X5 Retail Group drew attention to the noncore businesses - trading company reached an agreement with a network of pharmacies «A5» establishing a joint retail pharmacy business. Partners are planning to deploy pharmacy items in shops «Pyaterochka» and «Crossing». But experts doubt that the new alliance will be able to repeat the success of WalMart pharmacy.
Last time, nearly all commercial networks demonstrate same strategy - aggressive expansion, with the investment. This has led to some big retailer enthusiastic quantitative growth was not enough money for financial payments. Private cash flow often enough only to pay off the taxes and interest on loans.
According to international rating agency Fitch Ratings, some Russian networks even resorted to selling assets to repay existing debt. According to experts, this method of attracting money recently used «Arbat Prestige», «Kopeyka», «Alpi» and pharmacies «36,6». All these companies have had this year to sell their property. Tense situation analysts linked to default on securities holding «March», which took place in early August.
Problems with a shortage of funds are concerned many combating these trying everything. Someone selects bonds, someone prefers to bank lending, private or public offering on the stock exchange. Partnership with non-players can also be seen as an attempt to attract new sources of funding.
A new alliance of trade retailer X5 Retail Group and a network of pharmacies «A5» may be an example of such a search. According to the company for 30 Jun., 2008 under its control 762 «Pyaterochki» and 229 «crossroads» - an excellent base for the spatial and quantitative development of retail pharmacies. Partners are not yet comment on their plans and then, what will be the joint facilities.
Pharmacies, renting space in near case area supermarkets are not uncommon. But its own network of walmart pharmacies at a major retailer - that the Russian market had not yet been in the Americas that might be an example for the X5.
WalMart Pharmaceutical
Product retailer could become a key player in the pharmacy business. Example - Wal-Mart, in 80 of the last century began to develop its pharmaceutical business. Through this project, today the company - a leader not only in their field, but also on the market retails OTC medicines.
West retailer does not go past the opportunity to earn, whether or non-profile business. At the beginning of his rapid development WalMart lot of experimenting: opened the road network services in supermarket to provide simple services to customers - the replacement of tires, batteries and oil. The same goal moved the company when it drew the attention of the pharmaceutical business. Unwilling to let its territory tenants and share with them part of the profits retailer in the 80's began to develop the pharmacy network, placing it in supermarket. At that time the company had 300 stores and 16 pharmacies. Yet hundreds of stores passed the area to other pharmacies. Over time, they changed their own. In the first 16 years, the company opened every year for 150 new pharmacies.
Noncore businesses - always «land unknown», thus avoiding the difficulties at the start, it was not. As writes in the book «The effect of Wal-Mart» Charles Fishman, retailer withdrew two key elements for the success of the project - the price and people. When a new pharmacy, a manager hired the best pharmacist in the town and spared no money on it. The second component - the price, with the best, and there has been a cornerstone of the philosophy of company founder Sam Walton. «Sales treat all diseases. Sales cure all ills. What motivates sales? Discount Coupons for $ 5 », - he said, and, of course, in its pharmacies set the lowest prices in town. However, despite everything, the case has progressed very slowly. Sam Walton used to quickly make a profit from their ideas and the development of pharmacy businesses worried him for a long time to unhurriedly ROI - for the first five years the project was unprofitable. But perseverance and patience will soon be rewarded. Now turn the pharmaceutical business WalMart is 11 billion dollars a year, while the number of pharmacies as of 2006 stood at 3535. Today the network is the leader in selling generic drugs. The company withdrew and a number of drugs under its own brand. Incidentally, the last few years, WalMart actively registers PL in Rospatente.
In Russia, as look like in America?
Can you repeat the successful pharmaceutical experience WalMart in Russia? Would this alliance with H5 and «A5»? The views of market participants were divided. «Such a project is carried Wim in Russia, as in any country where trade is the modern way, and successful, dynamic», - considers the Director of Public Relations Group «Vester» Rimma Remizova.
But not so optimistic are representatives from pharmacy community. According to the head of the department of analytical studies «Farmeksperta» Nicholas Bespalova, hardly a project comparable in scale with the pharmaceutical area Wal-Mart, now can be realized in Russia, if only because the networks hypermarkets such as the company Sam Walton, in our country yet. However, the expert believes that in the long term with the development of industries such probability significantly, and then in favorable conditions will be those who began to create this direction now. Director of Marketing Network pharmacies «implosion» Michael Sentsov notes that WalMart - an example of a successful strategy in the development of so-called «pharmacists supermarkets» Sales para pharmacy and OTC medicines. «In the Moscow Ring Road, such a strategy is good - he said. - But for the regions of consumption goods «for Health and Beauty» drastically reduced. There is no single network pharmacies, the leader of turnover, which would be housed in a supermarket. There will always be mass points «not supermarket» location overtakes any of indicators of business, and often traffic ». However, experts do not rule out the success of the project and in the regions. «Experience WalMart indicators - explains the general director of the group of companies rba & MallMarketing Alexei Vanchugov. - It is possible that such a scheme of cooperation, first tested in Moscow and, if successful, will be implemented in the regions ».
