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Retailer ready to choose site for convenient expansion

Domestic retail networks spread to smaller Belarusian towns and Russian cities
By Vitaly Govorov

Almost ten years ago, the face of retail changed, with hypermarket chains launching and strong retail trademarks appearing. This year is expected to be a turning point for Belarusian retail.

“Business unions argue that we’ll lose our corner shops with the advent of hypermarkets. However, 90 percent of all stores are located within towns in Western and Eastern Europe, with the remainder placed outside — as large trading centres,” notes the co-Chair of the Association of Retail Networks, Andrey Zubkov.

Mr. Zubkov emphasises that small shops are unable to offer the same discounts as larger stores, whose huge turnovers allow them to order in bulk, at lower prices, from suppliers. Their logistical costs are also smaller per sale.

Meanwhile, we pay a premium for bananas, pineapples and other exotic fruit, shipped from such countries as Ecuador or Costa Rica. At present, even our largest retailers are too small to deal directly with Latin American agents, requiring them to buy from further down the chain, from Europe. Naturally, this leads to higher prices for Belarusian shoppers.

Without doubt, residents in smaller regional towns would love to enjoy the same choice of high-quality goods as those in the capital. According to a January survey, conducted by the National Academy of Sciences’ Sociology Institute and Nilsen (an international analytical company), just 17.5 percent of small town residents are satisfied by what’s on offer in their local shops; the rest are keen to see more variety. Most people are familiar with chain stores, visiting them when they travel; for example, Euroopt has been visited by 75 percent of residents in towns lacking their own such outlet.

Around two million Belarusians live in small towns and villages and, ultimately, should enjoy the same access to goods and services as their counterparts in larger settlements. Usually, where a large shop is already operational, a chain store would be reluctant to open. Moreover, Mr. Zubkov notes that local authorities can be obstructive, offering sites which are clearly unsuitable. This attitude is surely short-sighted, since large chains, for example Euroopt,  are also offering to deliver across a large radius, bringing savings to those in remoter villages. He admits that, ‘of 100 small towns approached for the building of a hypermarket, only 10 percent of local authorities supported the proposal’.

As regards competitiveness of chains and independent stores, Mr. Zubkov stresses that there is much scope for further development, with many businesses yet to take full advantage of their opportunities. “In the EU, several dozen types of shop exist and, although chains account for a significant share of turnover, there is far greater competitiveness. Small shops are successfully encouraged to compete against larger rivals,” Mr. Zubkov stresses.

While economies of scale bring obvious advantages, chains need to ensure that their range and quality of products is uniform across all branches. Since personal contact with customers is lost, they must also inspire loyalty by offering value for money and convenience. Smaller shops are able to compete by tailoring their goods to the tastes of their locality and by offering friendly and helpful service. 

Not long ago, Belgospishcheprom Concern hosted a business meeting for large retail chains and producers of distilled beverages. Larger stores wish to be able to cut standard 60 days to 40, 30 and even 20 days. Shops are, naturally, reluctant to buy large quantities of new products, since they may not sell quickly. The question is whether manufacturers are ready to accept these conditions. Specialists note that turnover must be raised on the most popular remaining goods if the range is reduced. 

Last year, Euroopt debuted in Russia — after seeing success in Belarus. It has already launched 12 branches there and, by late 2013, their number may reach an impressive 50 — covering the Smolensk and Bryansk regions, Moscow and the Moscow District. Belarusian producers supplying Euroopt are gaining a valuable new export market, which can only lead to further development and promotion of their produce abroad.
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