Lee Cooper Russia

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Lee Cooper Russia

  1. 1. Lee Cooper in Russia Roseleen Bakshi 25th June 2009Steve Manners, VP Brand DevelopmentLouise French, AVP Marketing & Business DevelopmentSerena Sibbald AV P
  2. 2. Today we will cover….Hard metrics versus soft dataSelecting channels for Lee Cooper for the middlemarket.Which geographies to target? Which players to target for Lee Cooper?Which retailers to target?Timeline
  3. 3. Hard data is bad… 2007 2008 2009E 2010E GDP 8.10% 7.20% 3.50% 4.50% (UBS) GDP 8.10% 5.60% -4.50% -2% (Verdict) Consumer Expenditure 12.80% 13.10% 6% 5% (UBS) Unemployment Rate 11.90% 13.30% 14% (UBS)…but it’s not all bad … 2007 2008 2009E 2010E Interest Rate 10% 12% 13% (Verdict) Inflation Rate 9% 14% 10.90% 8% (UBS) Oil revenues make up around a quarter of Russia’s GDP. Current Oil prices levels are low Russia’s economic recovery will return as oil prices recover.
  4. 4. …but from the soft data: there is hope Do you think your country will be out of an economic recession KPI in the next 12 months? Percent saying yes. 60% 56% 50% 40% 32% 29% 30% 22% 23% 24% 24% 22% 19% 20% 18% 13% 11% 10% 0% France UK Brazil US Canada Germany 53 Country Italy Spain Russia China India Average Top actions Consumers are taking to save1 Very Strong Growth: >= +5%2 Growth: between +1 and plus 4%3 Neutral: between -1 and +1%4 Negative: between -1% and -4%5 Very Negative: <= -4%
  5. 5. Reasons for the Crisis in Russia: Oversupplies of imported Garments during the Boom Phase from 2002 till 2007Management Defaults hidden by the Boom Phase: Only 40 % of independent clothing retailers monitor and evaluate through- selling results during and after the end of retail seasons budget- and portfolio planning still based on emotional rather than rational indicators (vertical against horizontal portfolio planning) Calculation of retail prices, based on“commonly practiced” mark-ups of in between 2,8 and 3,8 and not by full cost assessments according to western business administration standards display of merchandise characterised by “more is better” rather than by “less is more” no awareness for professional visual merchandising and window decoration shop managers not capable to teach sales personnel in service orientation towards consumer clients
  6. 6. Clothing forecasts have been adjusted downwards 70 60,5 (+5%) in bn 57,6 (+10%) US $ - 60 52,3 (+15%) 45,5 (+20%) 50 37,9* (+26%) 1/3 40 30,0 (+33%) 22,7 (+28%) 37,9 40,0 30 17,8 (+45 %) 35,1 30,3 31,9 20 12,3 (+41%) 8,7 10 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 …but on a relative basis still look good… Country Per capita consumption of clothing $US 2007 2011 Russia 267 426 Germany 460 424* Source: ITMM GmbH, Stuttgart
  7. 7. Lee Cooper can benefit in present crisisCost of lease for retail space at Shopping Malls and TradeCentres down by 30-50 % against Spring 2008.Cost of building materials, shop construction and furnishingsdepreciating by similar rates.Salaries and wages put on freeze for 2009 or under negotiationat cuts of 25 %.Availability of skilled human resources surging at lower salaries.
