Page 4 - bne magazine November 2021_20211104 uzbekistan risding

4 I Companies & Markets bne November 2021
Price conscious bargain hunters head to Familia, where they can find last season's fashions of top design names at knock-down prices.
Familia leads Russia’s off-price retailers with knock-down high fashion offering
Ben Aris in Berlin
What happens to last season’s clothing that big fashion retailers can’t sell? Landfill is not the only choice for sellers who overestimated demand. Enter off-price retailers, who buy the end-of-season surplus from fashion houses and sell it at knockdown prices. The sector is booming globally, but a combination of social and economic factors make it ideally suited to the Russian market.
Off-price retailers allow fashion houses to recoup some of what would be losses by buying the surplus for low prices and selling it to a hungry public that doesn’t mind wearing last season’s clothes. In an exclusive interview with bne IntelliNews, Svetlana Mozhaeva, CEO of off-price Familia, discussed why this model is such a good fit for Russia.
Familia is Russia’s pioneer and leading off-price player. It is often described as being similar to TK Maxx in the UK or TJ Maxx in the US, offering customers the chance to find unique branded items for up to 85% below their original price.
“We’re very different from other retailers here in Russia as well as our peers on the global market,” she explained. “We were founded in 2000, when we opened our first store in Moscow. In 2006 we started moving into the regions. Now we have over 370 stores across Russia. We are the only off-price
www.bne.eu
retailer operating across Russia, and we don’t have any direct competitors on the federal level.”
Whereas the off-price share of the apparel market in the US is 10%, it is around 1% in Russia. The market in Russia is also highly fragmented, so there’s significant potential for growth, Mozhaeva explains. She considers Russia particularly suited to the off-price segment, because six years of falling real incomes have forced Russians to search for bargains, creating a niche, which the off-price sector caters for. “Here in Russia we have 145mn people, and about 75% of citizens have per capita incomes below RUB45,000 ($628) a month based on official statistics. This 75% of citizens is hence by definition value oriented.”
There are social factors behind the growing popularity of Russia’s off-price segment too. “I believe that many Russians are more brand-conscious than people in most other countries.” Mozhaeva commented. “That’s due to the history of the Soviet Union. I remember that in my childhood, we had nothing in terms of choice and variety of brands. That’s maybe why Russians now tend to be so brand-conscious.”
The result is a Russian off-price sector that is growing faster even than the global market. “We’re growing very fast.”