The founder of the Izbenka and VkusVill chains, Andrei Krivenko, accustomed Muscovites to products without preservatives and chemicals. Now he opens stores every day and implements advanced software so as not to lose control over the company

Founder of the Izbenka and VkusVill chains Andrey Krivenko (Photo: Yuri Chichkov for RBC)

“We don’t have a crisis at all” - Andrei Krivenko repeats this phrase several times during a meeting with RBC. Two years ago he had a dozen VkusVill stores and about 300 small Izbenka outlets. Now there are already 130 “VkusVills” in Moscow and the region, five new ones open every week. Both chains are positioned as health food stores.

“Izbenka” are kiosks and shops with an area of 15–20 square meters. m, most of the assortment (there are about 70 items in total) are dairy products. "VkusVill" - stores with an area of 60–120 sq. m. There are already 700–800 types of goods: in addition to dairy products, there is almost everything that makes up the daily food basket - meat, fish, vegetables, fruits, juices, bread, sweets, tea and coffee. Recently household chemicals and cosmetics have appeared.

The main feature of these stores is that 99% of the products are sold under the VkusVill brand and, according to the company, are produced without preservatives, flavor enhancers, phosphates, flavors and chemical dyes. From SPARK-Interfax data it follows that the total revenue of the companies managing Izbenka and VkusVill in 2015 amounted to 4.9 billion rubles. Krivenko refused to discuss financial results.

“And the traffic (the number of buyers. - RBC) is growing, and the revenue per meter is growing - everything is growing,” Krivenko smiles. “VkusVill” managed to play on “all the trends that exist,” its founder believes: “It seems that a generation has matured that thinks about healthy eating, that they should eat Russian products and that they should not spend a lot of time on Auchan” , because time really [is] precious.”

“They told me: you’re not suitable”

Most likely, this business would never have been born if not for the previous crisis. In December 2008, Andrei Krivenko resigned from his position as financial director of the Agama group, a producer of fish and seafood. It was a conflictual and ambitious dismissal, he recalls: “For many years I was the first person after the owners. I wanted to grow and directly said that I was no longer interested in being a financial director, I wanted to be a general manager. They told me: no, you don’t fit.”

Andrey Kryvenko's business in numbers

7 million units of goods are sold by the Izbenka and VkusVill chains per week

3 thousand calls are received per week to the Izbenki and VkusVilla hotlines

2 thousand times a week, customers return products they don’t like

15–20 sq. m — area of the “Izbenka” retail outlet

70 product items make up the assortment of the Izbenka retail outlet

60–120 sq. m —area of the VkusVill store

700–800 product items make up the assortment of the VkusVill store

Krivenko describes his lifestyle after his dismissal as follows: “I sat all day long, read books and waited.” But at the beginning of 2009, no one was interested in his resume for the position of general director. He had two children, a mortgage with a monthly payment of 100 thousand rubles. and about 1 million rubles. savings. “During the process, I realized that something had to be done. What was I supposed to do? - he says.

Krivenko had some experience in his own business - a small construction company, while still studying at the institute. “At some point I realized that I had turned into a foreman and that I was completely uninterested in this,” recalls the businessman. Then he dropped everything and got a hired job as an IT analyst. Then he moved into finance and in 2005 found himself in the position of financial director at Agama.

Agama cooperates with most federal chains, and Krivenko has a good understanding of how the largest retailers work. “The main problem is that everyone who sells goods to federal networks is forced to think about how to please the network, but not the buyer. Nobody thinks about the buyer at all; he occupies the last place in the chain,” he is sure.

Krivenko began to look for a problem that he could make money from solving. And I discovered that large chain stores have almost no fresh dairy products with a short shelf life. I borrowed a car from my wife and hired a technologist - together they began to travel around the Moscow region in search of suppliers who produce products without the use of milk powder, milk fat substitutes and chemicals.

The first person we managed to reach an agreement with was the small producer SAPK-Moloko from the Kaluga region. The assortment of the first “Izbenka”, which opened in Moscow at the Trinity Market in the Strogino district, consisted of six names of his goods. The premises were rented; opening the first outlet in 2009 cost 50 thousand rubles. A year later, there were already 15 “Izbenok” in Moscow.

