Ukrainian retail takes big losses, searching for new “places in the sun” and trying to go online
The coronovirus epidemic was a real test for global retail, and even more for Ukrainian. Ultimately, this was fine for entrepreneurs who, until recently, delayed the transfer of the worst online business. According to a Nielsen study, in developed countries, online sales growth broke all records in the first days of quarantine measures – in France it was 87%, in Italy – 82%, in Spain – 62% and in Australia – 45%.
In Ukraine, unfortunately, there are relatively few examples of a rapid transition to the network, especially among small businesses – one found the restructuring of organizational processes too complex, and one faced a shortage of available funds. Retailers who have immediately transferred the business to an online account account for only 21% of the total industry.
Ukrainians began to shop extensively on the Internet, but small and medium-sized domestic retail are still in no hurry to change their unprofitable habits.
All this, of course, does not apply to major market players. Especially if at the time of quarantine their work was only partially limited – we are talking about food supermarkets, pharmacies and convenience stores. Most of them worked both offline and on the Internet.
Perhaps the best example of digitization were home appliance and electronics stores, showing sales growth of 7% compared to the same period last year. Webcams, monitors and laptops have never been in such demand, but many people have suffered in this direction.
Some large food chains have found alternative options for working online – in the form of collaboration with large markets and delivery services. Now you can already see OLX, UAPAY and EKO stores or coordinated joint activity of Rozetka, ATB and Nova Poshta. Supermarkets place products on online marketplace sites, and provide order courier services.
The transition to the network is not the only mechanism for Ukrainian retail operations in quarantine. Many people save on rent, staff and management salaries. According to Colliers International, 83% of domestic retailers optimized costs by modifying lease terms – only 11% of retailers continue to pay the rental rate in full. Approximately 70% of employers in the retail industry sent workers on leave at their expense, and 30% reduced workers altogether.
It should be noted that at the beginning of the quarantine, the business of large retailers such as Metro, ATB and Silpo had grown significantly, but the event was indeed temporary, with sales falling by 30-40% since then. These indicators can be considered relatively positive, as most retail representatives did not have the opportunity to work during the epidemic.
Furthermore, even online sales growth cannot guarantee good revenue. According to a GfK study, online sales should increase fourfold to make up for the complete closure of stores. Only 7% of Ukrainian retail noted an increase in turnover and the number of purchases after switching to online retail.
Fortunately, quarantine is ending, slowly bringing the industry back to life, but companies that survive the crisis will still have to adapt to the new challenges. Ukrainian retailers must create a safe environment for an entirely new consumer – experienced, cautious and economical.
Most representatives of domestic retail will be able to return the turnover indicators to acceptable figures of the pre-crisis period in at least a year, and then we’re talking about those who were “alive” and their continued existence. Has resources for. Only 15% of retailers can afford business expansion, the rest will reduce their presence and increase online sales.
Researchers at University College London have established that for most new habits to form, a person needs an average of 66 days. Therefore, buyers will quarantine with new requests and priorities, which can serve as the final opportunity for timely business revision.
Read: A large bank helps retailers sell through social networks: how it works.