Over the past few years, we [in Russia] have been dealing with negative trends such as shrinking consumer purchasing power, sanctions, and currency volatility. The industry is forced to work on promotions, and their share has grown very much. We are already talking about a certain “promotional dependence,” from which we, together with our suppliers, are now trying to get out and create a new paradigm for working with the consumer. This is where the mechanisms that Oleg [Alkhamov, Director of Productivity, Auchan Retail] spoke about come into play: the consumer must receive entertainment, experiences, individual service, an omnichannel approach. This is the coordinate system in which we all find ourselves on the market. As a company that works in the small wholesale format, we can judge this by the behavior of our professional clients. We work mainly with three segments: the gastronomic business, small retail, and – as we call it – small companies and offices.

Judging by the behavior of our small retail customers, we see that life is becoming increasingly difficult for them. Unfortunately, this trend has not yet reversed.

In our opinion, the law on trade (381-FZ "On the Fundamentals of State Regulation of Trade Activity in the Russian Federation" dated 28.12.2009) did not work as intended. It led to increased competition, and increased competition, especially price competition, immediately affected small businesses both on the supplier side and on the trade side.

Alexey Grigoriev

Graduated from MGIMO and completed his postgraduate studies there. Candidate of Law. In 1986–1992 and 1996–2001 he worked at the USSR Embassy, the Russian Embassy in Germany, in 1992–1993 and 2001–2002 – at the Ministry of Foreign Affairs. In 2002–2013 – Director of Corporate Communications at Siemens LLC in Moscow. Since 2013 – Vice President for External Corporate Policy at Metro AG, Head of the Metro AG Representative Office in Moscow.

A business like Metro Cash & Carry can try to help its professional clients survive a difficult phase in the development of the Russian market, make them more effective in relations with larger competitors. But we do not exclude the coexistence of large and small trade formats, because the concept of multi-format works. It also works in European countries, where the penetration level of large chain retail is much higher than ours. There are countries where the level of large retail is 80% and higher, and with a small number of major players. Nevertheless, small trade businesses find their niche there too. Small and large trade businesses respond to different customer needs, serve them differently. And, accordingly, the end consumer is guided by this system and solves basic needs mainly through large formats - supermarkets, hypermarkets, and more specific needs, judging by our experience in European countries, are inclined to satisfy through small retail.

There is, however, an interesting trend where hypermarkets are starting to move towards a small retail format. In Germany, we have a subsidiary called Real, which manages about 200 hypermarkets. These shopping centres are currently being remodelled and are being brought closer to what is called a farm shop. You go in there – it seems to be a large hall with a classic hypermarket assortment. But it is structured in such a way that you find individualised service, a customized offer, an element of direct communication between the buyer and the seller.

There are several ways we can help a professional client from a small business. The path that Metro is taking is, first of all, developing our own infrastructure aimed at improving service to professional clients. Here we serve as a kind of buffer, because we are not served by suppliers with the same care and precision with which we serve our professional clients. And this is very important, because due to our logistics, our assortment policy, we manage to build the business in such a way that, given the necessary infrastructure, we serve our clients with a care of over 95%, which is a fairly high indicator on the market. This is the first thing - infrastructure development.

The second important story is the development of ready-made solutions. It is clear that small retail is far from the trends of the modern market. We feel that it lacks competencies, lacks understanding of how to effectively build a business.

Last week we held the Metro Expo exhibition, where we communicated with about 20,000 professional clients from all the regions where we work. And these thousands of clients were simply bursting into the seminars that we organized for them in a variety of areas - from product range policy to the development of such skills as conflict resolution, non-material motivation. These are things that they desperately need. And we give them these competencies, but at the same time we give them ready-made solutions. If you want to open a store, we can offer several formats, we will explain what and how to do. We are actively developing the Fasol franchise project. Moreover, we are also developing it in several formats: there is a small Fasol store and a larger one. After all, there are stores of 10.5 sq. m, and there are 50-100-150 sq. m. We have a customized solution for gas stations, there is a customized solution for bus stops - these same 10.5 sq. m. There is a simplified option for joining the Fasoli program, when you can develop without much expense, gradually adapting your business to the requirements and standards of Fasoli. We give partners a real toolkit, which includes both competencies and an understanding of the product range policy, because franchising, naturally, comes with branding.

Metro AG

Shareholders (as of September 30, 2017, voting shares): the Haniel family (22.5%), the Schmidt-Ruthenbeck family (14.19%), the Ceconomy family (9.99%) and the Beisheim family (6.56%), the rest is in free float (46.76%). Market capitalisation: €4.2 billion. Financial performance (financial year ending September 30, 2017): revenue: €37.1 billion, EBIT: €852 million, net profit: €345 million. Unites the Metro/Macro Cash & Carry and Real store chains. The total number of the group's stores as of December 31, 2017 was 1,041, including Metro/Macro Cash & Carry - 760 and Real - 281. The total number of stores in Russia as of December 31, 2017 reached 90. The revenue of the Russian division in the 2016/17 financial year was EUR 3.4 billion, EBIT - EUR 292 million.

By the way, in connection with this project, we have a question for the regulators. We must urgently remove individual entrepreneurs who work under the "Fasol" program from the definition of a retail chain. Because if they have one facility and the franchisees retain entrepreneurial independence, they are not a retail chain. And now we are forced to service it with all the restrictions that suppliers have in their relationships with retail chains - on volume bonuses, on delivery delays, etc.

And the last topic I would like to briefly touch on. We talked about omnichannel, the Internet, and entering the digital economy. Small retail businesses need to be given this opportunity as well. We already had experience when we had to train our professional clients from the gastronomy and retail trade businesses on how to work with the EGAIS "Retail", how to work according to Federal Law No. 54 - with online cash register equipment (54-FZ "On the use of cash register equipment in cash settlements and (or) settlements using electronic means of payment" dated 05/22/2003). Now we are training our professional clients on how to work with the Mercury system (this is an electronic veterinary certification). These competencies really need to be transferred and we need to facilitate the entry of this business segment into the online systems that the state is creating - that's one.

But it is also necessary to introduce them to the digital economy in general. We have discovered, for example, that in gastronomy, 50% of businesses are not present online at all. What to do? Create platforms that allow them to build their own websites. And do it quickly, simply, without special competencies and, if possible, cheaply, or even for free. We have now created such a portal service, called RestoRu. And now more than 4,000 professional clients have mastered this tool, created their own websites for their cafes and restaurants. Another important area of entering the digital economy is offering professional clients from small retail, since we are talking about retail, various kinds of digital tools that will make their business easier. How does the life of an ordinary owner of a small store build? He worked 12 hours in his store, then sits down at the paperwork and fills it out for another 3-4 hours. You can optimize his time costs and simplify the process by offering him the appropriate digital tools, thanks to which he will spend literally half an hour on the same thing. We have such experience, and we will gradually implement it in Russia, because this is the way to increase the competitiveness and efficiency of small retail.

The text was prepared based on the speech at the XIV annual conference "Retail in Russia", held by the newspaper "Vedomosti" on March 29, 2018 in Moscow. The positions of the conference participants and persons mentioned in the speeches are indicated at the time of the conference

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