Rus News Journal

The master of sports

the Trading network “ the Sport master “ began 10 years ago as the company specialising on trade by training apparatus. Now it is the leader domestic sports ritejlerom - it posesses 30 shops in Moscow and regions, and also 25 % of the capital civilised retail market of the sports goods. All shops own, a franchise in the company do not recognise. Nikolay Fartushnjak, the president and the co-owner “ Sport masters “ asserts what to achieve leadership it was possible thanks to rigid vertical structure of management and the mechanism of duplicating of shops at which it is not given to a shop of any freedom.

history of occurrence of a group of companies “ the Sport master “ a little than differs from stories of the majority of the Russian companies which have appeared in the market in the beginning 1990 - h: four graduates MFTI in 1992 have not wanted to live for the beggarly salary and have decided to be engaged in business. fiztehovtsy have created trading - purchasing company Ilion to sell sports training apparatus. One of businessmen has gone to America, and having returned, has told: there is the whole market very filled there and absolutely empty here. According to Nikolay Fartushnjaka, this opening simply was formulated: “ Time such goods buys the West, means, we too can have a demand. The logic primitive, was not at that time any marketing sophistications “.

“ ` the Sport master ` in a greater degree considers interests of the mass consumer “
Sergey Nehochin, the sales manager of the company “ the Sir the Sportsman “:
- I can not tell that we compete with “ the Sport master “ directly. Our assortment differs enough: those brands which are offered by us, does not offer “ the Sport master “ and on the contrary. We are crossed only on Nike, Reebok, Adidas, but it only 30 % of our assortment. We are not crossed and in methods of attraction of buyers. “ the sport master “ very actively gives advertising within all year, we do it extremely seldom and only in concrete occasions - for example, in connection with seasonal sale or occurrence of a new collection.

Besides, “ the Sport master “ has strongly left forward - I can not tell, how much, because anybody yet did not do serious marketing research of the market sports roznitsy. There is value judgment, but they have not something in common with a reality. I can estimate only their advertising investments - they in times surpass any other budgets in the market of a sports retail.

Alexander Maslov, marketing - the manager of the company “ Ribok Russia “:
- At us productive business - relations with the company “ the Sport master “ . On the one hand, in retail we compete. With another, us escalating of business and increase in a share of production Reebok not only through own shops, but also through a network " interests; the Sport master “. However if for “ Sport masters “ shops first of all the trading tool for us it is the tool also imidzhevyj with which help we speak about style Reebok. We cannot infinitely increase a market share of the shops, as multibrand shops like “ Sport masters “ probably, in a greater degree consider interests of the mass consumer. They can offer very wide assortment of brands, but all lineup in one brand. We, being one of the brands, forming tendencies and demand in the sports market, we represent wider assortment and certain style of service.

the FIRM SECRET: Where you, yesterday`s graduates, took the starting capital?
NIKOLAY FARTUSHNJAK: We were on friendly terms with banks. It was 1993, and credits stood out on perfect another, rather than now, to schemes. The guarantee of the person to which the bank trusted sufficed. Oborachivaemost the goods during that moment was enough high to dare to work with the involved money. As that market of training apparatus did not exist, but there were very many the rich people, ready to buy that they saw at cinema. We gave announcements in newspapers, and there and then there were orders.

We have decided to sell training apparatus of German company Kettler. Have agreed that we will receive from them the goods directly on 100 - a percentage advance payment. As at assortment we had only one mark of training apparatus, it was necessary to collect only orders and to transfer to their unique supplier. The obtained money again was started in business. Gradually, as constant customers, we began to receive at Kettler more favourable conditions. And by 1994 we had already appreciable network of regional dealers and impressive, a $5 million order in year, turns. It has allowed us to sign the exclusive contract with the manufacturer.

In 1995 Ilion has opened in Moscow on Leninsk the prospectus shop on sale of training apparatus “ Kettler - sports “. It was the first serious experiment in the sports retail market. Then other shops under mark " began to appear; Kettler “ on all country. But to them Ilion no direct relation had: “ Kettler - sports “ was not the registered mark, and shops were opened by dealers Ilion.