In 2011, the manager of Izbenka, LLC Lug da Pole, received revenue of 177 million rubles. Over the course of a year, 20 thousand families constantly shopped at 30 retail outlets. Krivenko decided it was time to expand. In 2012, four VkusVill stores opened almost simultaneously.

No need for exclusivity

To the dairy products from Izbenka suppliers, VkusVille has added meat and meat delicacies (on the shelves in the chain’s stores there are signs explaining why natural meat products have a strange gray color instead of the usual pink), fruits and vegetables (compared to selected identical imported ones they happen to look unsightly), fish, baby food, juices, water, bread and other products.

A year later, four more were opened, but “eight stores were noticeably sinking,” says Krivenko. We decided not to open new stores until the existing ones become effective. The correct format, assortment and list of suppliers were selected only in 2013.

“Two years ago I made ice cream in an ice frying pan in a 30-meter apartment, now I have 15 tons a month and I can’t keep up with the demand. Do you think I’m happy?” - this is how Alexey Korolev, founder and general director of the Icecake-ECO company, which supplies ice cream to this chain, answers the question about relations with VkusVill. From the very beginning, he created his business with Krivenko’s stores in mind. The Korolev family became addicted to Izbenka products almost from the opening of this chain. After learning that the chain was looking for suppliers, he decided to get into the ice cream business. “VkusVill” accounts for about 70% of “Icecake-ECO” sales: “Initially we discussed 4 tons per month, but immediately reached 10 tons, and now we are already selling 15 tons.”

Settlements with suppliers

A 14-day deferred payment for his company at VkusVille, says Alexey Korolev, founder and general director of the Icecake-ECO company (the shelf life of his ice cream is four months). The average delay, according to Krivenko, is even shorter - about seven days. The Trade Law obliges chains to pay suppliers of goods with a shelf life of less than 10 days no later than 10 business days, with a shelf life of up to 30 days no later than 30 calendar days, and for other goods no later than 45 calendar days from the date of delivery.

But usually VkusVill does not require exclusivity from suppliers; on the contrary, it tries to limit work with such manufacturers, says Krivenko: “He begins to depend on us, and in any [controversial] situation he begins to cry: they say, you are ruining our business.” He calls the optimal situation when the supplier's turnover with his networks accounts for no more than 20% of sales. If the “ceiling” is reached, the company tries not to increase purchases from this supplier.

On the VkusVilla website there is a banner: “Constantly! We are looking for producers of natural products.” Now the network has about 200 suppliers, by the end of the year the company expects to increase their number to 300. Selecting manufacturers whose products can be put on the shelf is the job of technologists; there are 40 of them in the company. The company controls suppliers in several stages: first, it checks raw materials and production, then the finished product is randomly checked upon delivery to the distribution center, and finally, samples are submitted monthly to an independent laboratory. There are no fines for quality violations, Krivenko assures: if the violations are serious, the company simply breaks off relations.

One brand store

Almost 100% of the products at VkusVill are sold under the chain’s brand, and the chain uses this argument in price negotiations with suppliers. “For us, the purchase price is the production cost plus the manufacturer’s normal earnings,” explains Krivenko. “We, in fact, have outsourced their commercial services and tell the supplier: you will be alone on the shelf, customers will see only your product, we simply don’t have anything else like it.”

Krivenko explains the model using milk as an example. In 2015, the chain fixed the shelf price for it at 49 rubles. per liter package with a fat content of 3.2%. Similar milk from VkusVilla suppliers under the supplier’s own brand in other chains can cost about 70 rubles on the shelf. At the same time, the entry price for such a network can be just about 49 rubles, says the businessman.

The average markup for the entire assortment at VkusVill is 55–56%, and this is comparable to Magnit, where it is 50%, notes Krivenko. “In terms of markup, we are already like a federal network. Yes, our products seem more expensive, but 70% of our products are perishable,” he smiles. According to calculations by Raiffeisenbank analyst Natalya Kolupaeva, the average markup for Magnit is about 40% (across all formats of the company and the entire range).

