How the founders of Kopeyka earn on same price products

Sergei Lomakin and his old partner Artem Khachatryan were the only businessmen to own stakes in two of the 30 fastest growing companies in Russia according to RBC: Best Price (Fix Price shops) and Odezhda 3000 (Modis shops).
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Another two companies with their participation - networks "Coin" stores and "TsentrObuv" - to get into the rating of "RBC-30" did not have quite a bit. Due to what Lomakin Khachatryan and managed to become a "serial" growth leaders?

Millions of "Penny"

"No one knows on what we earn. And thank God! "- Smiles Sergey Lomakin, founder of the" one price stores "Fix Price, where any product now costs 39 rubles. In the retail market, he and his partner Artem Khachatryan, best known as the founders of the network discounter "Kopeika", among which the co-owners of Yukos managed to get even, and which in 2010 bought the X5 Retail Group. In the retail business Lomakin, Khachatryan and partner Alexander Samonov came from wholesale.

"Up to" nickels "we are three or four years, engaged in distribution of coffee. We had different brand - and Jacobs, and Nestle [company sells coffee under the brand Nescafe], and others ", - says Samonov. In the business of all three, he said, were shareholders in the same structure, they do, and retail. In 1998, the partners established "Penny", aWell, the first in Russia discounter networks: the very latest in the company was 60%, and in Lomakina Khachatryan - on 20%. In early 2007, Samonov, Khachatryan and Lomakin sold their remaining by the time 50% "Kopeika" financial corporation "NIKOIL".

By the time of completion of the transaction on the network was almost 330 stores that have received proceeds of almost $ 980 million in 2006, wrote "Vedomosti" newspaper. In the transaction the founders have earned, according to sources, from $ 600 million to $ 700 million (Samonov confirms that the amount of the transaction was within these limits, but does not name an exact figure). Samonov sold 30% of the network, and Lomakin Khachatryan - on 10%. So, for their share of Khachatryan and Lomakin could bail at $ 120-140 million each. After parting with the "penny", they began to invest in the retail business.

In 2007, the Ural chain "Coin" brand announced that Lomakin with Khachatrian gained in its capital 25%. The network consisted of 115 food stores. From the new owners, she received 26 retail properties in Moscow and the Moscow region. Now, according Lomakin, businessmen own network in Moscow, they have the option to obeInonu businesses with Ural.

In the summer of 2008 it became known that the Lomakin and Khachatrian gained 5-7% of the network Modis clothing stores selling "fancy clothes own brands at affordable prices." At that time it included 32 stores in 25 cities. In 2009, Sun Investments Partners Fund, representing the interests of business, bought 33% of JSC "TD" TsentrObuv "Managing a network of similar shops selling low-priced footwear. And in late 2012 with the participation of the structure Lomakin Khachatryan and agreed to establish a joint venture with a major shareholder of the German apparel retailer Takko Fashion, investment company Apax Partners.

"All investments are one of the ideological leader - they are united by Sergey Lomakin," - says the managing partner of Quadro Capital Partners Giedrius Pukas.

Structured investments "in different ways", he says (to other "RBC" magazine issues Pukas did not answer).

Fund for friends

"We - the generators of competitive advantages. Footprint than you can beat the competition ", - explains Lomakin. Now he Khachatryanand Pukas - Partners Quadro Capital Partners, said on the website of the investment company. It is - part of the holding Retail Brands Collection (formerly Sun Investments Partners), which calls itself "the largest private holding company that invests in non-food retail trade economy" in Russia, the CIS, Eastern Europe and the European Union. Pukas previously worked at Alfa Capital Partners and Finartis Group, was then managing director of Troika Capital Partners. Neither of the amount of assets under management, nor the composition of investors Quadro Pukas says.

"The main source of the money fund - money and Sergei Artem, but it is distributed sources of investment, it is unknown", - said an employee of one of the investment banks. "Sergei was joking that this fund for his friends: mostly in it for the money a few dozen friends, who want to invest with them [Lomakin and Khachatryan]", - tells the familiar Lomakin.

