|Indicators||Unit||2016||2017||Rate of indicator changes (2017/2016)|
|Profit from sales||ths. rub||2,329,037||2,300,558||-1.22|
|Net profit||ths. rub||1,182,668||1,310,080||10.77|
|Return on sales||%||23.37||21.30|
|Net profit margin||%||11.87||12.13|
|Revenue per employee||ths. rub||3,591||4,430||23.38|
МMono-brand Westfalika stores offer European-style shoes, which is distinguished by elegance, simple clean design, beauty and convenience. Westfalika footwear is made only of genuine leather and fur. Westfalika creates a topical collection each season with consideration of the main fashion trends. Westfalika offers city footwear for every day.
Chief Designer of the Westfalika brand is a German designer Thomas Frank, with whom Obuv Rossii has cooperated since 2011. He has over 30 years of experience in working with well-known European brands such as Peter Kaiser, Ara, Dockers, and Tom Tailor. In Obuv Rossii Thomas is responsible for Westfalika brand development and for the development of new collection concepts
Since 2010, the spokesperson of the Westfakabrand is singer Valeriya. She participates in both advertising campaigns and the design of new models of shoes. The Westfalika assortment in stores includes a line of fashionable shoes under the Valeriya by Westfalika brand name. In addition to footwear, Westfalika stores offer a wide range of related products under own brands. In the retail space, there are separate areas for clothing, branded racks for hosiery, shoe care, foot care products, etc.
The network stores offer about 2,000 models of women’s, men’s and children’s footwear for all seasons and lines. Assortment of Peshekhod consists of remaining collections of previous seasons of other monobrand chains of the Group and shoes under the Peshekhod brand name
The target audience of Peshekhod is 20-60 years old people leading an active life and at the same time want to look stylish and bright. The network range of products not only includes stylish, fashionable shoes, but also classical models for every day.
Emilia Estra’s target customer group are young women between the ages of 25 and 30. The main ideas of the brand are brightness, fashion and singularity.
The products assortment in new stores consists only of women’s fashionable and trendy designer genuine leather shoes, as well as accessories and shoe care products under the same brand. In October 2014, Emilia Estra online store began to work: www.emilia-estra.ru.
Rossita includes stores offering European shoes with a wide range for the whole family: stylish shoes — for women, practical footwear for men, and comfortable — for children. The Rossita retail network offers models of not only leading European and Russian brands, but also models under the same brand.
For the first time, the Rossita collection of women’s shoes was presented in the spring/ summer season of 2015. Now it comprises 30% of the women’s product range of the footwear network. In October 2015, the rossita.com online store started to operate.
They are small cozy shoe showrooms designed in the same style. Lisette is the French style in footwear design: sophisticated, easy and feminine. Lisette creates unique collections for every season. Varied decor: perforation, contrasting stitching, hems, and appliqués distinguish the collections under this brand and make each model expressive, emphasizing corporate identity.
To create a harmonious and unique image, Lisette stores offer handbags and other accessories that perfectly go with the shoes. In the year 2017, online Lisette store lisette.me was launched.
This brand of men’s and women’s comfortable shoes was introduced on the market in 2000. It became part of the Obuv Rossii Group in 2015, when, as a result of an M&A transaction, the shoe factory producing shoes under this brand name was included in the Group. S-TEP shoes are manufactured using a progressive German moulding technology. It allows producing solid, light and comfortable shoes, which is suitable for both everyday wear and for recreation. The lasting moulding construction method, non-slip nonfreezing outsole, natural materials, and peculiar design are the main distinctive features of S-TEP shoes. A design center works to develop S-TEP collections at the factory in the Novosibirsk region. They also produce the whole range of S-TEP footwear there.
The S-TEP brand is presented in the shop-inshop format in retail networks of the Group. A significant amount is also supplied to wholesale customers.
All.go is a new casual brand, which appeared on the market in the spring of 2014. Initially, the collections of All.go consisted only of models for summer, beach and garden shoes made of an ultra-light EVA material. In 2015-2017, walking shoes, demiseason winter boots, winter snow joggers and cast boots manufactured using EVA appeared in the assortment. Some of the All.go shoe models are made at own production site of Obuv Rossii in Novosibirsk. The of All.go brand is developed in the shop-in-shop format and its products are mainly sold through other retail chains of the Group.
