Translation: Polina Pushina
The main objective of any manufacturer is the successful sales of products. Today, the most effective channels of distribution of goods are considered to be large chains of supermarkets and hypermarkets. However, selling products through retail chains, the manufacturer runs the risk of getting lost among competitors, representing the same product category. And the conditions that chains dictate are not always beneficial for manufacturers.
Small convenience stores are willing to cooperate with the producers on softer terms than retailers, however, selling a large amount of their goods through these channels is likely to be a failure. In addition, there is also a competition on the shelf in such stores, but it’s not so strong.
So, there should be an option for a manufacturer to sweep out the competitors and successfully sell his or her products. And there is an option – a branded shop.
Branded shops not only enable the manufacturer to be out of competition in a particular outlet, but also allow advertising a brand and making it recognizable.
Philip Wegh, General Director of OJSC “Confectionary Factory named after N.K.Krupskaya”, and Vadim Grigoriev, Managing Director of the “Siberian Agrarian Holding” (SAHO), will tell us about the efficiency of branded shops.
The strength of our brand is reflected in the number of branded company shops we have. In St. Petersburg alone, we have 23 shops or dedicated sections, and more are planned.
Since 2007 we have made efforts to grow our brand loyalty by opening company branded shops in other NW Russia regional cities of Pskov, Veliky Novgorod, Petrozavodsk, Arkangelsk, Severodvinsk, and three shops in Murmansk city area. Everytime we open a shop, we make a celebration around it, by carving a Grifon or other symbol out of 200 – 300 kg of chocolate! The process takes an afternoon, and is sure to draw both kids and adults alike. They then know they have a Krupskaya shop in their neighborhood, and the loyalty to brand continues to develop.
However, more than half of our sales goes to chains such as Metro, Auchan, X5, Magnit, Lenta, and Okey. We also have distributors who cover traditional store channels.
Our goal is to serve all modern trade directly. Developed logistics is a must for achieving this goal.
We have leased 10,000 square meters of a modern warehouse at AKM in Shushary. Here we use a sophisticated warehouse tracking system which allows us to prepare orders at night, and ship during the day. We can serve many types of trucks simultaneously.
We have a special Sales Manager who negotiates all details with the shop owners. Normally we invest in the facade and signs on the outside, while the owner invests on the inside. But the efforts are coordinated, so that the consumer just sees an excellent confectionary shop outside and inside.
The branded shops usually offer the full assortment of Krupskaya products, which are not always available in supermarkets and traditional trade. We require the shop owner to carry a certain percentage of our products in their shop, though most also carry some other products such as tea and coffee.
Prospects of branded retail stores
The branded shops are a good place for degustation of new products, since these customers are usually our most loyal ones, they will give us an honest opinion. And lastly, the shop signs themselves are a way of advertising our branded products.
In general, the branded shops have grown sales nicely. But we need to consider the fact that their success depends on the individual shop owner himself, as these are usually independently run. Therefore, these shops will develop where we can find reliable partners.
These shops for us is a nice supplement to our sales, but cannot match the sales growth of modern supermarket chains, which still remain our most important trade channels.
Providing consumers not only with bread
Branded retail chain "Khlebnitsa" is an important link in the vertically integrated structure of the Group of companies Siberian Agrarian Holding. SAHO farms, grows corn, ensures its integrity, processes grain into flour, the company produces its own bread. Production control "from field to counter" allows us, as producers, to minimize seasonal and market risks. Furthermore, SAHO sees the presence of its own retail chain as an important factor that helps to control prices.
Developing retail, we included not only bread and confectionary in our assortment, but also convenience goods from other manufacturers. Soon, ensuring the effectiveness of this decision, we offered our customers some household goods. As a result, today "Khlebnitsa" it is not just a chain of baker’s shops. These are stores, located on the way home, where you can buy all the necessary goods at reasonable prices.
Features of Geography
Today, our stores are located in nearly all regions, where the federal enterprise chain of bakeries holding is presented, including the Moscow region, Tatarstan, the Saratov region, the Ulyanovsk region, the Omsk region, the Novosibirsk Region and the Altai Territory.
Each regional market, where SAHO bread and pastries are presented, has its own peculiarities. In cities like Omsk and Zvenigorod, where SAHO large bread-baking complexes are located, "Khlebnitsa" is a solid part of the urban grain market, and it happens thanks to developing its own retail chain. In Novosibirsk SAHO implemented a unique project. SAHO branded shops were set up on every metro station, the most popular passenger transportation. Now these stores are more than half of our entire chain in Novosibirsk.
While we strive to ensure product availability, there might be many different decisions on the organization of trade, like transportable outlets, pavilions and minimarkets. If there no possibility to build typical “Khlebnitsa” store, the specialists of the construction department of SAHO will create an individual project of a shop, considering the landscape features, the area, the shopping format.
At the same time we design all our shops in accordance with our brand-book. Our shops attract people’s attention thanks to bright colors of our trade mark, and we strive to make it a symbol of tasty, fresh and high quality bread at a convenient location.
Different channels of distribution - different opportunities
SAHO products are sold in all the major supermarkets chains, where bread-baking complexes are presented. Also, we are actively working with individual entrepreneurs, who have one or two stores.
Cooperation with the large chains has some advantages: it makes the products more recognizable, expands sales area and, thus, guarantees the load and increase of production capacity of bread-baking complexes. But the own retail chain increases the competitiveness of products of any manufacturer.
The branded shop is a trade organization that sells goods produced by one manufacturer.
These stores usually have a trade name, trademark, branded product packaging, branded clothing for the employees.