Elena Pismenskaya: the crisis has forced retailers to look for new ways of interacting with the customers
At the end of June, an online trading forum "Suppliers in the retail chains: one step ahead of the children's goods market" was held. It was attended by representatives of children's retail. Elena Pismenskaya, General Director of Kids Fashion Retail Consulting Agency, a permanent expert of our Exhibition, was the moderator of one of the sections. We asked Elena to share her impressions and tell us about the main problems identified by the participants.
– Elena, you moderated a case session attended by representatives of various retail chains. Is the situation in the toy and fashion business about the same or not?
– Our session was attended by retail chains from different market segments - Leonardo, Dochki I Synochki, Gulliver. And I can say that absolutely all retail chains have suffered from closed stores and reduced traffic, but still, there are some nuances. Those who had actively developed online sales channels by the time of isolation certainly had an advantage. Boris Katz (Leonardo retail chain) noted an increase in sales (8-10 times!) through the online store, but, unfortunately, the company did not have enough capacity to satisfy all the requests.
Besides that, not all trading platforms were closed at Leonardo and the Dochki I Synochki retail chains, since their stand-alone stores could operate in the regions. But anyway, in April, sales in Dochki I Synochki retail chain fell 65% down (compared to April 2019).
Gulliver Company found itself in a much more difficult situation, since all its stores were located in large shopping centers, and all of them were closed.
– What are the main tools and techniques used by children's market players to struggle with the crisis?
– First of all, it is optimization and cost reduction. The Dochki I Synochki retail chain made a 40% cost reduction, which allowed them to survive in these difficult 3 months. All the participants spoke about reducing expenses, but the numbers were different for all of them.
Secondly, we have to work with the landlords, discussing rental reductions for non-operating stores; this is one of the most important points, and sometimes the main reason for closing a store.
Thirdly, it is the development of online sales and delivery. Dochki I Synochki positively assesses the "express delivery" introduced during the pandemic, which allowed increasing sales. During the pandemic, goods from the retail chain were delivered on the same day in a few hours.
– Since the topic of kids fashion is closer to you, I would like to know your impressions of the situation with the sales of children's clothing in the post-quarantine period.
– Unfortunately, most retailers have suffered rather serious losses. The children's graduation season (in kindergartens and schools) did not happen, and all companies that produce holiday clothes have noted a decrease in sales in this segment down to 90%. Summer collections are also mostly discounted. Detsky Mir already sells with discounts of up to 50%. Dochki I Synochki notes that 70% of their sales are discounted.
At the same time, the season of summer collections sales, unfortunately, is coming to an end. There is still a short time ahead for selling beach collections, when you can, without dropping your margin, sell some of the goods without discount. But most of the goods are being sold with large discounts (up to 50%).
– What is your forecast for the coming season: will the customers return to the stores or stay online? How will manufacturers and suppliers behave in this case?
– I agree with those who believe that the pandemic has not launched new trends, but rather has accelerated the processes that were before:
The development of online trading has accelerated, but we should remember that in the Fashion industry, the online channel occupies only 12% and in toys – about 12-15%. Therefore, so far, retail is still the main sales channel.
As for consumer demand, it has unfortunately been falling for 6 consecutive years and this trend will continue in 2020. The crisis hit the middle class the most, so the share of the economy segment increased. At the same time, the trend for conscious consumption is developing, extra items will not be bought, and the customers' choice will be in favor of the quality and functionality of the products. I would recommend to small manufacturers to produce high-quality and unique goods and put the affordability into the second place.