"Sergey has a very wide circle of friends in reteyle, and he is very competent. They invested money in high quality successful formats "- explains the business partner of business. It is not only the individual investors, Said an employee of one of the investment banks, all the projects have grown from a low base. "You can not compare the growth of" Magnit ", which is a $ 30 billion is growing at 30% per year, and" Coins ". Of course, increased. But somewhere before it was poor management, somewhere the company started to grow from the ground up, so to say, this effect is Sergey, I would not "- says the interlocutor of RBC.

Lomakin and Khachatryan is not just portfolio investors - they do have their own project, which is growing faster than all the others. The first store opened Fix Price at the end of 2007. By the end of 2008 it was planned to open a couple of dozen shops, but opened 60.

Fix price - BEST price

A huge banner "Clothes. Footwear. Crazy prices. All 370 rubles. Fix Mix »occupies half of a two-story wall of a shopping center at the railway station in Moscow Moose. According to the address, in the shopping center must be located one of 1543 stores Fix Price network. But no advertising, no pointers to no building.

To get to the store, you have to pass through the rows of hangers with Fix Mix products, the usual assortment of clothing ryka. On the shelves a variety of goods - from cups and sponges to wash dishes up pens, clothes for dolls, carnival masks and mascara. Almost everything is made in China and imported to Russia "Best Price" LLC of Khimki near Moscow, the management company network Fix Price.

"We are very much trying to break into the network, - says Andrey Turjanytsa, development director of AZ (supplies Fix Price bulbs). - But they are self-sufficient for all proposals replied: "We have everything you need, we carry ourselves." Just Fix Price submitted 2,000 items of goods, 70% of them - the imports, it was posted on the website for the presentation of the network partners.

Chinese companies listed on the labels of products in the Fix Price, - the so-called consolidators, requested anonymity said the businessman, who also buys in China consumer goods. The range of local factories are usually narrow, some produced one or two items. Sell ​​your goods overseas factories often do not know how, brokers cope with this task better. If you need to purchase a wide range of very dshevyh products easier to deal with one intermediary than a dozen factories, the source explained RBC. Selling price from the factory, usually fixed, and middleman receives for its services embodied in her interest.

How much costs the Fix Price products Chinese factories? Products similar to those sold in the Fix Price, can be found in online stores suppliers on the platform of the largest Chinese online retailer Alibaba. The minimum price for many of them - $ 0.1 and rarely exceed $ 0.5.

The secret to success Fix Price Lomakin calls market knowledge and ability to work with the category of non-food items, "The milk is always sold, and if you had introduced kites and sold over the summer, sit with downtrodden warehouse before the New Year and no money."

How is the price

3.9 ruble - the price from suppliers in China

5,8-6,2 ruble - the price at the distribution center in Russia (including logistics, customs clearance and payment of VAT)

39 rubles - the price on the shelf in the store Fix Price (taking into account logistics, rental, utilities and other payments, trade margins)

12% -Argens on EBITDA Fix Price network (estimated INFOLine)

Food for the people

"I went into the Fix Price in Novosibirsk: people on Thursday, the day of the arrival of trucks, all occupied! Removed from the store all the products well and prihvatyvayut something from non-food at the same time ", - says the businessman, who has studied the possibility of opening stores of this format. Food helps to create a range of in-store customer traffic, summarizes Angela Ryabov, CEO of Network "At the same time".

Food Fix Price buys mainly in Russia. Water, juice, tea, coffee and sweets in the original packaging, canned food, sauces - nothing perishable. "The Fix Price of one of our running products in the week sold 120 thousand units, an absolutely similar to the" Auchan "without regard to" attack "supermarkets -. 8.8 thousand units.", - Said an employee of a large network provider.

Russian suppliers of network puts two conditions. The first - a supplier selling price must be below a certain figure, which enables the network to receive a double-digit margin on a particular comradepolar positions. Second - this heading should not be sold to other national networks, says the employee of one of the major suppliers (employee of another supplier with a narrower range, says that from his company's exclusive supply network does not require).

