. The significance of the parameters is determined by the leading specialists of the enterprise.
I took over as CEO in November 2015, replacing Stéphane Ducharme, who served in this role for three years. During that period, with the support of the Board of Directors, of which I was a member, the company's management carried out a large-scale program to change the positioning of X5 Retail Group and its affiliated retail chains. The new strategy provided for the formation of a flexible multi-format business model capable of ensuring rapid growth and adaptation to the changing needs of Russian buyers, as well as unswerving adherence to the principles of efficient operation and long-term development.
I am proud to announce that in three years the company has successfully achieved its goals, including in the tense macroeconomic situation of the last one and a half years. Despite the fact that it was in 2015 that X5 managed to achieve record results for the company in a number of indicators, in order to assess the effectiveness of strategic transformations, it is necessary to take into account the achievements of the last three years:
- Revenue in 2012–2015: growth by 64.7% to RUB 808.8 billion.
- Store traffic 2012-2015: up 37.6% to 2.5 billion visits
- Retail space in 2012–2015: an increase of 69.2% to 3,333 thousand m2
- Number of stores 2012–2015: 84.6% growth to 7,020
- X5 stores are represented in nine Russian federal districts, where 88% of the country's population lives.
Having achieved really significant results, the company was able to become the leaders in terms of growth, overtaking ten largest companies Russian market grocery retail and the market as a whole.
achievement of strategic goals
In 2015, X5 Retail Group achieved significant results in the implementation of five main strategic objectives:
Multi-format operating model: we managed to bring stores in three main formats to the trajectory of sustainable independent growth. Thus, the net retail revenue of the Pyaterochka chain, whose value proposition meets the changing needs of customers better than others, increased by 34.3%; revenue of the Perekrestok chain - by 12.5%, and revenue of the Karusel chain - by 11.6% compared to 2014. Thus, the growth rate of revenue of X5 retail chains significantly exceeded the general indicators for the market against the background of growth retail turnover in Russia by only 8.3%.
The retail space of Pyaterochka chain stores in 2015 grew by 668.4 thousand m2 due to the opening of 1,476 new stores, which is a record figure not only for X5, but also for the Russian retail market as a whole. The Perekrestok and Karusel chains also continued to expand, adding 75 and 8 new stores, respectively. The net retail space of the Perekrestok chain increased by 68.2 thousand m 2, that of the Karusel chain - by 31.5 thousand m 2.
Improving the value proposition: Each of the X5 formats is targeted at specific groups of the Russian population, and in the reporting year was actively working to adapt its value proposition to changing customer needs and challenging market conditions, which, among other things, allowed us to maximize our share of buyers' expenses and the company's market share.
A deep understanding of customer needs and the ability to adapt to ongoing changes would not have been possible without the introduction of IT systems across the company to analyze the current market situation and provide a more complete picture of customer preferences and demand trends.
Balanced growth: Considering the relatively low representation of modern retail chains in the market, in order to achieve these goals, we must make the most of the potential for organic growth. Our business development specialists of all formats have a wealth of industry experience and are some of the best experts on the market on such issues as determining the optimal location for a store, promptly opening new facilities, and carrying out renovation works with a store closing for a minimum period.
We use the latest analytical technologies to select new store locations and also have in-house resources to conduct acquisitions land plots and construction shopping facilities... This allows us to make quick decisions, control costs and open new stores on time. Although the company is focused on organic growth, X5 also has ample opportunities to participate in mergers and acquisitions, thanks to which it can quickly enter the market in a new region or strengthen its position in the main regions of presence.
Efficiency operating activities: The sustainable growth that the company has achieved has been made possible by high operational standards and ongoing efforts to improve performance. X5 Retail Group is one of the largest users of SAP retail solutions: our innovative IT platform enables real-time analysis of data from billions of purchases. Important role in control and analysis key indicators The effectiveness of our formats and competitor networks, as well as the improvement of forecasting accuracy, is played by the specialists of the financial department.
In addition, we have achieved a significant increase in transport and logistics capacity by improving the efficiency of distribution centers and significantly increasing our own transport fleet.
Highly qualified management: one of the most important factors in our success are experienced managers who lead the retail chains of each of the formats and the X5 corporate center. As I take over as Chief Executive Officer, I am confident that the company will not slow down on its growth rate thanks to the first-class people who, along with me, lead X5 Retail Group. In the months that I worked with Stéphane Ducharme during his transition to the presidency Supervisory Board I was amazed at the high level of professionalism of the X5 staff.
industry situation
Despite a significant deterioration in most of the main economic indicators Russia, our company managed to achieve significant growth in the reporting year. In our opinion, the difficult economic environment will continue throughout 2016 and early 2017.