Obuv Rossii entered the market of outerwear with the Snow Guard brand in July 2014. Initially the collection included only the winter range, but in 2015-2017 the company expanded the range and divided outer garments into different categories: now the stores offer light cloaks and coats for early autumn, light jackets with padding polyester and puffer jackets. Thus, the Group became more professional in working with the outerwear category; it expanded the season limits which helped it increase its revenue and the group of buyers. The concept of the Snow Guard brand is the creation of practical and trendy solutions using modern innovative technologies. These are clothes for modern active people wanting to look stylish even in cold weather. The Snow Guard brand is developed in the shop-in-shop format in retail networks of Obuv Rossii. Each store is equipped with a separate area for clothing, which is usually located in the center of the selling space next to the cash register area. In 2017, sales of clothing increased by 25 per cent, their share in retail revenues amounted to 14.5%. Development
Since 2010, Obuv Rossii has been developing related products under own brands. Today, there are more than 5,000 SKU of related products: bags, leather products, shoe care products, a specialized line of care products for feet, and hosiery. Annual revenues in this line are growing: in 2017, the sale of related products (taking into account clothing) increased by 7%, their share in the retail revenues amounted to 31%. Some branded zones for related products were created in retail network stores that are part of Obuv Rossii Group.
In 2017, Obuv Rossii included a new product category in the assortment of stores — middle layer clothes (sweaters, cardigans, and turtlenecks). In the autumn-winter season, pilot sale of this line of 150 SKU started. The new range was demanded by the buyers: the percentage of sale of this category exceeded 90%.
Given the successful sales experience, Obuv Rossii expanded the middle layer clothing line 7 times in the springsummer collection of 2018. Diversification of the product range is one of the most important components of the Company’s business strategy.
Related products under private label are promising and show annual growth of sales. In addition, it’s a high-margin product category providing for not only revenue increase but also for profit. Diversification of the range also allows the company to increase average ticket, to stimulate purchases and to enhance customer loyalty.
Obuv Rossii entered the e-commerce market in March 2014. Now the company operates five online stores: Westfalika.ru, Emilia-estra.ru, Westfalika-home.ru and Rossita.com, Lisette.me. In 2017, sales in e-commerce increased by 56%, their share in retail revenue reached 10%.
Over the past two years, the range of products in online sites of Obuv Rossii grew considerably: now it includes shoes, clothing, various accessories and related products. For example, there are over 5,000 SKU at the Westfalika.ru online store.
In its strategy, Obuv Rossii invest in the development of multichannel and omni-channel trade when the buyer is offered to make purchases using different channels and tools, while switching from one channel to another is “seamless” and the interaction of the client with the Company’s brand comes to the fore. Therefore, all the online stores of the Company are mono-brand stores and are essentially a continuation of traditional retail networks.
An important trend that will determine the direction of e-commerce development in the near future is growing mobilization. In this regard, in 2017, the Company launched updated mobile versions of its Westfalika.ru and Rossita.com on-line stores. This allowed for a boost in mobile sale: in 2017, the number of requests issued through mobile devices increased 2.6 times.
The Company has a branched retail network across Russia which provides a competitive advantage of the Company’s online stores — as a result, Obuv Rossii established an infrastructure for the delivery of its products to any region. It makes it possible to reduce logistics costs, to offer buyers the service of pick up from outlets (it now comprises 90% of all purchases in online stores) and, in general, solve the tasks of prompt delivery of the goods more effectively. Each of the Company’s stores performs the function of a miniwarehouse and a pickup point. Customers of Obuv Rossii’s e-shops are also offered other delivery options: delivery via courier services (SDEK and DPD) and via Russian Post.
The Company created a multifunctional centre for information support and order processing. It works 7 days a week from 7am to 10 pm Novosibirsk time providing serves to clients from all regions of Russia. The call center employs 20 specialists processing each more than 100 incoming calls per day on average.
Obuv Rossii has a unified order management system, i.e. data on all orders from any on-line stores of the Company are received and processed in a single database; and operation of the call center is automated based on CMS 1C-Bitrix.
To communicate with its clients, Obuv Rossii uses various channels, including both traditional — offline stores, catalogues, etc., and new — email-newsletters, social networks, etc. This allows the Company to make interaction with the brand most comfortable for the customers: they can choose the channel of interaction, which is convenient to them at any given time.
Financial services for customers are one of Obuv Rossii’s key activities. In 2007, the Company was the first one on the shoe market to offer a program of consumer crediting. Then, in 2009, Obuv Rossii started their own lending to customers and introduced the service of buying shoes with payment by instalments. Since the beginning of the project, over 1 million customers have purchased shoes using this programme, every second of them took advantage of the service again. In 2017, instalment sales totalled RUB4.54 bln.