"With Fix Price providers does not work as a retail company, as well as the wholesaler: the network is very demanding on the input cost, but it does not have any bonuses, deferred payment of the minimum, and high turnover," - says Andrey Turjanytsa. Fix Price does not take a marketing providers additional payments, say, two suppliers of food products. As a result, on 39 rubles a Fix Price sold, for example, 350-gram package by Heinz ketchup, tea Lipton Royal Ceylon and liter bottles of pomegranate juice Armenian producers. Small "Gardens Pridonya" juice packs sold packages "3 for 39", and the different types of soda from PepsiCo - two for the same price.

"The price of our products in this network is exceptionally low: there are shops where the price on the shelf above and below. I can not say that we supply to Thuabout something at a loss, "- said an employee of a large supply company Fix Price. Network takes no problem, for example, products that suppliers are going to be removed from production and therefore are not willing to spend money on their progress in other sales channels, says another supplier.

In the regions to the east of Novosibirsk, where there is no "Auchan", "Magnit" or a strong local network of food products in the Fix Price may be on average 15% cheaper than other stores. Using this, Fix Price «kill» the category of non-perishable food at local stores, and then teaches buy from themselves and products for home and office, says one of the retailers.

Game margin

Gross margin Fix Price - about 60%, and EBITDA - up 12%, according to the general director of branch agency «INFOLine-Analytics" Mikhail Burmistrov. If these estimates are correct, the Fix Price on profitability ahead of industry leader - "Magnit": this year, Russia's largest retail company expects EBITDA margin to 10,6-10,9%.

The average check isleaving about 200 rubles, and the average annual revenue of the store -.. about 3 million rubles, calculated businessman who planned to open a chain of the same size. Close to the source of Fix Price, however, these figures are not confirmed.

Network, says Andrew Turjanytsa, "plays a margin": for tradable goods, which are purchased in Russia, the margin may be just 5%. "The team have buyers - young, energetic, mostly girls up to 30 years. Everything is very specific: just say it interesting item or not, predict sales, discuss procurement conditions ", - says Turjanytsa.

"The network is developing very actively, there [stores] in many new areas. Therefore it is very interesting as a partner, including for the future ", - says a large supply company employee Fix Price. Previously, the network announced plans in 2014 to grow to 1,450 stores in the next year - until 1950. But only from 25 September to 6 October, it increased from 1523 to 1537 retail outlets, according to data on the web site.

Cents and billions

Inventor format stores, which Sunie sold at the same price, according to Frank Woolworth. In 1877, 25-year-old Woolworth, who worked in the New York store Augsbury and Moore Dry Goods Store, invented expanded unsold goods on a table with a sign "All for 5 cents." Sales proved popular and buyers and shop vendors. In 1878, Woolworth opened store at the same price - Woolworth's Great Five Cent Store in Utica, NY.

The world's largest network format fix price, Dollar Tree, was founded in the US in 1986. All items in it are sold for a dollar or less. Now the network includes more than 5 thousand. Stores in the US and Canada. The company's revenue in 2013 was $ 7.8 billion, net profit margin - 7.6%, capitalization - about $ 12 billion Other major networks -. Japanese Daiso (2,8 thousand stores in Japan and 860 in other countries.), Canadian Dollarama (900 stores in the country) and the British Poundland (more than 500 stores in the UK).

Network opens and franchised stores. Familiar with several franchisees Fix Price businessman believes that the share of these stores can be up to two-thirds. Signing the contract of franchise, the network part of the capital of the franchisee & ndash; typically 25%, it reports. Close to Fix Price source confirms this: "We will take 25%, and three years later, when we meet the performance, completely buy out franchisees." Therefore, he argues, it is now a network of franchised stores have no more than 5% - almost all of them have become their own. "But to say that we give up the franchise, it is impossible: it is convenient to go through them to new territories", - continues the source of RBC.