Prices for domestically produced products will continue to rise, while real salaries will slow down or even be replaced by a decrease. This leads to a reduction in the share of food spending in the shopper's budget and influences the behavior of consumers who try to make every shopping trip less expensive, look for the best deals, choose cheaper products and postpone large purchases.
Such trends complicate not only the company's work, but also the situation in the retail sector in general. However, X5 is ready for such difficulties: our multi-format operating model allows us to cover various social classes of the population of Russia, and constant work on optimizing the value proposition of retail chains makes it possible to meet the changing needs of buyers from each class.
X5 strives to provide every Russian with the opportunity to buy groceries in modern stores that guarantee access to quality goods at affordable prices, and this is our main advantage, especially when working with consumers who have been most affected by negative changes in the economy. Therefore, we are increasing the number of promotions and expanding the range of goods in the lower price segment, and, as part of supporting the most vulnerable groups of buyers, retirees are now offered the opportunity to purchase socially significant products at special prices that do not cancel the discounts already provided to them in our stores.
In the long term, we are optimistic about the development of the Russian retail market, as traditional retail formats and small regional chains are gradually giving way to leading market players.
perspectives
Despite the challenging economic environment, X5's 2015 results significantly outperformed those of the top ten Russian retailers and the market as a whole, while maintaining profitability at target levels. In Q4 2015, we ranked first among publicly traded companies in terms of net retail revenue growth, creating an excellent base for strengthening the company's position in 2016.
The current market situation for us is a time of new opportunities that we plan to effectively use in the future for strategic growth and further development of the company.
To date, we have already achieved significant success in transforming our business, but we do not plan to stop there. Our strategic priorities include improving the operating model, further increasing operational efficiency, improving value propositions, and, of course, maintaining a leading position in the market in the context of its transition from a traditional to a modern trading format.
One of the most important tasks for me personally is the development of the X5 corporate center, not only in terms of increasing the efficiency of managing our brands, but also in the context of expanding its capabilities to use the potential of the current situation in the sector with maximum benefit for the company.
We have modernized the IT infrastructure and will continue to implement innovative technological solutions in all divisions of the company, which should positively affect both our performance indicators and the accuracy of forecasting the preferences and behavior of Russian consumers. We will also continue to develop our transport and logistics infrastructure, which will enable us to achieve additional efficiency gains.
As the business grows and adapts to the needs of our customers, we work for the benefit of all stakeholders: buyers get the best value proposition, suppliers get the opportunity to sell goods through our large retail chains, and shareholders benefit from participating in the sustainable growth of a business of this size.
I would like to once again thank our customers, whose loyalty is the key to our success, as well as suppliers, shareholders and members of the Supervisory Board of the company for the support they have provided us throughout the year.
In addition, I would like to express my gratitude to the management and the entire team of X5 Retail Group for their highly professional work and responsible attitude to the tasks set in the past year. Our people are the foundation of X5 Retail Group's success today and in the future, and I am grateful for the opportunity to work in new position it is in such a team on the creation and development of the largest food retailer in Russia.
Igor Shekhterman
Chief executive officer
The so-called economical supermarkets serve about 60% of the population. In addition, buyers from wholesale markets may become potential customers of such stores. And this already accounts for a significant proportion of buyers. Excellent students from Pyaterochka considered that economical supermarkets pay off much faster than hypermarkets, and the market shares are approximately the same.
The orientation towards the poor part of the population dictates the following condition: prices must be low. The main indicator for comparison is the small wholesale markets. If in supermarkets the trade margin is about 40%, then in Pyaterochka it is only 10-12%. As a result, products are 10-15% cheaper than retail market, and 20-30% cheaper than in supermarkets and hypermarkets.
But the trading network cannot function without profit, therefore, it is necessary to reduce costs so much that a sparing mark-up ceases to be an unaffordable luxury.
Rationality, reliability and efficiency have become the basic principles of the company. The most efficient use of the available retail space: every square meter is occupied, whether it be products or an advertising stand. The range includes only the most hot goods and changes with consumer demand. Free retail space is rented. They save on the design and equipment of sales areas, on the number of services for consumers.
Reduce the cost of product maintenance: logistics, delivery, pre-sale preparation, etc. These costs represent approximately 85% of the retail markup. In "Pyaterochka" they are five times lower than in the average regional supermarket. Pyaterochka uses its own vehicles. The company even has its own construction division. His work has reduced store building times to four months.