Opening of shop by the area of 260 sq. m has managed the companies approximately in $800 thousand From them about $700 thousand the rest has left on premise purchase, - on its re-equipment. In due course there was an idea to create a retail network. As a result in 1997 there was a first shop under mark “ The sport master “. Now this network includes already 30 shops, and only 15 of them - Moscow.

Council of Federation: Why you have departed from a primary principle: to trade in production of one manufacturer?
NF: We have tried to trade in “ Kettler - sports “ not only training apparatus, but also other sports goods. Trade has gone. And we have decided that the future behind universal sports shops. All - taki the shop where training apparatus are on sale only, is a nonsense. He can live only in a short time interval when in the market deficiency of the given goods and consumers only is felt get used to it, there is a fashion, demand. When we have understood it, have decided to create a network of sports shops under any original name. A word “ the Sport master “ has thought up our advertising department. And to develop the network concept, we have held the tender between advertising agencies. Who has won, now I will not remember. But then we on the sly, in stages, changed the graphic decision and the general style.

Council of Federation: However contrary to the concept of a chain store system with the general name “ the Sport master “ you have left for “ Kettler - sports “ its name?
NF: Differences between present “ Kettler - sports “ and any shop “ the Sport master “ no. But a brand “ the Sport master “ has been developed in two years after opening “ Kettler - sports “. As to this shop have already got used, it has been decided to change nothing.

By 1997 four shareholders Ilion owned the several more companies, each of which was responsible for the line of activity - purchase of the goods, wholesale trade, advertising, logistics and etc. To raise management efficiency and to prevent duplication business - processes, owners have decided to unite them in group under uniform mark “ the Sport master “. However there were problems with introduction of uniform structure of management. In 1998 owners have addressed in consulting - the centre “ the Step “ also have set for its experts a problem: to order company structure, in details to register the purposes of divisions and function of employees. Reorganisation has ended just after August crisis. Approximately then fast development " has begun; Sport masters “.

“ We go to less provided clients “
Council of Federation: you prefer to buy ready premises or to rent them. Why? Investments in building are too great?
NF: Looking what to consider as the big investments. Depending on a place - Moscow or regions, the centre of Moscow or suburb - the square metre can cost to $1 thousand (Cost of rent of trading real estate depending on region varies from $100 to $800 for 1 sq. m, purchases - from $400 to $5 thousand and above. - Council of Federation.) At us such project only one: shopping centre “ League “ near to Himok Matter is not in the sizes of investments, and in building terms. Unfortunately, terms of realisation of this project have appeared more long, than we counted.

Council of Federation: It is your independent project?
NF: Is not present, joint with partners in a pool “ 777 - 777 + “. Building is conducted by firm “ Russian trading networks “ - joint venture “ Sport masters “ “ M.Video “ and “ Old man Hottabycha “ is also soinvestor - a network “ the Crossroads “. Together to participate in the project it is easier - and financially, and arising questions to solve easier. This spring we should finish it. In “ to League “ “ the Sport master “ will open megastor a total area of 2500 sq. m. We consider that the future behind such shops. The client becomes razborchivee, to it is necessary bolshy assortment which he wants to see in one place.

In a pool of retail networks “ 777 - 777 + “ (“ Six semerok “) Created in the spring of 2001, networks " enter; the Seventh continent “ “ M.Video “ “ the Sport master “ “ Old man Hottabych “ “ Arbat Prestige “ “ avtokej “ MVO and “ Where. ru “. Numbers of multichannel phones of each network differ only in last figure - according to advertisement makers of a pool, it facilitates storing.

Members “ 777 - 777 + “ legally from each other do not depend. The basic requirements to participants - absence of a competition with each other and in the lead position in the corresponding market. The purpose - to increase coverage of potential clients at the expense of crossing of audience of advertising and discount programs. Joint actions at which the client of one network can apply for a prize from another, promote carrying over of loyalty of the consumer from one participant of a pool on the others.