70% of perishable products are many times more than any major chain. Thus, in the Azbuka Vkusa supermarkets, perishable products make up 15% of the assortment, and the entire fresh category (vegetables, fruits, dairy and meat products with a short shelf life) accounts for about 40% of the turnover. In Victoria supermarkets, the fresh category accounts for 22%. At Perekrestok, dairy products with a short shelf life make up 7% of the assortment.

Krivenko does not want to depend on one supplier: each product must be supplied by at least two manufacturers, and they are “assigned” to stores according to a geographical principle. For example, the chain is supplied with milk by four or five companies, and with sour cream by seven, that is, in the same VkusVill package you can buy milk from different producers in different parts of Moscow. Having multiple suppliers for each product is also one way to control the price from suppliers. It will be difficult for new suppliers to enter the network with similar goods - precisely because of the low price threshold, admits Krivenko.

Judging by the labels, among VkusVilla’s suppliers there are many individual entrepreneurs. Thus, eggs are supplied by the individual entrepreneur “Vlasov” from Kasimov, cucumbers are supplied by the peasant farm “Ogurechnik” from the Moscow region, cakes and rolls are supplied by the individual entrepreneur “Stepanova” from Korolev, near Moscow. Many consumers believe that Krivenko’s networks sell farm products. In fact, this is not so: the farmer is unlikely to be able to provide the volumes required by the networks; the main suppliers are small industrial producers located in the Moscow and neighboring regions.

Among the suppliers there are also relatively large industrial manufacturers, many of which are known for their own brands: coffee is supplied by one of the oldest roasters in the capital - Montana Coffee, meat delicacies - the Remit plant near Moscow, chicken meat - the Yaroslavl Broiler factory, products from goat milk - Sernur cheese factory. Of the 200 manufacturers that VkusVill works with, 20–30 are represented in federal chains, says Krivenko.

The fact that at VkusVille his coffee is sold under someone else’s name does not bother Alexander Malchik, the president of the Montana Coffee company, which works with Perekrestok, Metro Cash & Carry and even Stockmann. “It’s important for us to have a client who is responsible for their product, values quality and has the same requirements as we do,” he says. The network really does not take bonuses or other payments from suppliers, confirms Malchik. But VkusVill bargains no less than its competitors about favorable prices, he adds: “In this sense, VkusVill [is] no different from them.”

Checks and competitors

The revenue of VkusVills, which have been operating for more than a year, grew by an average of 40% over the past year, says Krivenko, while the average bill remained almost at the same level - about 500 rubles. New stores show maximum growth during the first year, he continues, so in stores that have been operating for two years, there is no longer 40% growth: over the past year, such stores added only 20% of revenue.

For large chains, the figures are an order of magnitude lower: in “Magnit” convenience stores that have been operating for more than a year, 0.79% fewer purchases were made in 2015, the average check increased by 8.14%, “Dixie” “convenience stores” lost 4% of customers. The dynamics are similar in supermarkets: traffic in “Perekrestok” decreased by 2.8% with an increase in the average check by 3.7%, in “Victoria” - by 2.6% with a check increase of 6.2%.

Krivenko says that he does not see competition from chains that position themselves as sellers of farm, organic and natural products. He calls large chains his competitors: if every existing Pyaterochka or Dixie has a department with fresh dairy products, “that’s it, development will end immediately,” admits the founder of VkusVilla.

Where is the business

At the operational level, the businesses of Izbenki and VkusVilla, according to a company representative, are not separated. The networks, judging by SPARK-Interfax data, are managed by two companies, the sole owner of which is Andrei Krivenko - Meadow and Field and VkusVill.

LLC "Meadow and Field"

Revenue*

RUB 3.59 billion

Net profit

RUB 446 million

LLC "VkusVill"

Revenue

RUB 1.33 billion

Net loss

41 million rub.

*Hereinafter data for 2014.

Source: SPARK-Interfax

Farm products are gaining popularity among Moscow buyers, confirms Andrei Golubkov, a representative of ABC of Taste. But a representative of X5 says that at Perekrestok there are only seasonal dynamics, and an employee of another company that manages a supermarket chain speaks of a decrease in demand.

Specialized players know how to effectively attract customers and “get them hooked” on their products, says Golubkov. But, in his opinion, the limited assortment may be an obstacle for the general consumer in such stores.