Now about 75% of goods sold through the Pyaterochka retail network are Russian-made goods. The company works with 500 suppliers. Sergey Lepkovich explains: “It's no secret that today foreign manufacturers when selling their goods through foreign networks, through contractual relations, they set dumping prices and thereby reduce the interest of buyers in Russian goods. The example of Pyaterochka as a company that has created an effective structure of the discounter format as a company that has significantly reduced the chain of intermediaries and reduced all costs to a minimum, proves that it has now become possible to successfully compete with Western chains.
At Pyaterochka, a mutually beneficial form of work with suppliers is practiced. The network assumes part of the costs of logistics and product delivery, as well as product promotion on the market, freeing the manufacturer from the difficulties associated with the marketing and advertising process. The manufacturer lowers its prices. As a result, the demand for cheaper products is growing, and the volume of sales in stores is increasing. The manufacturer, in turn, increases the volume of products and, accordingly, receives additional profit... That is why the main requirements for suppliers are the minimum cost of production, high quality of goods and packaging, adherence to the delivery schedule and convenient logistics.
Multinational corporations set the same prices for all market participants. Moreover, advertising costs account for up to 30% of the cost of branded goods. Meanwhile, Russian manufacturers have relatively small budgets to promote their products. But they have a better price-quality ratio, more flexible pricing and distribution policies. Studies have shown that customer demand for products of Russian brands in Lately has grown significantly. Therefore, in the near future "Pyaterochka" plans to change the assortment, withdraw some of the transnational branded goods from it and replace them with domestic analogues. "Pyaterochka". Philosophy of economical business. // Magazine "TopManager", No. 19,2007.- P.14. ...
Interestingly, Pyaterochka does not invest in market research. The network doesn't even have a marketing department. It's just that all employees regularly conduct interviews with clients, figuring out their preferences. The results of the polls are summarized weekly, and representatives of all services responsible for goods movement and accounting are familiarized with them. Based on this data, assortment decisions are made.
The speed and accuracy of business processes at Pyaterochka are considered one of the main indicators of the efficiency of the network. Complex automation trade, strict adherence to schemes and constant control can also reduce costs. There is a division within the company that regularly checks the logistics, assessing the quality, speed and cost of processes and the associated risk.
Purchasing goods and pricing in stores is centralized. All areas of the company's work, from the most complex logistics operations to the most elementary ones, are described in business processes. They are structured and are part of the informatization and management system.
Pyaterochka considers automation and implementation of IT technologies to be its strategic task. Installed in stores one system electronic document management"Pyaterochka +". It was developed by the company's specialists, taking into account all the specifics of the trading network. The system automates and simplifies logistics, procurement, sales and distribution of goods in stores. This made it possible to reduce costs, operation time and labor costs by more than 30%. "Pyaterochka". Philosophy of Lean Business. // Magazine "TopManager", No. 19,2007.- P.16 ..
Since December 2000, Pyaterochka has united its suppliers into a single information network... There is a purchasing portal on the Internet.
By the end of this year, Pyaterochka will transfer the management of all commodity flows to the unified automated computer system Avtozakupshchik. The system will allow purchasing goods for the entire chain using Email and control the entire process of the passage of goods from arrival at the warehouse to sale in the store, and also fully guarantees the confidentiality of information and associated electronic contacts. At the same time, the time for placing an order is significantly reduced. This will make the network more flexible and more convenient for suppliers.
Unlike many others, Pyaterochka does not require retail experience from its future franchise partners; on the contrary, it welcomes its complete absence and considers it “freedom from the burden of past mistakes”. The company does not distribute a franchise for individual stores: the company's management prefers to sell the right to open entire chains of 20-30 retail outlets in the regions.
“The purchase price of our technology ranges from $ 500,000 to $ 750,000, depending on the region that purchases it,” says Felix Stetoy, vice president of communications and brand policy. - Investment volume - from 3 to 5 million dollars for 2 years. And then the network goes to its own own funds... Within 3.5 years, she gets back on her feet. In the classic version, the chain consists of 30 stores, training center, warehouse complex. Royalties are negotiated separately, they are minimal. "
It can be concluded that Pyaterochka won the battle for customers and retail space, and acquired stable suppliers. After that, an all-round struggle for quality - the quality of goods and services - unfolded. This was the result of changing consumer needs. Recovering from financial crisis, buyers are thinking about prestige again.