Without fail members of an alliance participate only in the advertising program directed on advancement of all companies entering into a pool, - in catalogue release (the nearest will be printed by circulation of 2,5 million copies), advertising in printing mass-media, on television and in “ naruzhke “. Other programs become a subject of the separate arrangement. For example, “ the Sport master “ gives a discount 5%ļī to cards “ M.Video “ “ Arbat Prestige “ and “ Old man Hottabycha “ and 3 % - on cards of network MVO. The idea of a uniform discount card of a pool is now developed. Annual investments of each of participants of an alliance - an order $200 thousand Return from advertising within the limits of a pool in “ the Sport master “ estimate as high in spite of the fact that as a whole the company spends 10 times bigger sums for advertising.

Council of Federation: At you already is megastory - not so long ago in shopping centres “ Vejmart “ and “ Mega “ in Moscow shops " have been opened; the Sport master “ the area about 2000 sq. m. At the same time considers that the format of sports shop most convenient for shopping centre - a monobrand shop of the small area. You megastory pay off?
NF: to Monobrand shops, of course, to be present at shopping centre easier. To the big area it is not necessary to them - quite suffices and 200 sq. m, and it means that they pay for rent much less, than we. But they are imperceptible against other tenants.

our Two shops in shopping centres while have not paid back themselves, because have been opened less year back. Between shops in “ Vejmarte “ and “ Mege “ there is a difference. In “ Vejmarte “ floor spaces are got in the property, in “ Mege “ are rented. Accordingly, shop in “ Vejmarte “ has demanded the big investments, and in the long term from it bolshy a time of recovery of outlay. On the other hand, at rented shop the rate of return as it is necessary to pay for rent constantly is less. We hope that shop in “ Mege “ will pay off for two years, a platform in “ Vejmarte “ - for three - four. To judge growth of turns in these shops while it is difficult, because on normal attendance and consumer activity the shop leaves usually year for ones and a half. Now average I will eat from square metre makes about $250 a month, with an obvious tendency to increase.

Council of Federation: What should be a turn of sports shop that it was possible to speak about its efficiency?
NF: the Turn from square metre in various shops very different. megastor in region can give $200 - 300 c metre month, and small shop in Moscow - $1000. Accordingly, the total turnover at these two shops will be identical, despite the big difference in the areas. As a result both shops appear effective.

Council of Federation: But after all the big shop and an expense has more?
NF: Actually is not present. In regions expenses on purchase or premise rent, on its service, on the personnel and all the rest much more low, than in capital. So as a result it turns out that charges of small shop in Moscow and megastora in region are almost identical, and their turns too are comparable.

Council of Federation: how much strongly assortment of shop depends on its size?
NF: we have small shops of regional value - about 400 sq. m of floor spaces, averages - the area 700 - 1000 sq. m, and big - over 1500 sq. m. In general - that the area is the only thing, than they differ, because an assortment kernel in them almost same, only in small shop it is presented shtuchno, and in big each commodity unit can be touched. In small shop to the buyer bear its size from a warehouse, and in big under each model there are boxes with all sizes. Now at us average assortment - more than 20 thousand articles. It not 20 thousand versions of the goods: one model krossovok in ten sizes is already ten articles. The assortment only in the big shops extends, and that is insignificant - basically at the expense of the cheap goods which in small shop to place there is no possibility.

Council of Federation: you want to move to the bottom price segment?
NF: we Will tell so: we go to less provided clients, without leaving from clients with an average prosperity. Less provided clients more than more provided. Accordingly, comes more people and buys more commodity units.

Council of Federation: In Rostov-on-Don you have opened the biggest in Russia sports shop. How much it is profitable?
NF: It was the greatest one and a half years ago before there were our the first megastory in Moscow. Its floor space - 2000 sq. m, the general - 3400 sq. m. We never open sales volumes of separate shops, therefore I cannot name its turns. This shop too masshtaben quickly to pay off. Under our forecasts, it will occur during four - five years.

