Page 28 - bne_Magazine_April_2018

28 I Cover story bne April 2018
before we became a public company. If you are serious about creating a serious company then you just need to do it,” says Tynkovan, who is widely seen as a pioneer of Russian retail, setting trends that have become industry standards.
M.Video was also the first to embrace unsecured consumer credits to boost sales. In the early noughties the new kid on the financial block was Rustam Tariko’s Russky Standart (aka Russian Standard), an upstart bank that offered unsecured credit to customers on nothing other than a copy of their passport and the promise to pay the money back.
At the time these highly risky loans
were considered a flash in the pan, but the volumes of credit went ballistic and super-charged the retail consumption was the fuel for Russia’s economic boom.
Alexander Tynkovan
President, CEO, Co-Founder, M.Video Pjsc
“We are well trained by this volatile environment and there has been a very high level of competition
the whole time”
“We were the first to have credit brokers in store. Russky Standart's first con- sumer credit was made to a consumer in an M.Video store,” says Tynkovan, who adds that credit increased the store’s sales by 20-30% almost overnight until at its peak a third of M.Video’s sales were
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being made on the never-never. The economic crisis has reduced the share of credit in sales somewhat, but even today 19% of sales are made on credit.
The Omni store
Now the business is changing again thanks to the explosion of e-commerce which is already seriously disrupting traditional retail and the role of stores. M.Video launched its website in 2000 but it has only been in the last eight years that the Russian consumer has really embraced online shopping and Tynkovan is meeting the challenge with his “omni-store” concept.
“When Russians started to shop online in 2010-2011 it totally changed the retail landscape. We had to see it either as an opportunity or as a threat. We chose to see it as an opportunity,” says Tynkovan, who has built up the online business
on three pillars: an “endless shelf,”
price competitiveness and offering
a superior service.
The assortment of goods a store offers is obviously a core part of the business, but the advantage of online shopping is you can offer an unlimited number of goods.
“The store space footprint doesn't matter now. It makes no difference if your shop is 5,000 square meters, 1,200 or even 800 at a good location. The customer can come in and see the display samples, but if they want a different colour TV or a fridge with some extra functions they can simply order it online and it will be delivered. It leads to much better stock management and makes it easier to sell,” says Tynkovan.
Price is important, and with the strength of M.Video’s brand in theory the com- pany can command a premium. How- ever, Tynkovan insists on offering the lowest prices and backs the promise with a price guarantee: even if the shopper buys a TV on Friday and M.Video cuts the cost of the same set by 20% the following Monday, M.Video will refund the difference.
“A tiny number of people actually make use of this service, but still it gives the
consumer confidence in our stores and that is important,” says Tynkovan.
By 2005, Tynkovan says he had learned all he could from his international peers. He believes that now M.Video has overtaken them and is the leading and most innovative retail business
in Europe.
“We are ahead and more advanced than the other companies in our sector in the rest of Europe. We are still exchanging knowledge with our peers but we have been able to be more innovative,” says Tynkovan. “For example, we never allowed there to be a difference between online and offline prices, while other companies took some time to integrate these two.”
It's the leapfrog effect at work, where Russia has jumped over several stages of development and gone directly to state-of-the-art solutions. Business leaders like Tynkovan have embraced new technologies from the very start, and M.Video has been especially progressive. For example, when Russky Standart started adding significantly to the company’s bottom line, Tynkovan organised a credit broker desk in all his stores, which cooperates with 11 banks, so customers had to fill in only one form and then could choose from the best deal on offer.
The next stage is to create “one retail” which will be the full digitisation of the sales experience, says Tynkovan. When a customer enters the store they will be “checked in” by the sales staff using smart phones. In this way all their decisions and preferences can be recorded and followed up on. It will allow the store to identify its “hot” and “cold” areas and products that will improve the layout and
stock management. Customers can buy a product simply “kissing” their phone with that of a member of staff, transferring payment and delivery details from one device to the other as well as connecting to inventory and credit control at the company.
“All retail is headed to the mobile phone,” says Tynkovan.