Gennadiy Vykhodtsev, Foxtrot Group of Companies: Retail to stay in the market
In an interview with Delo.ua, CEO to Foxtrot Group of Companies tells about current trends in the retail market and what it may see in the near future
- Foxtrot brand, which was established by you - Gennadiy Vykhodtsev (in English, his name also sounds like Gennadii Vykhodtsev) and Valerii Makovetskii, is 25 years old this year. How has your company been developing over these years?
We were the first in the electronics market, so we had to rely on our own expertise and learn via trial and error. Let me give an example of how banks worked that time. The first loan we took included the principal of 100 thousand and interests. And a requirement was to repay the interests immediately after having taken the loan. And then to repay the principal, naturally. That was the only option, we had to accept these terms.
When our business was about five years old, wholesale started bourgeoning. Valerii Makovetskii (in English, his name also sounds like Valeriy Makovetskiy) and I even in Foxtrot started to mull over our leaving the retail segment and focusing on wholesale clients. More information: That time investments in our outlet chain did not pay much for themselves. But we were aware that retail outlets offered the most effective access to end-customers and thus provided for our brand development. I think it was a sound decision to stick to the happy medium, to keep cooperating with customers - it provided background for Foxtrot brand growth. Now, 25 years later, the growth point of Foxtrot is its special, positive attitude to clients, their expectations, omni-channel service development (synergy of online and offline outlets) and offering maximum comfort to customers. A goal of Foxtrot team development is to set such high service standards that customers could say "I want to be served like in Foxtrot".
With this goal in mind, we should remember that today’s retail segment is very much different from what it used to be. A modern outlet is a show room where items are just demonstrated while products themselves can be found online, and shopping means not only purchasing a product but also getting bright positive emotions.
That is why it is important to maintain high service standards: this is where we compete for customers - the quality of consultations, delivery, servicing. The price is not the brightest competitive advantage today. It takes a couple of seconds (even not minutes) to set the same price as competitors did. But it may take months to maintain high quality and it is illogical to stop this process.
- What is about your HR management?
- Currently the Foxtrot chain has about 5,000 employees and pays taxes of more than half a billion of hryvnias a year. The brand holds leadership by the weight in the industry, as an employer, by the brand value, by reputation, despite the challenging competitive environment and economic conditions (in Ukraine, the shadow market is estimated at 60-90%, the gap between the market conditions for white sellers and grey imports distributions is growing). There is a trait I would like Foxtrot to keep featuring in the future - I would like Foxtrot to keep being an expert brand. In my view, being an expert means being a public company associated with not only Valerii Makovetskii or me but also the team. Historically, brands are not associated with personalities in the household appliances market.
If you want anyone to report on sales, the head of Foxtrot sales department can offer a great case on how we developed our sales. It is important to create expertness.
People like having expert brands in their pool of assistants. And Foxtrot is a chain that enables people to buy products quickly and easily. 163 outlets and an online marketplace visited by up to 10 million customers a month are good starting advantages for an omni-channel brand. Ukrainian customers are most demanding, at least in Europe. Besides, our customers are getting younger very quickly and the team of Foxtrot is ready to respond to this trend.
- Advanced technology and retail - do they have any connections?
Innovation is due to external factors (expansion of global seller brands to Ukraine, the growing part of shopping centers in Ukraine’s retail segment, the great amount of new shopping centers opened in the Ukrainian market) as well as specifics of customer expectations in Ukraine. The global market is facing the process of smartphonization, that is why we focus on smartphones in category management, younger customers in marketing, a variety of installment plans, express lending, facilitation of replacing old smartphone models with new ones.
New instruments are expected to make it quicker, clearer and more understandable for customers to compare products, and make pre-purchase processes more effective. It is important for customers to be enabled to quickly decide on the product characteristics, and then buy and receive the items as quickly as possible – the checkout should be very quick.
For this end, customers need personal accounts and personal wallets, and the purchasing process should be quick - customers should not be distracted when selecting and purchasing items, and receiving after-sales service.
- Big retail chains are closing in the U.S. In your opinion, will this trend expand to Ukraine?
- Naturally, the retail segment will be modified: outlets may offer a wider or smaller range of products (depending on their location), or they may be show rooms, or shop-and-shop variations. But retail is sure to stay in the market, anyway.
Customers used to come to a single outlet to do shopping but today shopping is moving to shopping centers. Shopping centers are understandable to customers, they’ve developed into the locations where people meet with their business partners, where paths cross, where families spend their weekends, and naturally, retailers should have their outlets there. That is why, undoubtedly, outlets will become fewer in Ukraine in the future - the amount of outlets is not a competitive advantage any more. Retailers will focus on customers, their expectations for high-quality shopping and impressions.