Andrei Vadimovich, in your opinion, can Far Eastern companies seriously compete with the federal ones, or is the arrival of the latter doom for small outlets?
Andrey Zausaev: Far Eastern business live! I am sure of this and I am willing to discuss. Small businessmen are very afraid of the appearance of federal actors. I think it’s wrong. On the one hand, this expansion means the evolution of the industry and on the other hand, of course, it leads to more competition.
Together with the feds, new standards are entering the regional market. The bar is raised. And this is the first thing that benefits the buyer.
Let’s look at specific examples. The developers “Talan” and PIK came to us. What are you offering? New designs, interesting solutions for various small architectural forms, patios and parking areas, etc. Note that I am not saying that their houses are better. I am only referring to the fact that there are new demands in the market. For example, in the western regions of the country, renting finished apartments is already the norm. Initially, this was typical for the budget segment, but today it is already quite popular in the middle and even premium segment. The total cost of the finished apartment, including the cost of repairs, is subject to the terms of the mortgage contract.
One more example. Not so long ago we opened “Pyaterochka”. This network has a rather interesting solution in store design. Despite the fact that we are talking about a discount store, the design of the commercial premises seems modern. It is a minimalist concept: accent lighting, imitation of natural wood… Such a fresh, pleasant store that is not almost a warehouse where there are boxes of goods.
That is, now companies that have been in the market for a long time see an example of how they can become more attractive?
Andrey Zausaev: With the arrival of the feds, new directions appear, new niches. Yes, it forces regional companies to change. And just the unwillingness to do it kills them. Of the minuses: of course, the feds take part of the market. So it was and so it will be. The first example is the entry of Leroy Merlin into the construction materials market.
Has anyone closed?
Andrey Zausaev: Some local companies could not stand the competition. Which is the reason? When you’re competing with a major player in his field, where he’s strong is a dead end. This strategy doesn’t work. But all major players have weaknesses. Here they should be exploited by regional companies. You have to understand where you shouldn’t go and at what times you can play.
But is competition inevitable?
Andrey Zausaev: Also, the era of competition came a long time ago. Many people think that the federal players have just come to us. It’s a hoax. We have long been competing with federal companies in the markets. There the representatives of the manufacturer, distributor, wholesaler and retailer meet. And you don’t have to come to offline retail to feel this competition.
You mentioned how important it is to see your strengths. What can they be?
Andrey Zausaev: Let’s look at the example of the food industry. There are quite a few different brands on the grocery store shelves. But have they started buying less local products because of that? don’t think. Especially when it comes to artisan products, fresh from farmers or made with authentic ingredients from the Far East. In this segment, the price is usually much higher than average. But the premises are especially appreciated, the buyer is often ready to overpay for it. The “own” berries seem healthier than the Chinese ones. Far Eastern honey is “more understandable”, it is trusted more than even the Bashkir. It is important to be different.
A federal company that enters the regional market is like a slab of reinforced concrete that falls on the local landscape with its holes and hills. When it covers the market, the irregularities of this landscape always remain under it. They will be occupied only by local companies. Flexible, agile, efficient, and in some ways understands the market better than the federal player.
All major players have weaknesses. Here they should be exploited by regional companies.
There is always a place for small businesses, we know that from our travels. Granted, when we travel we often try to buy something local, try local food… It’s the regional business that brings a special flavor. He is more touching. These companies better understand the characteristics of the region and the buyer. A small business can and should know as much as possible about its customer.
Successful examples of input from some federal networks are sure to inspire others. Is it possible to prepare for the fact that the competition will only grow?
Andrey Zausaev: Of course, it is worth working in advance. Two common mistakes when working with federal players: scaring yourself to the point of panicking or ignoring. These are extreme. Both tactics fail. Pyaterochka announced the arrival of him a few years ago. “Leroy Merlin” also did not suddenly appear. There is always enough time to prepare. Weigh your strengths, learn about the enemy’s strengths and weaknesses. Yes, the feds follow the industry trend, use advanced technologies, it is worth studying, understanding and, of course, applying something at home. But, I repeat, it is difficult to play in their field. Therefore, it is also necessary to consider the weaknesses of large networks.
It is important to share experiences with companies (including those from other regions) that have long been in competition with the federal government. Don’t copy their work, find best practices and adapt them to your needs.
I highly recommend attending federal and international forums and exhibitions. All the players in the sector meet there. You can participate online, but it’s better to go there. These events not only provide inspiration, but also a specific set of tools that can and should be applied. Trust me, many times it is not as expensive as it seems. It is important to search, choose, travel and learn.
Think about what will enhance your uniqueness, which is applicable to the Far Eastern business. And treat the federal experience as your growth point.
