Interview with Anton Titov

Face2Face
Anton Titov
Anton Titov
CEO
Obuv Rossii
Obuv Rossii

Russian market offers great opportunities

Obuv Rossii is a leading Russian footwear company, the first to be publicly traded in the country's fashion retail. It manages 863 stores under the brands of Westfalika, Peshekhod, Rossita, Emilia Estra, and Lisette, in addition to the active lifestyle brands of S-TEP, All.go and Snow Guard. CEO Anton Titov discusses the highs and lows of the Russian market with Hiral Oza.

How big is the footwear market in Russia? At what rate is it growing?

The Russian footwear market is among the biggest consumer markets in the country. In 2018, it was more than 1.37 trillion RUB (or more than $21.7 billion) in value terms and more than 320 million pairs in volume terms, according to thinktank Discovery Research Group. In 2019, the market has been growing: in the first half, it increased by 10.9 per cent in value terms and by 8.7 per cent in volume terms. In the mid-run, the market will show an upward trend which will be supported by growing disposable income and consumption. As for consumption, it is still not very high in Russia-a little bit more than two pairs per capita per annum. In this respect, we lag behind European countries and the US and we have great potential for growth in the next 3-5 years. The normal level of consumption for Russia is 3-4 pairs since we have all four seasons and a rather cold winter.
How big is the footwear market in Russia? At what rate is it growing?

You were the first company to be listed in the Russian shoe and fashion market in 2017. How has the growth been?

When we held an IPO on the Moscow Exchange in October 2017 we announced our investment programme for three years. An important element of this is the growth of our retail chain. Our aim was to double our retail network and to increase it up to 1,000 stores in three years. Since 2017, we have been implementing this strategy. Last year, we launched 192 new stores and entered 80 new cities. In the first half of this year, we rolled out 110 stores and enhanced our footprint by 92 new cities and towns. As of August 31, our retail chain comprised 884 stores in 353 cities and towns all over Russia. 

Another important element of our strategy is LFL sales increase due to improved technologies, stock diversification and development of additional services. In the first half of 2019, total like-for-like revenue of the Obuv Rossii Group rose by 7.7 per cent. Now, we sell not only footwear but also a wide range of related products, apparel and accessories. In 2018, the share of related products in retail proceeds reached 35 per cent. 

We focus on improving our customer experience through the development of omni-channel sales, introduction of new services and the development of innovative loyalty programmes. We operate five online stores, constantly modernise business processes and improve online orders processing and terms of delivery; we also cooperate with marketplaces. In 2018, our online sales grew by 10.3 per cent, and the share in retail revenue reached 13 per cent. 

One more strategic goal is to improve our value chain due to development of unique product lines, supplier chain and introduction of new IT solutions. We have our own R&D centre which deals with new materials and tests new technologies. We embed them into our in-house footwear production as well as in outsourcing. We pay much attention to our IT infrastructure, invest in new IT solutions, introduce new ones which have no counterparts in the market. We consider IT to be one of the important competitive advantages of modern retail since stores of the future are not just shelves for goods but multifunctional service points which offer a wide range of high-technological services to their customers. That is why we launch new services for customers, scale up omni-channel sales and introduce an innovative loyalty programme which is not confined to bonuses and discounts. 

What are the latest footwear market trends in Russia?

Many trends like materials, styles, etc, come from sports footwear to everyday shoes. One of the main trends is the increasing popularity of casual style footwear like sneakers, slip-ons, canvas shoes, etc. For the last several seasons, the share of high heels in women's collection has been declining, and at the same time the share of casual style, comfort flat shoes has been growing. It characterises not only spring-summer collections but also autumn-winter ones. Now it is widespread practice to combine classical suits and elegant dresses with sneakers. In mainland Europe, footwear made of synthetic leather and other materials is in high demand. We do not have the same trend in Russia since there is a rather cold winter and people still prefer footwear manufactured of natural leather and fur.

Regarding women's shoes, boots with thick, massive wedges are among the hottest trends. Heels are still popular, but they should be comfortable and attractive. So, different forms of heels are fashionable, for example, wedge heels, V-shaped, four-square, globeshaped. Ugg boots of bright colours with fur and other décor are still appealing.  Animalistic and reptilian prints are among must-haves of each collection. 

As for men's collections, sneakers are very popular, not only for summer but also winter. Cold-proof sneakers with natural and synthetic fur are included into the range of goods of Russian footwear stores. Men have started paying more attention to fashion trends. So, their footwear is not so conservative and dull as it was 10 or 15 years ago. In addition to classic black and brown colours, blue and mustard ones attract attention of male consumers. Accessories such as buckles, bright lace or straps is a common element of various men's shoe models. 

What are the latest footwear market trends in Russia?

Which price points are the most preferred by Russian consumers?

The biggest market share belongs to the low-price segment with prices up to 3500 RUB ($45-50). In 2018, it amounted to 851 billion RUB ($13.5 billion, 62 per cent of the market in value terms). The second biggest price segment is mid-price which we focus on. It accounted for 29 per cent of the market in value terms in 2018. We consider it attractive since thanks to growing disposable incomes and a change in consumer behaviour, people prefer high-quality shoes of well-known brands for affordable price more and more. Many consumers who get used to buying high-quality shoes stick to their favourite brands even during the periods of downturn.
This interview was first published in the October 2019 edition of the print magazine.
Published on: 06/11/2019

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.

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