  8. 8. Today we will cover….Hard metrics versus soft dataSelecting channels for Lee Cooper for the middlemarketWhich geographies to target?Which players to target for Lee Cooper?Which retailers to target?Timeline
  9. 9. Projection on Market Shares of main Clothing Retail Categories in Russia, 2008 YES NO YES NO
  10. 10. Which channels do the middle classes prefer?Russia’s middle class consumers often frequent modern shopping centers and boutiques: more value focused consumers usually prefer hypermarkets out-of-town and expanding fast fashion players like Gap, H&M and Inditex. A multitude of street stalls and markets also survive as they are often the cheapest in the clothing sector. 3,000 such markets are active in Russia today, but their number and share of total clothing sales is diminishing. Source: Verdict Research
  11. 11. Today we will cover….Hard metrics versus soft dataSelecting channels for Lee Cooper for the middlemarketWhich geographies to target? Which players to target for Lee Cooper?Which retailers to target?Timeline
  12. 12. Seven large Russian Federal Districts to be critically observed Northwestern Region Far East Moscow Central Region Ural Volga Siberia Northern Caucasus Source:
  13. 13. Scoring Regions in regard to theViability of Fashion Retail Market 3.25 Northwestern Region Far East Moscow 3.8 3.38 Central Region Ural Volga Siberia 4.14 4.0Northern 4.0Caucasus 3.29 4.0Footnote: 1= very good viability, 6 = very bad viability Source: UBS
  14. 14. Regional Retail Market AnalysisYESCentral Region & the Urals Far East Federalare two Federal Districts District has thewith income per capita lowest share ofthan Russia’s average of retail sales (4%) NO$580. in Russia. Northwestern Region Far East Moscow Central Region Ural Volga Siberia Northern CaucasusThe most dynamic developmentof retail sales in 2008 wasdemonstrated by the South, Urals& Volga Districts 34%, 33% and 32%y-o-y , respectively YES
  15. 15. Today we will cover…Hard metrics versus soft dataSelecting channels for Lee Cooper for themiddle marketWhich geographies to target? Which players to target for Lee Cooper?Which retailers to target?Timeline
  16. 16. Criteria of Players choice
  17. 17. VF CORPORATION www.vfc.com VF Corporation makes branded apparel including Jeans wear, intimate apparel, sportswear, outdoor products and workwear.PORTFOLIO Lee, Wrangler, Riders, Rustler, Vanity Fair, Vassarette, Bestform, Lily of France, Nautica, John Varvatos, JanSport, Eastpak, The North Face, Vans, Napapijri, Kipling, Lee Sport and Red Kap.Why? YES Key supplier of related denim brands in Russia
  18. 18. FIBA HOLDING www.fibaholding.com Founded in 1987 Fiba Group controls an investment portfolio of high- value brand names in both financial and non-financial lines of business. It has 63 companies in 15 countries with $20 billion total assert & $4 billion total equity. Groups international financial investments have increased by 35% in 2008.PORTFOLIO Franchising rights of Marks & Spencer Russia in 2005 with 14 stores and 512 employees in Russia. Gap Russia it operates with 3 stores in 2 different locations. Banana Republic stores are expected to open for the 2009 holiday season in Russia.Why? YES Key supplier in our target department stores & our target independent stores
  19. 19. Jamil Co. Group Holding company with international management and international business standards. JamilCo. has been active on the Russian retail market for luxury and casual clothing and accessories of major international brands since 1993.PORTFOLIO JamilCo Group has represented the Levi’s® brand since 1988, opening the first Levi’s® store Moscow in 1993. Represent Coach brand in Russia.Why? YES Key supplier (long established) denim supplier in our target regions
  20. 20. PPE Group – Mail order Founded in 1999, the PPE Group is today Russia’s leading mail ordercompany, operating across the entire country. The Otto Group owns 70 percent of the cooperative venture and the PPE Group 30 percent.PORTFOLIOMail order OTTO is aimed at women between the ages of 24 and 45 and families. Bonprix is for the particularly price-conscious customer. Witt International is aimed at an older and established target group, who are looking primarily for quality in their purchases and prefer a classic dress style.E-commerce & Logistics The second company, “Business Service”, is building the required warehouse and logistics center in the town of Tver, along with a call centre for order taking and customer service.Why? YES Market leader in mail order / internet in Russia
  21. 21. Today we will cover….Hard metrics versus soft dataSelecting channels for LeeCooper for the middlemarketWhich geographies to target? Which players to target for Lee Cooper?Which retailers to target?Timeline