First Fix Price interested in cities and towns in which they live more than 25 thousand. Man in Central, Volga, North-Western, Southern and Urals federal districts, according to the network presentation. The development of the territories continues: Network opens new distribution center in Krasnodar, and next year plans to add one more - in Novosibirsk (up to the year of distribution centers in Fix Price was four - in Moscow, Kazan, Yekaterinburg and Voronezh).

Standard shop area - 230-350 square meters. m. Most often, Fix Price opened in the cellars and the basement or on the first floor, said Irina Danilkin leading consultsAnt department of commercial real estate Cushman & Wakefield. For rent in the year a network willing to pay no more than 10-12 thousand. Rubles per 1 sq. m, she said. But recently, Fix Price store was opened on the most expensive street of the capital for rent - Tver, in the building of the Central Telegraph. The network did not seek to open this store, says a source close to her: "They offered the room - why not?" Revenue store in the Central Telegraph building is higher than the average store Fix Price, he says, without naming figures.

Familiar Lomakin said that revenue growth in stores Fix Price, operating more than a year (revenue Like-for-Like, LfL), «is close to double-digit" this year. The "Magnit" in the first half of 2014 sales LfL stores increased by 13.45%, the "Dixie" - by 11.65%, while the X5 - 8.1%.

All for what?

Until recently, the major competitors were Fix Price networks consisting usually of several stores. Now, after the founders of "pennies" in the format of "all for one price" trying to force many experienced players of the retail market.

The property of the founder KupiVIP internet holdingOskar Hartmann - almost one third of the Cypriot Za odno Ltd. This company - the only member of the Russian company "At the same time", which owns a network of the same name about a dozen stores. On Web sites, job network reported that sells all products at 33, 55 and 99 rubles, and this year plans to open 20 stores. The presentation of the project for the partner states of the plans to bring the size of the network to 750 stores.

It is considering the possibility of creating such a network and one of the founders of the "Pyaterochka" Andrei Rogachev, reported with reference to the presentation of the project Fan Price branch portal According to Oleg Vysotsky, chief executive network "Faithful" (Rogachev another project), a decision has been made yet.

Finally, testing the format of "all for one price" main retailer of the country - Krasnodar "magnet" Sergei Galitsky. At a meeting with analysts in September, the company's managers told us that try a new format stores of cosmetics and household chemicals "Magnet cosmetics." The test version they sell products with the usual price of 25 to 50 rubles - all offered at 33 rubles. & laquo; there will be a copy of Fix Price? Not sure: the "Magnit" in this format will be sold only cosmetics and household goods. Galitsky looking for points of growth to continue to grow at the same pace, and as base is growing every year, to maintain the momentum all the more difficult, "- says the familiar" Magnit "owner.

But Fix Price is waiting for a serious test before the competitors have time to grow. In 2007, the first stores Fix Price opened with the slogan "All for 30 rubles." Now, they sell everything for 39 rubles. The ruble continued to fall, and the network will have to decide whether to put a new price tag - "everything for 40 rubles" or maintain profitability in other ways, says one of the suppliers.

Due to the depreciation of the ruble would have "a little sacrifice profitability", recognizes the close to the source of Fix Price. To win back the growth of costs, the network is preparing to raise prices. In the Urals, in stores the price tag has already appeared "all for 40 rubles," the source said. "40 rubles were for us a psychological mark, - says RBC said. - Feared and even tried to write 39.99, but not so much numbers premisestilos on the price tag. " However, while a negative reaction in the stores, he said quietly: "The consumer has agreed that this is true."

Why Lomakin in the "golden" for retail in 2007, when the crisis was not yet out of the question, I decided to create a network of hard discounters in a completely new format for Russia? "We are closely watching the West at all successful concept. We knew that it would work: my goal - to please as many people as possible. Now, if would not a crisis, we started to develop a couple of concepts that have any chance of success is the same ", - says Sergey Lomakin.