Council of Federation: you plan to open others regional megastory?
NF: Yes. In the near future in Krasnoyarsk, then in Ekaterinburg. In general, in all cities - millionnikah there should be at least one megastor our network the area not less than 1000 sq. m.

“ It is necessary to win a market maximum. Or all “
Council of Federation: How many all money you have enclosed in network creation “ the Sport master “?
NF: we do not disclose This figure. Though basically to whom it is interesting, that can count, how many it was required to us for the equipment of floor spaces. Average cost of the equipment in 1 sq. m - $500, and a total area of our shops exceeds now 20 thousand in sq. m. As to expenses for rent or premise purchase, these figures always very different. We prefer not to advertise them.

Council of Federation: Those means which the company invested in network development, have paid off?
NF: the Shop pays off on the average for three years, therefore we cannot speak yet, our investments have returned or not: profit constantly reinvestiruetsja in network development. We leaders of the market and to lose a palm we do not gather. Means, it is necessary to win a market maximum. Or all. For example, in 2003 we plan to open 20 more shops, half from them - in regions. Now “ the Sport master “ goes with very big separation from competitors. By our estimations, we occupy 25 % of the civilised sports retail market of Moscow. And here to state a share estimation “ Sport masters “ across all Russia I am not ready - this market while is not investigated absolutely not.

Council of Federation: That in your understanding “ the big separation “?
NF: It means that we advance competitors very essentially, even those whom we can name the nearest - networks “ the Sir the Sportsman “ and “ Sports - city “. Our turns above, than at them, approximately five times. It, of course, an estimated indicator because competing networks do not open the sales volumes. Our sales in 2002 have exceeded $100 million

Council of Federation: That is you do not feel pressure of competitors?
NF: the Empty seat is always, practically in any market. On a commodity market for sports and rest of serious struggle is not present. We feel, of course, that in the market is multibrand “ the Sir the Sportsman “ and “ Sports - city “ from monobrand - Reebok, Nike, Adidas... But it is necessary to understand that many competitors - they and partners. For example, firm Adidas delivers us the goods. But it has also shops in which it arranges sales, involving clients - our buyers.

Sellers of the sport goods in the markets do not compete to us - at us while different audiences. But they our competitors in farther prospect. The civilised and not civilised sports markets, by our estimations, are approximately equal. If now clients “ Sport masters “ - people with an average prosperity as we will win buyers with lower level of incomes, we will start to compete and to the markets.

“ Any part of the goods all the same it is necessary to lie in a warehouse “
Council of Federation: In what feature of work of a sports network?
NF: Many sports goods are collection, and collections order 8 months prior to their receipt in sale. Now we order collections on the following autumn - winter. However, it is feature not only sports, but ibolshej parts odezhno - the shoe market.

Council of Federation: What occurs, if you are mistaken with quantity?
NF: If have ordered less - there will be empty regiments if more - the rests turn out, and in the end of a season it is necessary to sell them at the prices, which sometimes below cost. For example, now there comes a season of discounts for winter clothes, footwear and stock. Discounts, of course, stimulate sale, but any part of the goods all the same it is necessary to lie in a warehouse.

Council of Federation: It is the most part?
NF: Can remain to 30 - 35 % of a collection, depending on a season to 15 % can be sold with discounts. The others 15 - 20 % leave on a warehouse. The most unpleasant that the goods get out of fashion and in a following season, probably, will not be in demand at all.

Council of Federation: And what you do with the rests which are not on sale?
NF: it is not thrown out, certainly. Either we sell absolutely cheaply, or we give to children`s homes.

Council of Federation: Do not plan to open stokovye shops?
NF: We are going to open shops for sale of last collections, but not only them. It is possible to name such shop “ the Sport master “ with assortment from price categories “ low “ and “ the lowest “. But it does not mean that the cheap goods will leave other shops of a network. We now solve, whether such points will be specially marked to allocate them among more expensive shops of a network. Most likely, will be.

