Debenhams’ Panchenko has contributed a lot of good ideas on typical behaviour of a Russian customer
By Dmitry Kosyrev / Pic By BLOOMBERG
Last summer, my wife and I have participated in a murderous clearance sale at Debenhams, Moscow.
You know the feeling: First, your back is killing you after standing in line to a cashier (10 people before you is the minimum you may hope for).
Second, your arms get sprained from carrying things to the car. Third, you come home, access the bank account, think hard and drive back, only to find out that the stock has been cleared by the time you returned.
In our case, that were the bed sheets and the rest of linen we were after, for us and our daughters, etc.
This week, I have read a long interview by Yakov Panchenko, owner of franchises for department stores — Debenhams’ and also its Finnish competitor, Stockmann’s — explaining what happened to Debenhams in Russia that did not happen to Stockmann.
Panchenko has also contributed a lot of good ideas on typical behaviour of a Russian customer at the times of crisis and the start of a boom.
Russia’s pace of growth in general rises 1.5% annually and will maintain the pace for the next three to four years, according to the International Monetary Fund.
The growth will be between 2% and 3%, according to local economists. But that’s the economy in general, while the department stores are something entirely different. According to The Boston Consulting Group, the department stores hold 7% to 20% of retail sales in developed markets.
In Russia, their share is less than 1%. So we are talking, again according to the same source, about a potential mar- ket of approximately RM8.5 billion.
As a reminder, the Russian economy was supposed to be destroyed as the nation’s currency crumbles, and by the US and European Union sanctions imposed in 2014 for reasons nobody remembers by now and nobody cares about.
The foundation of our economy proved to be invincible, but the general growth rate dipped down in 2015 and 2016, with several sectors suddenly surging ahead due to Russian counter-sanctions.
The sales boom started last summer, as one of the signs that good times are back.
So, I thought, the closing of Debenhams was a typical case of some player quitting a sudden winning game, simply having no more chips to lay down.
Not so, according to Panchenko. It looks like the problem was in a typically Russian consumer behaviour at transitional times. When in doubt, we turn to reliability instead of glamour.
Then there is an upper-end project, also held by Panchenko — that’s Podium Market, a chain of stores filled by boutiques of very local clothes and designers’ accessories.
The Market is not doing well, but Panchenko wants to keep the project running, anticipating a comeback of the upper-middle buyer.
While the department stores and some big brands give us a very mixed picture. We have Zara, we have Marks & Spencer and others who are very much around. And we have Stockmann.
It was Stockmann that have taken the space in the shopping centre where my wife and I were killing our- selves for the suddenly price-wise acceptable bed sheets of Debenhams.
Both, to remind, are being run by the same Panchenko, who plans to open 15 more huge Stockmanns all over Russia. Price bracket is similar.
His opinion in the interview is as follows: The British wanted to decide themselves what kind of goods to sell, and now they blame the locals (Panchenko’s team) for the problems.
As a result, the winter clothes on the racks were proper for an English winter, but not for the Russians.
The main idea is that when we, the middle-class Russian buyers, come to a foreign-oriented department store these days, we pay more when we see quality, and quality (in the times of crisis and after it) is durability.
We accept and find relatively simple things that is made to last.
If anyone remembers one of my previous columns, I wrote about our “chuck-away” civilisation which makes us discard a gadget after two to three years of use.
That’s Russia’s problem too, but when it comes to bed sheets, or even cars, we cling to the old era when durability was king.
My wife chooses T-shirts by their brands. She buys them everywhere, in Asia especially, with special respect to British India (that’s very Malaysian, if you didn’t know).
After delivering our horde of bed sheets home, she brought out a navy-blue T-shirt from her wardrobe and said: “As good as new, and do you know when I bought it? Maybe 1998. It’s a real Debenhams.”
- Dmitry Kosyrev is an author of 8 novels and a book of short stories as well as a columnist for 2 Moscow publications. Orientalist by education (Moscow University), he has a special love for Malaysia.