At the Central Asia Retail Week forum in Tashkent, a visionary session was held focusing on the future of discounters in retail. Expert Angela Ryabova, director of the "hard discounter" format for the "Magnit" chain, answered some questions from Anhor.uz.
— Angela, you have 151 stores, which almost matches the number of retailers in Uzbekistan. Considering the trend of attracting expatriates, what qualities do you look for in top managers?
— It’s important for me to evaluate the soft skills of candidates — their communication, management, and leadership abilities, as well as their willingness to take responsibility. Another key aspect is “out of the box” thinking.
— What do you envision for the future of discounters in Uzbekistan? There are powerful bazaars here.— I believe discounters have potential. For instance, the wonderful Havas network is a very progressive format. The main task for discounters in Uzbekistan is to shift rational buyers from bazaars to stores. However, considering the cultural peculiarities of the country, this task will not be easy and will require a comprehensive approach; nonetheless, local colleagues are handling this challenge well so far.
A discounter (from English "Discount") is a retail outlet that offers a wide range of products at prices lower than the market average.
— What is the share of promotions in a discounter? What types of promotions are used?— We do not have promotions. This is the essence of a discounter: we operate under the strategy of “the best offer.” I can hardly recall a time when we offered something at a discount. Promotions are an endless way to attract customers, but I don’t believe this creates real loyalty; rather, it just generates a flow of customers within various networks.
Promotions are a marketing tool used by companies to increase sales of their goods or services by attracting customers through various means such as discounts, gifts, contests, and more.
— Does your customer profile differ from those in the past?
— Absolutely! We focus on the rational buyer. We have a loyalty program that allows us to analyze the customer profile and their shopping basket. Typically, these are individuals aged 25-45 with rational thinking. They are not necessarily low-income buyers. Our customers usually select a basic basket that contains 8 or 9 product items.
— Some believe that a discount means significant price reductions and wholesale prices. They do not see a substantial difference between a discounter and a regular store; if there is a price difference, it is negligible. Should we move away from the concept of discounting?
— In Russia, the discount index from the “home” format is minus 15%. This difference becomes noticeable when compiling a monthly shopping basket, where it is quite significant.
— What is the payback period for self-service checkouts in a discounter format?
— Previously, self-service checkouts were quite expensive, but now we can set one up for about $1700. It generates around 20% of sales, and the payback period is very quick. For retailers, this has become a necessity.
— What is the fundamental difference in the competitive advantage of the large discounter “Svetofor,” and how often is the matrix reviewed?
— “Svetofor” essentially operates in a format that lacks a clear category matrix. Their strategy is based on purchasing so-called “slips”—that is, items they have managed to acquire at a lower price and resell. A normal discounter builds its operations on a stable matrix and a better response to customer needs. This is the first and very important distinction. The basic basket of goods must be stable.
The second distinction is convenience. The locations chosen by “Svetofor” can be compared to hypermarkets that require travel. We believe that it is more convenient for customers to shop at a discounter “near home.”
— What three key performance indicators do you monitor to understand the state of your business?
— From the perspective of store business, we focus on unit economics — the EBITDA of stores. From the perspective of a category manager in a discounter, we evaluate sales per SKU, the turnover of logistical quantities, and category P&L.EBITDA (Earnings before interest, taxes, depreciation, and amortization) is the earnings of a company before deducting interest, taxes, depreciation, and amortization.SKU in marketing is the identification code assigned to each product in the assortment.
P&L (Profit and Loss statement), or PNL, is a report that shows the profits and losses of a company over a specific period.
— And finally, what are your forecasts for retail in Uzbekistan?
— The market in Uzbekistan is very promising and is on the verge of explosive growth. There are excellent players like “Korzinka,” Havas, and Makro. Colleagues are doing tremendous work. I am confident that in the coming years we will see even more dynamic development in retail in Uzbekistan.