On average, “VkusVille” has an area of 100 sq. m total of 700–800 items of goods. For comparison: for example, in “convenience stores” “Dixie” there are 291 sq. m, the assortment is 2000–3500 types of goods, and in Perekrestok supermarkets there are 13,500 items per 400 sq. m. m of retail space. By evening, the shelves with dairy products, meat or fruits at VkusVille are often half empty: in other chains this would be force majeure. Krivenko cites the example of the main German discounter chain Aldi, whose experience has become very fashionable among Russian retailers in recent years: “They have an area of 1 thousand square meters. m - 600 product items, and we already have more.” There should be just enough goods in the store so that there is enough for customers, explains Krivenko. “A small number of SKUs (articles. - RBC ) allows you to effectively work with the manufacturer, select the best products, truly control and track them. When you have an assortment of 10 thousand, you don’t even understand what you’re selling,” he says.

80% of VkusVilla’s customers are those who walk home from the metro and come in to buy fresh products “for today and tomorrow.” Such a buyer visits the store on average three times a week, so the purchases are not too large: the average check remains at 500 rubles. two years already. But the average price in the network has hardly increased - due to margin management and optimization of the entire cost structure, Krivenko rejoices.

The businessman does not name VkusVilla’s revenue per square meter, saying only that by this indicator the chain is ahead of the Azbuka Vkusa supermarkets (by this indicator the chain is considered a leader among large players in food retail). Before the devaluation of the ruble, “Azbuka” gained revenue from 1 sq. m $25 thousand (795 thousand rubles at the rate of 31.8 rubles), says Golubkov (after the devaluation, the figure decreased, he notes, without naming a new one).

Now opening one store costs VkusVill 4 million rubles. taking into account the deposit for renting the premises and excluding inventory balances, and the first stores cost 10 million rubles each, recalls Krivenko. In two years, the company has become, in his words, “great specialists” in the selection of equipment manufacturers, construction work, etc. “At first we bought cash registers at twice the price. They foolishly took branded American devices. And then they doubled in price. Now we buy Russian ones at half the price. And so on in almost all respects,” he says. Opening an “Izbenka”, according to him, costs 150–200 thousand rubles, and this figure is stable. The largest Russian retailer Magnit spends at least 4.5 million rubles on opening a new “convenience store” in rented premises. (10–19 thousand rubles per 1 sq. m of total area).

“It’s written that it’s me who opens stores, looking for goods, manufacturers. In general, everything is done by the team, I haven’t even been to 90% of “VkusVills” and 99% of “Izbenok”, I haven’t tried 50% of the products, I don’t know 90% of the manufacturers,” admits Andrey Krivenko. (Photo: Yuri Chichkov for RBC)

“So far it’s going well.”

Now “VkusVill” opens a new store every working day. “It’s difficult, but it’s possible. Everyone is tired. But in the fall we want to try to open 40 a month,” says Krivenko. For comparison: the largest Russian retailer Magnit opened 2,378 stores in 2015, that is, 9.6 stores per working day. At the same time, VkusVill is hardly increasing its office staff. “We need to optimize work, find more effective ways, work with our heads,” explains the owner. “Instead of taking on an extra employee and paying everyone a salary, we have the opposite approach: the old people remain, but they begin to receive more bonuses.”

To maintain income, each next year the “knowledge worker” in Krivenko’s companies must do about 30% more work than in the past. When asked how quickly with this approach employees reach the “ceiling” at which they physically cannot work any more, the businessman snaps: “mental work has no limit.”

At the beginning of each year, an employee must find a person in the company to whom he will make a specific promise for the coming year. “For example, the accounting department promises that next year they will make all payments on time. Who needs payments on time? Firstly, the development department to pay rent and open new stores. Secondly, quality management to pay technologists. This means that in order to evaluate the work of the accounting department, we ask the development department and quality management. If they say that the accounting department did a bad job, guys, there will be no bonuses,” explains Krivenko’s motivation system.

Purely financial motivation does not always work, and it is logical that during a crisis, employers are trying to find new opportunities to increase employee productivity at minimal cost, says Victoria Filippova, partner at the headhunting company Cornerstone. “The example of Izbenka and VkusVilla proves that personal responsibility always works better. If you are personally responsible to the owner or even to your colleague and clearly understand what the whole team and you personally will receive in the end for your contribution, such a scheme is workable,” she says.

