17.09.2007

Ukraine-Russia. Store Fixtures: trends and prospectives.

Source:  a magazine «EQUIPMENT.Techniques and Equipment for shops» № 8, August 2007

About how trade refrigerating equipment markets of Russia and Ukraine differ and how work is going with clients of store fixtures in both countries and which trade formats will appear to be the most popular, the magazine talked to Alexander Sharunenko, chief executive officer of Russian representation of the company «Modern-Expo» whose headquarters is situated in Ukrainian town Lutsk.

- What complications does your company face working on the Ukrainian market? In Russia, for instance, positions of overseas brands are very strong. Foreign equipment is prefered because of good design anda high quality fitting. How do the customers behave in Ukraine? Did you have to make somebody change his mind to the contrary?

Main questions that arise on the Ukrainian market have to do with clients’ unpredictability. I mean that practically all of them can’t give us even an approximate plan of their development for us to project production and logistics. Not to mention plans for assortment. In most cases we have to promtly solve client’s local problems on next market opening. As far as brands with foreign names are concerned we overcame this barrier in Ukraine a long time ago not only because we convinced of something but because the professional level of our clients has considerably grown. Our company indeed has staked on the high level of quality since the first day. Besides abroad deliveries risks remained to be risks which in these days of rapid retail growth should be qualitatively and quantitatively reduced. As this imroves our clients’ level of business development.

- «Modern-Expo» is in production both in Ukraine and Russsia. Are there any fundamental differences (legislative, economic etc.) between these markets, and what are they based on?

The differences are and essencial. First of all it highlights that Russian market is much more capacious than a Ukrainian one. It’s quite natural that with such quantity of players: suppliers, manufacturers and the nets alone competition is considerably fiercer. Thereof companies have to work at lower margin. So that business develops successfully clients should be attracted by really vivid advantages, and look for new concepts of business conduct.

Thereby Russia exceeds Ukraine in territory many times over, one more distinctive moment is specified here. More thorough approach to client servicing is needed. There must be any mistakes in deliveries and production re-assorting. Correction of such related to local logistics inaccuracy may turn to be very capital-intensive and even make selling detrimental.

- What is the force allocation on the trade-refrigerating equipment market in Ukraine? Does it repeat a Russian one in something? What place for refrigerating equuipment is allocated in Modern-Expo’s line? Why did company take up refrigerating equipment production while there’s a multitude of brands on the market? Did you find your niche?

The whole trade-refrigerating equipment volume of Ukrainian market in 2006 amounted 700-800 million hryvnas ($ 140-160 million). Nowadays the company of «Modern-Expo» is not directly occupied with trade-refrigerating equipment production. At the present stage we are dealers of some Ukrainian manufacturers on the Ukrainian market. In the segment of cold we still stick to quality and reliability of supplied production. The basis of the offering goods range are display cases. Cabinets and chests. But we are also occupied with other kinds of cold, icluding a remote one. Among trade marks introduced by «Modern-Expo» are well-known Ross, Italfrost, Cold, Inter, Technoholod, Cryspi, Igloo, Liebherr, Snaige, Derby, Elcold and others.

As far as main trade-refrigerating equipment manufacturers in Ukraine are concern, I would mention such companies as «Intertechnika» (Donetsk), «Ross» (The Plant of Refrigerating Aggregates) and «Iceberg» (Odessa). Besides domestic manufacturer production, in 2006 trade refridgerates were imported in the country in bulk. Only within a year there was imported 13740 ton of trade refrigerating equipment to the sum of 270 million hryvnas ($ 54 million; prices are net of value-added tax and customs duties). It’s not a secret that except a normal market there officially exists so called a «black» market. That’s why a real market capacity is more considerable than it is shown by official statistics. In whole 56 companies dealt with import, among which there were «Coca cola Beverages», «S-Service», «Klimasan Ukraine». «Service Solutions», «Astra», «VDV Business» and others. 8.24% of general number of equipment that was imported were second-hand goods. To suggest our importers’ speciality, according to our marketing specialists’ data five major can be singled out among them: refrigerating equipment distributors, manufacturers of FMCG, representations of foreign cold manufacturers, completing importers and direct distribution networks.

The very largest distributors are «S-Service», «Service Solutions», «Astra», «VDV Business», «Interprof», «Merx-Trade». The major FMCG manufacturers are – Coca-Cola, «Herkules», «Zhytomirskij Maslozavod», Vitmark, «Lasunka», «Ice – Zaporozhye».

If to consider imported produce correlation by countries then in 2006 in Ukraine there were imported Turkish refrigerations the most. A little earlier, for example, Polish equipment still remained a priority.

Correspondingly Ukrainian market consumes generally Turkish, Polish and Romanian equipment. Mainly freezing chests and refrigerator cabinets are imported from Denmark. According to our calculations in 2006 the technical equipment intended for built-in cold occupied a lion's share of the market. Therefor 32% of the imported equipment was focused on cabinets for drinks and more 26% on ice chests. «Modern-Expo» specialists always keep up the situation changes on the market, because you know refrigerating equipment doesn’t lose its relevance with the lapse of time; in the particular sector new prospective posibilities are constantly sprining up.

- Present-up retail standards are being mastered at a growing rate in the territory of CIS. What sectors and formats of trade do you consider to be the most prospective?

