The development strategy of independent retailers: get ready to sell or develop further?


Many owners and managers of small and medium independent retailers is now gripped by the question: to prepare for the sale of a business or develop further their own? And this question, it should be noted, did not come today, and its relevance does not go down tomorrow. Retail industry in Russia is the most attractive for investment after oil and gas sector, both in terms of size and growth, and from the point of view of the low level of competition. The share of trade in the value added created in the Russian economy in 2009 was 19.5% in 2008 - 21.7% of Russian GDP. According to InfoLine, the volume of Russian retail market in 2011 is more than 400 billion euros, while the share of the top 100 retailers in 20% of total turnover. Revenue hundreds of leaders over the past year increased by 21% - up to 2.6 trillion rubles. If not in this industry to do business in Russia, where else? Perhaps succumbing to "trends" of economic modernization and development of nanotechnology in Russia, many entrepreneurs sell their businesses and invest in nanotechnology? Perhaps, but that's another story, and the topic of another article.

In this paper, we can not clearly answer the question posed in the title as the answer to this question for entrepreneurs a purely personal matter. Someone might "tired" of the business and looking for ways to sell it more expensively. Someone, however, only opened a few stores, and full of energy to compete. Our mission is much more modest. We would like to acquaint readers with the strategic concepts and tools, which allow the use of more objective look at your retail business. See, perhaps under a different, unusual angles, and try to answer the question. These tools have been successfully used in highly competitive markets of Europe and the U.S., and adapted for Russia based on a study of the "Strategy of development of independent retail chains in Russia 2010" conducted by our team in 2010. As objects of study were selected retailers in the segment of small and medium-sized businesses, defining strategic trends in the regional retail market and the leading local independent companies. It is retailers with annual sales of $ 50-250 million, located in one region and leading major operations in cities with populations of 500-1000 thousand. and more. They are typical representatives of independent local retailers in Russia. They own about 33% of the organized retail market in Russia in the segment of small and medium enterprises by number of stores. The study involved 31 retailer, each - the leader in its region, from Kaliningrad to Khabarovsk.

Macro Trends: The change of phase of the lifecycle

According to forecasts of Ministry of Economic Development of Russia through the Russian 5-7 years of retail business will enter a phase of slow growth. This phase is characterized by the proliferation of modern format stores across the country, as well as increased levels of consolidation and competition, which in turn leads to slower growth in prices. In 2010 about 70% growth in retail space in Russia were done by retailers belonging to the Top 5. In recent years the level of consolidation of the Russian FMCG-Retail increased due to an aggressive growth strategy of large retailers. According to a study RBK.research "Retail sales of food products (FMCG) in 2011," the share of the top ten FMCG chains has grown to 16%. According to L. Khasis, the head of ACORT, consolidation will take place both on the basis of the largest Russian companies, which will absorb the smaller players, and with the participation of major international retailers. "I think that during the period 2011-2013 to expect someone to return to the market from global retailers - Wall-Mart, Carrefour and Tesco. One of them, of course, during this time will appear," says L. Khasis. Consolidation - a natural process that occurs in various sectors of the economy, with a particular level of intensity. In the retail economies of scale greatly affects the efficiency of the business, and therefore an increase in scale is the natural and obvious strategy for the growth of large retail companies. The European Union has the highest rates of consolidation in Sweden (95%), Norway (86%), Finland (80%), Switzerland (76%). Under consolidated markets of France (64%), Britain (58%), Germany (57%). In the U.S., with a high level of competition and market development level of consolidation does not exceed 55%. According to forecasts of Ministry of Economic Development in Russia is expected to increase the share of organized retail trade in food, which is now estimated at 35% of the market, and it is expected that by the end of 2015 it will be 50%. The expected level of market consolidation by the end of 2015 may be 25-35% [1]. Another interesting figure: according to the rating of logistics performance index of the World Bank Russian market of transport and logistics services in 2008 was a 94 place (from 155 countries), while the other countries of the BRIC countries have better logistics (Brazil - 41 seats, India - 47 China - 27), which hinders the arrival of large networks in the regions of Russia. All these figures show that the "threat" or "trend" consolidation of retail sector in Russia is a myth that is most likely supported by large market players to make a compliant, "the acquisition" and bring down their market value. But one thing is certain - the level of competition is growing rapidly, along with a change in the consumer market....