Krivenko does not know how many more stores he will open; he says that he has no plan. “I compare it to sports. You go up to the bar, at first you lift it well, by the fifth rep you already understand whether you can lift another five or not. We got to [the bar] and it’s going well so far. But we don’t yet understand whether saturation will occur in six months, and we don’t even understand what saturation is,” argues Krivenko.

Krivenko’s main principles of business development remain unchanged: do not take out loans for development and do not buy real estate - all premises are leased. “They told us we were crazy. I was invited to Skolkovo, I came and said: “Guys, remember the most important rule - no loans.” Later they told me: who were they supposed to invite, some kind of suckers,” Krivenko smiles.

Loyalty and control

90% of purchases at VkusVill are made using loyalty cards: having made a purchase for a certain amount, the buyer can choose a product that will receive a 20% discount for a certain period of time. This costs the network 2.5% of revenue. Among public retailers, Lenta discloses the share of purchases using loyalty cards: in the fourth quarter of 2015, 92% were made (8.6 million receipts), says a company representative. At the same time, Lenta historically has some of the most loyal customers in all Russian retail.

On the one hand, 2.5% of the revenue that VkusVill spends on the loyalty program is quite a lot, says Natalya Kolupaeva from Raiffeisenbank. Large chains lose approximately the same amount due to theft, expired perishable products, etc. Quite a lot, agrees Krivenko. “But advertising on television costs 10% of revenue. But our program, in our opinion, works an order of magnitude better and costs four times less,” he retorts. On the other hand, the loyalty program provides a stable flow of customers, adds Kolupaeva: “An alternative way is investing in price, promotion and other marketing tools, which are also not free.”

Buyers of Andrey Krivenko

50–60 food products make up the average consumer's regular shopping basket

500 rub. is the average bill at the VkusVill store

3 times a week On average, a customer visits this store

Krivenko is proud of the loyalty program: it is implemented using software that no one else in Russia has, he believes. IT as a tool for increasing efficiency is generally one of the favorite topics of businessmen.

Six months ago, the company, for example, introduced a system that made it possible to fully control the operation of all stores via mobile phones. “We give us a task from the office: take a photo of, for example, such and such a counter. Or, for example, if something is broken in the store: there is no need to explain anything, I took a photo and they saw it in the center. All photos flow into a single system. Through the same system we control all returns, write-offs, and quality nuances. Now we are connecting drivers to it to control unloading,” says Krivenko. The system cost, in his words, “pennies”: phones were bought from a corporate operator for 1 ruble, the software was written as an add-on for the 1C system. The savings are millions of rubles a month, says the businessman: “Merchandisers don’t go anywhere, they don’t spend gasoline.”

Software with similar functions has been on the market for several years; some large retailers partially use it, says Dmitry Netkach, managing partner of Watcom Shop Mechanics. But he has not heard of small retailers implementing such programs. Russian networks lag behind foreign ones in terms of technology, Netkach believes: integration of data between cash registers, visitor accounting systems and loyalty systems is one of the main international trends.

“I’m making all this up because we can’t hire new people - it immediately affects the cost: if we need to meet the 55% markup, we need to do something,” explains Krivenko. The founder of Izbenka and VkusVilla hopes for modern technologies when thinking about the future of his enterprise. Krivenko admits that he monitors all the reviews and is very worried when buyers write: “Tell Andrey, such and such a seller will discredit your idea.” Or: “You are growing, but you have forgotten about quality.” Software is currently being developed that will allow you to view video from surveillance cameras in stores whenever there is a conflict or complaint.

“We are still a small business by American standards. There will probably be difficulties when there are a thousand “VkusVills”: how can we preserve the values that we have laid down with two or three times more people than now? How not to lose control of the situation? - he thinks.

Having gained experience in running his own business, would he have decided to quit again in December 2008 from the position of top manager of a stable company? "Certainly. This is generally obvious,” Krivenko answers without hesitation.

Fresh idea: how the founder of VkusVilla taught Muscovites to eat healthy food