  22. 22. Choosing Retailers For Lee Cooper….
  23. 23. Which cities?Expansion of Trade Centres and Shopping Malls as Key Driving Factors for Allocation of new Clothing Retail Stores in the Russian Region over the Period 2002-2008 City Population Estimated in 1.000 Number of Competitors Map of Russian subdivisions (2006) Retail Stores by GDP (GRP) per capita. of Clothing located at commercial centres LEVIS (2008) STORES Moscow 10406 10000 26 Volgograd 991 620 4 Ekaterinburg 1,308 1,400 3 Ufa 1,030 760 3 St. Petersburg 4,581 4,560 2 Omsk 1,139 480 2 Samara 1,143 760 2 Kazan 1,113 640 1 Chelyabinsk 1,093 700 1 Perm 993 600 Novosibirsk 1,387 760 Rostov-on-Don 1,055 520 Krasnojarsk 921 440 >$10000 Nishnij-Novogorod 1,284 970 >$5000 Sub Total 15,763 11,620 44 >$3000 Tumen 542 400 >$2000 Kirov 469 360 >$638.82 Saratov 850 320 Kaliningrad 424 360 Krasnodar 710 300 Pensa 510 300 Magnitogorsk 413 240 Source: Russian Federal Service of State Statistics Tula 509 200 of the Gross Regional Product (GRP, end of 2006), Togliatti 705 200 and population (1 January 2007). Subtotal 5,132 2,680 Total 20,895 14,300 Source: USB
  24. 24. …and which retailers? Expansion of Trade Centres and Shopping Malls as Key Driving Factors for Allocation of new Clothing Retail Stores in the Russian Region over the Period 2002-2008INTERNET/CATALOGUE INDEPENDENT MULTI/MONO BRANDS DEPARTMENT STORES JEAN 5KARMANOV STOCKMANN TOPSHOP QUELLE RUSSIA CITY SMPHONY Moscow 16 1 CITY St. Petersburg 2 1 Moscow 6 5 Number ofDenim Brands Ekaterinburg 2 1 St. Petersburg 1 3 12 Samara 1 Krasnodar 2Likely Size of Ufa 2 1 Nishnij-Novogorod 4 Nishnij-Novogorod Opportunity for Lee Kazan 1 Ekaterinburg Cooper HIGH Chelyabinsk 1 1 Ufa Financial Volgograd Total 7 0 Stability STABLEEstablished in Perm 1 1 Priority 2 1Russia since 1 2,005 Novosibirsk Number of DenimSALES (2007) 115BNCUSTOMERS 30M Rostov-on-Don 2 1 Brands 10 9 GROWTH 40% IN 2008 1 Likely Size of Omsk SKUs. offering 100,000 Krasnojarsk 1 Opportunity for Lee 600-page Cooper HIGH HIGH OTHER 10 PAGES catalogue TOTAL 43 9 Financial Stability STABLE Priority 1 2 Established in Russia since 1,989 2,006 Number of Denim Brands 10 25 Likely Size of Opportunity for SALES 250 M EURO Lee Cooper HIGH HIGH Financial Stability NA NA Established in Russia since NA NA Source: SALES NA NA
  25. 25. …and which retailers? Expansion of Trade Centres and Shopping Malls as Key Driving Factors for Allocation of new Clothing Retail Stores in the Russian Region over the Period 2002-2008INTERNET/CATALOGUE INDEPENDENT MULTI/MONO BRANDS DEPARTMENT STORES YES YES YES May be YES JEAN 5KARMANOV STOCKMANN TOPSHOP QUELLE RUSSIA CITY SMPHONY Moscow 16 1 CITY St. Petersburg 2 1 Moscow 6 5 Number ofDenim Brands Ekaterinburg 2 1 St. Petersburg 1 3 12 Samara 1 Krasnodar 2Likely Size of Ufa 2 1 Nishnij-Novogorod 4 Nishnij-Novogorod Opportunity for Lee Kazan 1 Ekaterinburg Cooper HIGH Chelyabinsk 1 1 Ufa Financial Volgograd Total 7 0 Stability STABLEEstablished in Perm 1 1 Priority 2 1Russia since 1 2,005 Novosibirsk Number of DenimSALES (2007) 115BNCUSTOMERS 30M Rostov-on-Don 2 1 Brands 10 9 GROWTH 40% IN 2008 1 Likely Size of Omsk SKUs. offering 100,000 Krasnojarsk 1 Opportunity for Lee 600-page Cooper HIGH HIGH OTHER 10 PAGES catalogue TOTAL 43 9 Financial Stability STABLE Priority 1 2 Established in Russia since 1,989 2,006 Number of Denim Brands 10 25 Likely Size of Opportunity for SALES 250 M EURO Lee Cooper HIGH HIGH Financial Stability NA NA Established in Russia since NA NA Source: SALES NA NA
  26. 26. In Independent Multi-brand 5KARMANOV,JS casual, Fashion Mart is good channel…..
  27. 27. Today we will cover….Hard metrics versus soft dataSelecting channels for LeeCooper for the middlemarketWhich players to target for Lee Cooper?Which geographies to target?Which retailers to target?Timeline
  28. 28. Retail in Russia Timeline: past, present and future 2000-2012 Source: Verdict Research
  29. 29. Lee Cooper Timeline in Russia A/W 2010Initial Meeting w/ Potential Brand Knowledge &Initial Meeting w/ Potential Brand Knowledge & Review marketing & sales Review marketing & salesLicenseesLicensees Training sessions Training sessions strategy AW2010 strategy AW2010 Finalization of Licensee Finalization of Licensee Present Product Present Product Weekly & Season Weekly & Season A/W 2010 A/W 2010 sales analysis sales analysis Deal negotiations Deal negotiations Support w/ Support w/ & sign off & sign off Feedback Feedback marketing marketing Loop Loop programmes programmes Initial meetings Initial meetings on on BUSINESS PLAN BUSINESS PLAN Launch Launch Business Business plan plan approval approval Dec ‘09 Dec ‘09 Feb ‘10 Feb ‘10 Aug ‘10 Aug ‘10
  30. 30. Lee Cooper Timeline in Russia

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