The company's specialists have calculated that 90% of its assortment is intended for buyers with an income of $ 300 per family. In line with this vision, a new advertising strategy unfolded. Now the buyer can return to the store any product he does not like, even without a receipt.
Labor productivity affects cost reduction no less than anything else. By staffing table each store employs 17-20 people per shift, while the supermarket employs 60-70. The daily actions of each employee are verified, calculated and typed for more rational use of time. When necessary, employees simply replace each other.
The trading house "Pyaterochka", which has recently been actively developing its franchise direction, uses the following concepts... The largest number of "Pyaterochek" work in the "supermarket" format (as it is called in the company). In the press, however, he is very often referred to as a "soft discounter". The trading floor area of such a store is about 700 sq. m. In parallel with it, a project of the "super-supermarket" format appeared two years ago. Now there are already four such stores, each with an area of over 2000 sq. m. There the group "nonfood" has been significantly expanded - non-food and related products.
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Marketing complex for the Pyaterochka retail chain
The assortment of the Pyaterochka retail chain includes only the most popular products and changes with consumer demand. Multinational corporations set the same prices for all market participants. Moreover, advertising costs account for up to 30% of the cost of branded goods. Meanwhile, Russian manufacturers have relatively small budgets to promote their products, but they have a better price-quality ratio, more flexible pricing and distribution policies. Research has shown that customer demand for Russian brands has grown significantly lately. Therefore, now about 70% of goods sold through the Pyaterochka retail network are Russian-made goods. The share of locally produced goods is increasing, which, according to 2010 data, amounted to about 30%.
Assortment matrix of the store in 2010 has undergone significant changes: the share of goods in the low price segment has increased; there was a reduction in the assortment by 15-20% from 2500 - 3500 SKU to 1800 - 2800 SKU (unit of one commodity group, brand, grade in one type of packaging of one container) due to the goods that are in the least demand. As a “soft discounter” store, Pyaterochka is characterized by a predominance of food products - up to 94% of the total assortment.
Pyaterochka continues to develop its own trade mark (STM).
Procurement specialists develop a specification for the product, and then contact supplier firms and agree on their production. The establishment of lower prices for such goods is possible due to savings from the purchase of large quantities, insignificant packaging costs, promotion, which is directly responsible for the network, and not the supplier. The brand of the chain is not used in private labels, which allows to reduce the risk of transferring the negative attitude of consumers towards the brand to the attitude towards the retail network. Examples of private label Pyaterochka are Vologda Lace (dairy products), Pavlovskaya Ferma (sausages), Groza (drinking water), Vinogor (wine), etc. Since the Perekrestok and Pyaterochka chains are part of X5 Retail Group, most of their own trade marks these networks are represented in other networks of the group. For example, in Perekrestok you can buy trademarks of the Pyaterochka chain and, conversely, in Pyaterochka you can buy some Perekrestok brands. In 2011. it is planned to increase the share of private labels by 40% (in 2010 - 10% of the total assortment). By introducing private labels into circulation, Pyaterochka gives sales additional impulse and not only increases sales, but also creates new incentives for buyers due to the obvious advantages of such products due to the attractive price-quality ratio.
In "Pyaterochka" it is practiced effective form work with suppliers. The company works with 500 suppliers. The network assumes part of the costs of logistics and product delivery, as well as product promotion on the market, freeing the manufacturer from the difficulties associated with the marketing and advertising process. The manufacturer lowers its prices. As a result, the demand for cheaper products is growing, and the volume of sales in stores is increasing. The manufacturer, in turn, increases the volume of products and, accordingly, receives additional profit. That is why the main requirements for suppliers are the minimum cost of production, high quality of goods and packaging, adherence to the delivery schedule and convenient logistics.
Purchasing goods and pricing in stores is centralized. Since December 2000, Pyaterochka has united its suppliers into a single information network. There is a purchasing portal on the Internet.
All areas of the company's work - from the most complex logistics operations to the most elementary ones - are described in business processes. They are structured and are part of the informatization and management system. Pyaterochka considers automation and implementation of IT technologies to be its strategic task. The stores have installed a unified electronic document management system "Pyaterochka +". It was developed by the company's specialists, taking into account all the specifics of the trading network. The system automates and simplifies logistics, procurement, sales and distribution of goods in stores. This allows you to reduce costs, operation time and labor costs by more than 30%. The system allows you to purchase goods for the entire network using e-mail and control the entire process of passing goods from receipt to the warehouse to sale in the store, and also fully guarantees the confidentiality of information and associated electronic contacts. At the same time, the time for placing an order is significantly reduced. This makes the network more flexible and more convenient for suppliers.