Nowadays a «round the corner shop» format with moderate optimal goods range is becoming more and more current. Growing people’s employment leaves just no time for long more remote trade places walks. Thus such forecourt shops for car owners and supermarkets situated at the consumers’ direct place of abode are the most convenient way out of the situation. It should be also mentioned that there’s a growing tendency of transition from standard servicing type shops (that is over the counter) to the self-service markets. It’s common known that profit out of such shops is 20-30 % higher. Intensive opening of specialized supermarkets and market segmentation is one more fact. It’s caused by growth of people’s requirqments for the level of service, range and quality of offered goods. For example, in 3-5 years in Ukraine the boom of construction supermarkets is expected. Meanwhile most of our fellow citizens consider doing shopping in hypermarkets to be prestigious, the situation in Europe has already changed: a rich client requires heigher attention there, and to enjoy it in full you can only by going to narrow-purpose shops.

- There aren’t so many companies with such a great range of output. Why did «Modern-Expo» decide to become a complex trade equipment dealer as there are also focused facilities which are sometimes more convenient for the client to work with?

There are two important questions we gave answers to: «Where can we be good at? and Where can we be the best of all?» The second one specifies our work strategy with every client. Our intellectual and manufacturing potential had decided for us what to do. And the fact we make comlex decisions depended first of all on the availability, easier to say on lack of the very focused facilities or their qualitative work performance. That’s why the level of our clients’ trust to us not only in Ukraine but also far abroad is the strong impulse to the whole company development.

- Many retail networks prefer equipping their facilities with non-standard equipment (in design, colour etc.) How high is the number of such retailers in Ukraine?

Here everything depends on the direction of the network – is that a price shop or the one offering a save-version of buying goods else a retailer whose desire is to stand out agaist the background of other competitors and thus win his customers. First of them having desire to save don’t pay particular attention to the trade equipment design and the interior. Moreover they even try to some extent to avoid any hints on luxuries. Because it can frighten their audience off. Asceticism, equipment of standard forms and plain unpretentious colours – that’s the style being practiced.

In connection with the growth of wellbeing of the people it has recently become more notable that for the clients not a material mode but comfort of purchasing is becoming more and more essential. That’s why in Ukraine as well as in Russia retailers are constantly being in the search of their «favourite subject» in trade premises design and give thir preference to a non-standard trade equipment. It’s an integral part of the brand development. Practically all serious Ukrainian retailers laying claims to the avarage category of consumers and buyers of a ‘premium’ rate prefer shop stage adaptation.

The fact that the comfort of purchasing appears to be a real cause of clients money parting, peculiar confirmation of the right choice has become realized by the nonfood trend representatives. Thus in Ukrainian shops offering clothes and shoes Scandinavian gamut of colours prevails. Neapolitan approaches to the design (artificial home comfort creation) are used. A good produce and its successful claim with the help of durable and original trade equipment guarantee a success of a business conduct. Therefore we, being trade equipment manufacturers, are constantly working on the new non-standard ideas realization called to optimize sale at the quantitative and qualitative levels.

- If to consider a manufacturing line of your company what is more frequently asked for by Ukrainian clients and what do Russian clients ask for more frequently?

Russian market is widely full of standard mass products. In Ukraine such uniformity is not observed. That’s why Modern-Expo’s distinctive feature is a wide range of the output. At the moment our nomenclature numbers over 12 000 goods descriptions. It turns to be our a strong advantage on the Russian market as we can offer not only richer variety of goods of the same sort but also work with different assortment groups: food and nonfood zones. Modern-Expo’s experience at different international exhibitions confirms that retailers are intensively trying to resign from the «museum piece» - encapsulated type counters. They are trying to make goods more attractive and maximum open. Not many of present manufacturers can offer similar goods. And this is the fact that explains the success of Modern-Expo’s checkout counters on the market of Russia. They are first of all required because of their non-standard and modern design (apropos a new model is shortly entering the market), the quality of materials and reasonable prices will play an important part.

- How far are the questions of backup and up-to-date service security actual, as the stores equipping is becoming more and more technologically complicated? What requirements do the clients impose in relation to the trade equipment?

With reference to the choice of dealers (specifically as to the spectrum and quality of the offered service) market in Russia is more exacting. The fact of the matter is that tempos of opening of trade facilities are much more higher in this country. One wide network can afford opening of two, three or five stores per month. There’s no time for mistakes, trainings, tests and experiments. In Ukraine situation is a little bit different- its market is full. When in Russia it’s still a struggle for a place in million-citizen cities and half million-citizen cities in Ukraine markets of even 40 000- towns are full of thier own retailers. It’s natural that in Russian stores access ability is higher and an average cheque is more considerable. It’s important that any questions spring up as for the service and repair of the bought equipment but in case such problems appear quick and qualitative troubleshooting is necessary. That’s one of the reasons why Russian networks according to tender results often choose not one but several dealers at the same time. Equipment of most of them is standard and interchangeable. At that not only with Russian but as well as with European more expensive analogs. This stimulates «Modern-Expo» which offers a set of exclusive goods constantly to increase the level of production technologies as well as the quality of warrenty and out-of-warrenty service.

- What operation factors influence the range line of your company? What are your plans as to the markets of Russia and Ukraine?

To suggest the range we are behind the companies with 30-40 years experience on the market of Europe. But within 7 years development we have met almost all our clients’ needs. Now we are optimizing all our assortment and bringing it to the specific standards which allow to resolve all the equipment questions as well as hangings including different types of markets and in the meantime guarantee total individuality of everyone. Recently set up design-studio «Green-House» is really turns to be our strong link. Project of equipment and its adaptation to the interior make every shop unique.