Later, the list of services was expanded: in summer 2012, Obuv Rossii started to extend cash loans to its customers who had already purchased shoes on an instalment plan and successfully fulfilled their obligations to the Company. Most customers borrow up to the salary and for current consumer needs. The microfinance line makes a substantial contribution to the earnings of the Company. According to the results of 2017, the cash loans amounted to RUB3.43 bln, the Company’s interest income was RUB1.5 bln, which makes 13.89% of the Company’s revenues.
The projects are managed by a team of over 100 managers with experience in working in banks.
A group for retail lending was created in the structure of the financial services, as well as an analytical support group, and a group of financial security. The Company has developed its own IT system which makes it possible to register and support instalment contracts and cash loan contracts online. The scoring system is regularly improved.
The Arifmetika system started to operate in Obuv Rossii networks in summer 2015. Platezhny Standart credit organization is the system operator (license of the Central Bank of the Russian Federation for transfers without opening an account No. 3530-K of 28 January 2015) which is a member of Obuv Rossii Group.
Initially, the customers were offered a service of payments at the cash register for different services: Internet, mobile communications, etc. Later on, Obuv Rossii united all of the loyalty programs operating in the retail networks of the Group into a single cumulative discount system on the basis of Arifmetika. In 2016, an eWallet service began to operate; in the summer of 2016, a prepaid Arifmetika MasterCard was issued, to which cash loans are credited.
According to the results of 2017, the number of loyalty cardholders in Obuv Rossii’ networks increased by 25% to a total of 1.95 mln people. 60% of them do repeated purchases.
The development of financial services is a worldwide trend in retail when stores do not just offer merchandise, but are transformed into universal service companies. Such trends can be seen on more advanced Russian retail markets, such as mobile retail. New services make it possible to increase traffic to the stores; they stimulate crossselling, increase customer loyalty and, as a result, improve efficiency and profitability of the business.
In 2017, Obuv Rossii launched the services of receiving online payments by instalments contracts and cash loans through the services of Sberbank PJSC, including Sberbank-online. The service started to operate throughout the network in June. In December, the share of online payments reached already almost 3%. In 2018, the Company plans further expansion of the possibilities of remote payments, including the introduction of online payment using the Arifmetika card.
Obuv Rossii’s production site is located in the Novosibirsk city and the Novosibirsk Region. Currently, Obuv Rossii produces shoes using all major shoe construction types: cement, injection moulded, combined (stitching and gluing) and high-temperature vulcanization. The Company mainly manufactures a footwear range of casual and semi-sport style. In 2016, Obuv Rossii entered also the market of working and special purpose footwear and opened a separate production line.
The manufacturing facilities of Obuv Rossii are one of the most advanced in terms of technology and equipment used in our country. The Obuv Rossii enterprise is characterized by a high degree of automation and the use of state-of-the-art high-tech equipment: computerised shoe design systems, NewLast and Orisol automated shoe cutting and tailoring systems, and high performance Desma injection moulding machines. The injection moulding machine installed at the factory is unique for Russia. It is peculiar because the material for the shoe sole is poured in the liquid form into the mould and congeals in direct contact with the leather. As a result, the sole bonds with the shoe upper at the molecular level.
In the spring of 2017, Obuv Rossii reconstructed its assembly shop and combined on one site in Berdsk the shoe assembly, which is made using the cement, combined glue and stitching method as well as the high-temperature vulcanization construction method. For this purpose, the Company transported a conveyor shoe assembly line using the cement construction method from leased premises in Novosibirsk to its own facility in the town of Berdsk. Having combined the shops, the Company optimized the technological process which will allow it to perform all works faster and with less effort. The joint assembly shop was located by the Company in a new facility acquired by Obuv Rossii in autumn 2016 (the Company expanded its production area in Berdsk 1.5 times: from 3.8 to 5.8 thous. sq. m.).
Since the spring of 2014, an automated production system has been operated in Novosibirsk to manufacture footwear of EVA (ethylene vinyl acetate polymer material). The production system makes it possible to have a complete cycle of footwear production, including moulding in press forms, lasting, etc. In 2017, Obuv Rossii significantly expanded the range of its shoes made of an ultralight EVA material and produced at the factory in Novosibirsk, launching more than 20 new models. To manufacture them, new technologies and materials were used: production of boots with EVA galoshes using the all cast technology, a combination of EVA and textile materials. The Obuv Rossii Group actively cooperates with research institutions and specialized universities for the testing and development of new materials and inventions patenting. A key partner in this activity is the Novosibirsk Institute of Technology (branch) of the Moscow State University of Design and Technology. Recent projects include the development of wearing surface of the sole and heel with antislip properties, sole material testing for wear resistance.