The target audience Pyaterochka - 110 million Russians: 60% women and 40% men; 70% of the employed and 30% of the unemployed; 40-65+ years old, average and below average income, pensioners, employees, workers.
The orientation towards the poor part of the population dictates the following condition: prices must be low. The main indicator for comparison is the small wholesale markets. If in supermarkets the trade margin is about 40%, then in Pyaterochka it is only 10-12%. As a result, food is 10-15% cheaper than in the retail market and 20-30% cheaper than in supermarkets and hypermarkets.
These categories of buyers are focused on the basic assortment and low prices, therefore, Pyaterochka's pricing strategy is a price leader's strategy: “100% of the range at the lowest prices on the market”. This is possible due to the containment of purchase prices due to: an increasing volume of purchases, strict discipline of payments, reduction of payment delays, effective use available retail space: every square meter is occupied, whether it be products or an advertising stand. Free retail space is rented. They save on the design and equipment of sales areas, on the number of services for consumers. The costs of product maintenance are also reduced: logistics, delivery, pre-sale preparation, etc. These costs represent approximately 85% of the retail markup. In "Pyaterochka" they are 5 times lower than in the average regional supermarket. Pyaterochka uses its own vehicles. The company even has its own construction division. His work has reduced store building times to four months.
From the point of view of pricing policy, discounters are divided into soft and hard. A rigid format in the classical sense means a room of up to 1000 sq., Goods on pallets, self-service, a minimum surcharge and, as a result, a very low price. Pyaterochka used this format for the first few years after its opening, but later abandoned it in favor of a “soft discounter” - a more popular principle market strategy in Russia due to the fact that today, in addition to price factor at the choice of store big influence provide such factors as comfort, a wide range and a range of additional services.
Labor productivity affects cost reduction no less than anything else. According to the staffing table, each store employs 17-20 people per shift, while in the supermarket there are 60-70. The daily actions of each employee are verified, calculated and typed for more rational use of time. When necessary, employees simply replace each other.
Advertising - in promoting the Pyaterochka retail chain is of great importance. For a new stage in the development of the Pyaterochka chain, the slogan “The closest low prices!” Has been chosen, which most accurately reflects the change in well-known stores. Over the years, the company has already changed its advertising slogan twice: starting in 1999 during the crisis, Pyaterochka focused on the price of goods, working in the format of a “hard” discounter under the slogan “Low prices every day!”.
Gradually, moving into a soft discounter format, the chain offered its customers an additional advantage - guaranteed quality goods and "easy" exchange or return of purchased products in case of complaints about the goods. The slogan “Quality assurance and low prices!” Was dedicated to this stage.
In 2009, the company began a store reconstruction program: stores are being equipped with new shelving and refrigeration equipment, cash registers, ventilation and air conditioning systems, lighting.
“For us, not only low prices and quality of goods are important, but also the external and internal appearance of the stores. "Pyaterochka" should be convenient, comfortable and modern; it should be pleasant to shop here. We have entered a new stage of development: stores are getting better and closer to customers. The new advertising slogan reflects these changes, ”says Oleg Vysotsky, Pyaterochka Network Manager.
The same slogan is present in television advertisements and advertisements on various radio stations. Commercial network Pyaterochka often sponsors various radio rooms. For example: weather forecast, traffic situation, etc., which also helps to promote the brand.
An important element in stimulating sales in the Pyaterochka chain is the weekly promotions: Successful purchase, Sale with the Pyaterochka card. The promotion provides for a sale, promotion or promotions non-food products in all Pyaterochka stores.
Requirements for goods in the "Successful purchase" promotion
1. The product must meet certain criteria for this type of product.
2. The period of sale of the product is one week, then its rotation.
3. The action is held in the Pyaterochka network in Moscow and St. Petersburg.
4. Display of goods - on separate equipment at the entrance / exit (depending on the layout of the store) to the store.
5. Pricing policy for the goods participating in the promotion is below the minimum price level of the local market (St. Petersburg, Moscow)
6. All merchandise unsold per share shall be returned to the supplier.
Since the establishment of Pyaterochka stores, a large number of celebrities and interesting personalities have visited them. In the Pyaterochka chain, promotions are periodically held to promote certain brands. Advertising agencies SAC and Bounty Euro RSCG received exclusive rights to provide staff for such actions. Today the Pyaterochka company is a sponsor of the Russian national football team.