Council of Federation: How you estimate the volume of purchases necessary for the following season?
NF: Manufacturers represent us new collections, commodity researchers select models which, in their opinion, will well go. Sales of similar positions for last year and expansion of a network planned for year are thus considered.

Council of Federation: From whom you buy the goods?
NF: We work directly with manufacturers or their representatives in Russia. Many large firms - Adidas, Nike, Reebok - already have here the representations. The largest our supplier - Ilion, owning exclusive rights on delivery to Russia many brands (Kettler, Roces, Tecnica, Volkl - all more than 30). In spite of the fact that Ilion enters into a group of companies “ the Sport master “ interaction occurs to it on a commercial basis. He is a supplier the largest, but not unique. And we - not its unique clients. Ilion, for example, is the supplier of a network “ the Sir the Sportsman “.

Council of Federation: And what scheme tovarodvizhenija in your network?
NF: the Goods come on the central warehouse to Moscow suburbs, are marked and goes to shops. Some times in a week we deliver the goods in shops own motor transport. Systems of intermediate warehouses at “ Sport masters “ while is not present, as the quantity of regional shops is not too great yet.

“ As the new mark will be called - yet I do not know “
Council of Federation: you stand up for multibrand shops. But you have small retail network Columbia - a network of one brand. Than the withdrawal from the concept is caused?
NF: It is simple business development. If you deal with a strong brand monobrand shops can be effective enough. Columbia - a world famous American trade mark, we have much enclosed in its advancement in Russia, and it yields the results.

Council of Federation: Throughout the concept “ Not only for sports “ you are going to open a chain store system of daily clothes under own mark. Who will develop and make it?
NF: Now the clothes most part is sewed in Jugo - East Asia, including world famous marks. I do not see the reasons why we should arrive differently. And our American partner (his name to you about what will not tell is an unknown firm in Russia), partially we will partially develop models to adapt them for our conditions. We have just received from the company COMCON the big report on research of fashions. I at all have not read it still, it will be necessary to take home... As the clothes will be called, I am not ready to tell yet - while we have only a working name. In May we will open at once some shops, the name of a network and clothes trade mark will coincide. Within a year we will open 6 - 7 shops, they will be small, on 150 - 200 sq. m.

“ Probability to be ruined thus - more than probability to earn “
Council of Federation: In 1998 advisers have helped you to optimise management structure. What does it represent today?
NF: Advisers have helped us to divide operative and strategic management. Before there was some mess. Now owners are councillors of directors of a group of companies “ the Sport master “ and I participate in an operational administration from owners only. The board of directors gathers some times in a month. Especial formalities at decision-making are not present: us in council of all four, and we each other know half-lives. Many decisions can be accepted, formally council without convoking: simply to ring round everything, all have given OK - the decision is accepted.

the Board of directors makes all large decisions - on acquisition in the property or about sale of large objects, about the big investments in purchase of new groups of the goods.

In “ the Sport master “ personnel selection is accurately built. In group works more than 2500 persons. From them nearby 500 - at the central office, the others - in shops and in warehouses. On the average in shop work to 70 persons. Candidates on a post of sellers are selected by department of the personnel of management of sales. The main requirements to employees - charm and sociability. Those who corresponds to these requirements, train within two months - at first in intrafirm training - the centre, and then in practice in shops. During training the salary though also smaller, than they will receive then is paid to candidates. The average salary of sellers - about $350. The payment part - fixed, the rest pays off under the difficult formula considering personal sellings, department and shop sales as a whole.

Non-material stimulus are all versions of thanks, and also possibility of career growth. As an example in the company result the director of one of the shops, begun work from a post of the storekeeper. Nikolay Fartushnjak admits that at the director of a shop of possibility for vertical growth are insignificant, but it is possible “ to grow across “: “ It can become, for example, the project head on opening of new shops “.

