“In Russia, a woman will buy a branded dress in Familia, and she will tell everyone that in TSUM”

by time news

Svetlana Mozhaeva joined the Familia chain of off-price goods stores in 2011 as CFO, having worked in similar positions in MTS-Retail and Utkonos Online. According to Mozhaeva, in Familia she was given the task of making finances as transparent and understandable as possible. A year later, the company made IFRS reporting for the first time and began to improve the procurement system. In 2015, she acted as CEO of Familia for several months and negotiated with two future financial investors – Goldman Sachs and Baring Vostok – and then with a strategic investor – the American network of off-price stores TJX, which in 2019 bought 25% – share of the company.

Mozhaeva took the seat of the General Director of Familia at the height of the first lockdown – in April 2020. [предыдущий гендиректор] Konstantin Nadezhdin left the company, I understood how this machine works and how to operate it, ”she says. Familia more than compensated for the 8% loss in the pandemic year back in the first quarter of 2021. For a large off-price player, “volatile time is a time of opportunity,” Mozhaeva believes. In an interview with Vedomosti, she told why the off-price sector of clothing, footwear and other goods had an easier time than regular fashion retailers, and how Familia’s business model allows large discounts on original branded items.

– What is the difference between off-price stores and discounters and what do you think is your advantage for buyers?

– The difference is huge. Discounters sell cheap [по определению] things. Selling cheap. And, as a rule, these are things of not very high quality. We buy quality goods from regular retailers and manufacturers – these are the remnants of collections not sold out by the end of the season or goods that arose as a result of planning and production errors. We take it, as a rule, at a very favorable price, with a deep discount. Why are we getting such a price? At the end of the season, retailers need to get rid of stale goods in order to free up shelves for a new collection. It is important for them that the goods of the previous collection, going on sale, do not compete with the new assortment. Therefore, there are businesses like ours. Off-price is globally represented by such major players as TJX Companies, Ross Stores, Burlington. The USA is the pioneer of the segment. There are special companies that buy these stocks and trade them only offline.

Our discount is up to 85% off the original retail prices. This is especially important for the Russian buyer. After all, three quarters of the country’s population have an income of up to 45,000 rubles, so they cannot help but think about prices, the value that we can offer them is important for them. Besides, Russians are traditionally very brand conscious (they love branded things). Perhaps the Soviet Union influenced this. I heard that when Century 21 was still open in the US, also one of the players in the off-price segment, 80% of the proceeds were made by Russians who came to Manhattan. The Russian buyer, of course, has some cultural characteristics that differ from the Americans. In the USA, for example, a girl will buy a dress in an off-price store, come to work, say: “Look, girls, I’m great, I bought such a dress so profitably.” And here a woman will buy a dress in Familia, and she will say: “I bought it in TSUM”. And for the younger generation, if we consider it separately, ESG principles are important. We believe that environmental friendliness is in the DNA of the offsprice: we give a second life to the product. Sometimes a product that we bought from a supplier would have been disposed of if it hadn’t reached us.

– What happens to the stocks that you could not sell?

– And we don’t have that. A regular retailer ordered a collection for himself, produced it, brought it, put it on the shelf – and for everything that he didn’t sell at the end of the season, he makes a sale or sells it to an off-price player. And we do not have collections and assortment matrix, we buy goods always, all year round, weekly. The buyer’s (buyer) has weekly and even daily updates open to buy – this is a purchase plan that the system calculates for each buyer. He is looking for new proposals and new vendors all over the world. We have a large supplier base – precisely in order to have the flexibility and the ability to deliver on time the goods that we need here and now. We always buy something at the moment, but for greater flexibility we always leave some of the plans open for ourselves in order to be able to react and adapt to a specific situation. For example, the weather didn’t work out – then we simply won’t buy excess goods. And vice versa, excellent sales – then the buyer will quickly buy everything that we still need. The flexibility of the business model gives us significant benefits.

Unlike regular retail, which begins to discount collections at the end of the season, we have revaluations on a monthly basis, according to the schedule. Our system is able to analyze all stock balances and determine the product that turns out worse than the standard, and then the system gives it a markdown.

– What if the stock does not turn around at the price you bought them? Are you discounting it, going into the minus?

– We discount the goods until they are sold. Any product has its own price, and any product is sold, the question is for how much and with what margin for us. We are the last link, no one is left behind. And this is also an important factor why brands are happy to sell their stocks to us. We do not highlight brands on the sales floor or online – and this is critically important, because, in fact, we receive a special price from the supplier precisely for being a confidential channel for the disposal of his effluent. It is important for us, and it is important for the brand, that our relationship and prices are not advertised. In our stores, the product of a particular brand will be mixed among thousands of other brands and will be simply invisible. We experimented with different brands many times: even if we sat in the same shopping center, there was no cannibalization with brand sales.

– About pricing principles: how does a buyer find the right price for a stock?

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