The corporation's monobrand network has shrunk

The South Korean corporation Samsung has suspended operations at about 20% of its branded stores throughout Russia, some of which were managed by the bankrupt retailer White Wind Digital. Samsung store closures may also be due to the growing popularity of budget smartphones and tablets.

Photo: Safron Golikov, Kommersant / buy photo

Several sources in the industry told Kommersant about the reduction of the mono-brand network of Samsung salons. Since the beginning of the year, Samsung's retail network has decreased from 265 to 230 stores, confirmed Samsung representative Yana Rozhkova. According to her, 35 stores were managed by White Wind, which cannot service Samsung retail, so the corporation was forced to suspend the operations of the stores.

As Kommersant reported on August 28, the White Wind Digital retail chain filed an application for bankruptcy with the arbitration court. The retailer owes contractors more than 7 billion rubles, while the value of its property is 2.1 billion rubles. More than 50 companies are trying to recover debts through the courts, including Apple equipment supplier Dihouse and the Russian subsidiary of the Japanese corporation Sony. A Kommersant source reported that White Wind did not pay Samsung either, but the South Koreans did not file claims against the retailer. “We are trying to resolve commercial issues at the level of partnerships,” explained Yana Rozhkova. White Wind could not be reached for comment.

In addition to White Wind, other partners have also closed Samsung stores since the beginning of this year. Thus, Inventive Retail Group, according to its CEO Tikhon Smykov, has closed up to ten stores (in total, the group manages 66 Samsung stores). The Samsung retail network in Russia has been built since 2012 and has grown “very quickly,” so mistakes were made during planning, as a result of which “some of the stores did not break even,” continues Mr. Smykov. He cites as reasons a radical change in the structure of the smartphone and tablet market, in which the average price is falling and the share of second- and third-tier manufacturers is growing, while the share of leaders, including Samsung and Apple, is declining.

Samsung is struggling with a falling share in sales of smartphones and tablets, not only in the overall market, but also in the premium segment. An employee of a large retail chain notes that sales of the flagship smartphone Samsung Galaxy S5 are approximately two times lower than sales of its predecessor, the Samsung Galaxy S4. To speed up sales of the new model, in August Samsung launched a promotional campaign to sell a smartphone along with a tablet for 31 thousand rubles, while the price of the Samsung Galaxy S5 outside the promotion is 30 thousand rubles, Kommersant’s interlocutor added. Sales of the Samsung Galaxy S5 decreased by 30%, notes a manager familiar with Samsung's business. In branded retail sales of the Samsung Galaxy S5 are higher than sales of the Samsung Galaxy S4, the corporation's press service insists. A decrease in demand for Samsung devices has been observed for about six months, agrees M.Video representative Anton Panteleev. According to him, this is due to the increased activity of brands in the budget and mid-segment, where Samsung's share is minimal and declining. “Buyers expected something new from the Samsung Galaxy S5, but the smartphone essentially remained the same; cosmetic changes could not reverse the trend,” explained Anton Panteleev.

Samsung will focus on developing branded retail as a premium channel, the company promises. For this purpose, the corporation rents salons with an area of 60-80 square meters. m on the first floors of shopping centers in cities with a population of at least 500 thousand people. “We consider 300 stores to be the optimal number. First of all, we want to develop branded retail as a premium channel,” said Yana Rozhkova. There are only about 30 shopping centers in Moscow and St. Petersburg, which are characterized by a good level of converting traffic into sales, notes General Director of Infoline Analytics Mikhail Burmistrov.

Vladislav Novy, Pavel Belavin, Maria Kolomychenko

Samsung is blown away by the "White Wind"