Nikolai Bespalov believes that comparing the experience and initiative WalMart H5 and «A5» not quite right in Because of American and Russian markets. «Pharmaceutical WalMart project focuses primarily on OTC drugs, while the network realized not brands goods whose value was significantly lower than the existing analogue on the market - says the expert. - In addition, the scope of WalMart requires substantial territorial coverage, strong logistics and other favorable for the development of pharmacy for conditions ».
The opening of pharmacies on a rental basis in supermarkets for the Russian market is not new, but because of licensing retail pharmacy area prefers not to develop independently and through partnerships with networks or individual pharmacies. «Pharmaceutical assortment of special, I do not recall success stories, when retailer has developed a retail pharmacy - observed Alexander Kuzin. - Here, suppliers and their relationships, their core competencies. Therefore, if the company intends to establish its own pharmacy network, the involvement of professional operators is the correct course ».
Another feature marks the representative of the Russian pharmacy networks. «Pharmacies have to compete with themselves on supermarket goods FMCG-group. And here are two options: either to keep higher prices or restrict the range - noted Michael Sentsov. - The project of this magnitude to realize, of course, but can not vouch for his return, not to mention the cost. Take a niche market with clearly stated criteria of profitability and the profitability of pharmacies in supermarkets - it is an achievable goal ».
Pro and contra: the benefits of the parties
The strategic partnership of food retail with federal networks and mutually is convenient for both sides. So think many market participants. Rimma Remizova notes that pharmacies, like other tenants (banks, a network of jewelry, mobile phones, accessories, payment terminals), is an excellent opportunity for the development and expansion of geography. «This option is especially attractive to networks that positioned as pharmacies« Health and Beauty », that is, selling para pharmaceutical goods and OTC medicines», - states Michael Sentsov.
Analyst UK «Finam Management» Maxim Klyagin sure that the «A5» similar joint venture - an excellent chance to seriously strengthen its position in the medium term, primarily due to the rapid growth in the number of objects in the finished squares H5. «If« A5 »even in the face of the company's stores, and that about 1 thousand locations throughout the country, it can easily enter the top ten pharmaceutical networks Russia», - said General Director Alexander Kuzin DSM group.
Maxim Klyagin observed that the risks in this case, low - Commercial H5 generate stable high consumer traffic. Retailer, in turn, gets a good opportunity with no extra cost to enter the fast-growing pharmaceutical retail market. According to Tatyana Klyuchinskoy pharmacies receive long-term development plan and numerous representations in the «Crossroads» and «Pyaterochkah».
On a good traffic is expected not only to pharmacies. «The food retailer, inviting pharmaceutical network on their own area, increase synergies and increase the flow of buyers, because pharmacy - are demanded by consumers tenant», - said Director of Public Relations Group «Vester» Rimma Remizova. For the H5 is an additional customer service. Coming back for the products, people can choose and medicine. «In the U.S., some drugs can be sold directly on the shelves of supermarkets, - tells Alexander Kuzin. - We can not, therefore, as a result of this partnership H5 receives synergistic effect - is expanding its range ».
There are other benefits. Rimma Remizova observed that for a major retailer with a partnership was the task of finding potential tenants in every region, signing treaties, to discuss conditions for cooperation, thus saving time. «Working with one tenant on many sites, it will turn out to standardize relations, record rates, negotiate more favorable terms, - said the expert. - In addition, you can arrange a single Marketing and advertising campaigns, shares of advertising brands and even impose a uniform system of the Loyal ». For pharmacies positive moment of cooperation, in the view of Michael Sentsova is still in use of resources supermarket on the organization ATL-and BTL-activity. The greatest efficiency, it will be in the regions. According to the director general of «Natur Product Retail» Alexei Batulina pharmacies in supermarkets, even in regions with low consumer index gives a good sale.
With all the positive points and there is quite a serious negative of such partnerships to pharmacy: it para pharmaceutical range will compete with the range of H5. «Margin para pharmaceutical in pharmacies and the establishment reaches 50 percent - said Alexander Kuzin. - These positions will be uncompetitive on price meant that presented to the retailer shelves. Therefore, pharmacy point will not be able to earn on its high marginalism product and will be forced to limit the range of available drugs ».
Michael Sentsov notes that the Russian statistics, more than 80 per cent of turnover pharmacies institutions accounted for medicines, of which more than 60 percent - on prescription drugs, but they «commodity risk zone» (near cases zone) pharmacies in the area of the supermarket.
Venture ...
Speaking of limitations should not forget the risks incurred by each partner. Of course pharmacy, start to work in a supermarket, can count on some traffic store, this guarantees a large number of buyers. However, Nicholas believes Bespalov, such cooperation is fraught with certain risks: «For example, pharmacy network, is likely to face higher rates for rental of commercial space, and therefore will be forced to raise the surcharge on products that limit the possibility of price competition». Director of the Department of Trade real estate company Colliers Intrenational Tatiana Klyuchinskaya notes that near cases gallery is famous for its high rates and is considered the most expensive area in a shopping complex: «But pharmacies have traditionally paid one of the lowest rates compared to other tenants. In Moscow, is approximately 2500 dollars per square meter per year ». According to UK analyst «Finam Management» Maxim Klyagina, discount to the partner organization may be 10-20 per cent of the market rate rent. However, the possible reduction of the H5 profits from the sublease, in his view, will be offset by some growth in network traffic facilities and the proceeds of sales of pharmacies.
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