Council of Federation: you are a councillor of directors, and you - the president of a group of companies. What enters into your duties of the operative managing director?
NF: In the direct competence of the president - decision-making on investments into projects and in real estate, if they are not so great to get to area of decisions of board of directors. To me the general director is directly subordinated. He is engaged in an operational administration, directors of managements submit to it. Such managements at us six: Financial, IT - management, management of technical maintenance (a warehouse, transport), advertising and marketing, commercial management (it is engaged in wholesale purchases and distribution) and management of retails which supervises directly over shops whereas other services provide their activity.

Council of Federation: What decisions can accept shops independently?
NF: almost any. For example, for an operational administration commodity researchers in shops are the goods, but already commodity researchers in management of sales at the central office are engaged in purchases and forecasting.

Council of Federation: Such rigid centralisation, in your opinion, justifies itself?
NF: Probably, it is possible to type people, to set it an approximate way of development, and further to allow to do everything. In such a way it is possible to open five times more shops and five times faster. But probability to be ruined thus more than probability to earn. It is very difficult to rely on system where there is no accurate centralisation. Advisers have confirmed with us that in our validity the best model of management - centralised and vertical.

Council of Federation: so rigidly to operate the company, it is necessary to have all shops in the property. But one of the fastest ways of expansion of a network - a franchise. You have franchajzingovaja a program?
NF: In our business on franchajzi it is impossible to earn. At least, I do not know the company which could make it in Russia. And to give the rights and technology simply so that our brand hung at every turn... What for?

Few times we tried to give the franchise. There were two regional shops - in Chelyabinsk and Ekaterinburg. They normally traded, but we from it absolutely have received nothing. So it is more we on a franchise we do not work, and those signboards too are already removed. To earn on the franchise, the same civilised market as in Europe that to people did not come to mind that it is possible to use another`s brand and nothing to pay is necessary at least. And in Russia now it is possible to have legal proceedings and seize 10 years as a result of 1000 roubles. To whom is it necessary?

“ Ideas of advertising agencies suit a maximum for one season “
Council of Federation: How you involve buyers?
NF: basically by means of advertising. That advertising - the trade engine, we have understood not from books, and on a private experience and for a long time. Advertising do not happen much. We try to inform to the consumer the information that in “ the Sport master “ it is possible to buy all for sports and rest, we do an emphasis that shop universal. Before the season beginning we focus attention on certain groups of the goods. Let`s tell, rollers start to buy in April, tourist equipment - in July and etc. We cannot affect desire of the buyer to buy this group of the goods in general: if “ not a season “ the desire all the same will not arise. But before the season beginning should be informed the potential consumer that these goods can be got at us.

Council of Federation: Who develops advertising campaign strategy?
NF: We want to develop some years strategy of our advertising actions, but those ideas which bring to us advertising agencies, suit a maximum for one season. Therefore each season we should change even a slogan. We would like to create idea which can long live - as Philips from it “ we Will change life to the best “. But till now could not find such fad on which it is possible to sit down and maintain its year three.

Council of Federation: you advance also separate brands. These are joint programs with the owner of a trade mark?
NF: Usually yes. But the participation parity depends not only on on what the emphasis in advertising, but also from concrete arrangements is placed. For example, we advance mark of roller skates Roces. The command " has been created; Roces-Šīńńč’ “. There came Italian team Roces, carried out consultations, trained sportsmen. The manufacturer participates in such projects always, it is not obligatory money: sometimes - carrying out of marketing researches, sometimes - discounts for advanced models.

Council of Federation: Such model of advancement how creation of a command of the sportsmen acting in equipment from any manufacturer, it is effective?
NF: We consider, what yes. After all rollers, for example, it is the goods the crying need in which is not present. Accordingly, it is necessary not only advertising, but also popularisation of for what these goods are intended. You saw, how scooters go for a drive on stages what they acrobatic tricks manufacture? They get youth to which would like to make the same. And to make the same, it is necessary to buy rollers.

Council of Federation: the Advertising campaign “ Sport masters “ in Moscow and in regions differs?
NF: Is not present. In - the first, the advertising most part goes on-line, on all regions. And in - the second, advertising image and the concept too are uniform for all shops of a network. We achieve scalability of business by means of centralisation in all.