Re­tail: Re­al­i­ties and Prospects

The pric­ing pol­icy of re­tail net­works re­flects changes in the FX mar­ket

Economy of Belarus - - CONTENTS - Maxim GIlYAROV

The pric­ing pol­icy of re­tail net­works re­flects changes

in the FX mar­ket

New Eco­nomic Re­al­ity

The sit­u­a­tion on the Be­laru­sian consumer mar­ket is unique. Price rises that used to go prac­ti­cally un­no­ticed have spi­raled into a full-blown in­fla­tion. For­eign currency was hard to get and many im­porters tried to hedge against the risks. This spurred a sharp rise in prices for im­ported prod­ucts and then do­mes­tic goods. Be­sides, it is not a se­cret that many Be­laru­sian prod­ucts are man­u­fac­tured us­ing

it is an in­dis­putable fact that it is al­ways eas­ier for a trader to raise the price rather than lower it. firstly, it is what traders nor­mally do, be­cause even when the mar­ket is sta­ble, in­fla­tion makes it pos­si­ble to raise prices grad­u­ally with­out crush­ing consumer de­mand. Se­condly, from the psy­cho­log­i­cal point of view, busi­nesses are hard­wired to make as much profit as they can, which is why let­ting prices “loose” does not sound like a good idea.

im­ported parts. The dis­par­ity of prices for do­mes­tic and im­ported prod­ucts leads to the ‘wash-out’ of the mar­ket, as man­u­fac­tur­ers find it in­creas­ingly worth­while to ex­port cheap goods at dump­ing prices in­stead of sell­ing them at home.

But the sit­u­a­tion changed in Septem­ber due to the start of the additional ses­sion of the Be­laru­sian Currency and Stock Ex­change. Busi­nesses were given an ac­cess to for­eign currency, and the ex­change rates of US dol­lar, euro and other cur­ren­cies started to fall fast.

The mar­ket held its breath for a mo­ment look­ing at where things were go­ing and hav­ing no real idea of how to re­act.

What­ever the Cir­cum­stances

The first com­pany to get its breath was Evro­torg, a branch of Evroopt, Be­larus’ ma­jor re­tail op­er­a­tor and one of this coun­try’s largest im­porters. Re­tail prices in Evroopt started to fall in the mid­dle of Septem­ber. Ac­cord­ing to An­drei Zubkov, Evroopt di­rec­tor, prices for some goods were fall­ing by 10-15% in the course of one week.

About one-fifth of the imports sold through Evroopt are goods the com­pany buys out­side the coun­try it­self. These goods were the first to fall in price.

Prices for a num­ber of Be­larus­made goods fell too, but in that case it was the ini­tia­tive of Evroopt to lower the prices by cut­ting back on its markups.

“This was not the first time that we lim­ited price markups in the Evroopt chain stores,” he said. “At the height of the cri­sis that af­fected the pur­chas­ing power of the ma­jor­ity of the pop­u­la­tion, our com­pany was cut­ting back on the markups on sta­ple foods. And some of the prod­ucts, like sour cream, milk, sausages, and the like, were sold with­out any markups at all.”

A good re­serve for re­duc­ing prices for many goods in the Evroopt

net­work is the re­la­tions this com­pany has with its part­ners. The di­rec­tor says, “We are con­duct­ing a very strict pric­ing pol­icy. There are chain stores that try to have as many goods as they can, which is why they agree upon vir­tu­ally any price. Their po­si­tion­ing is very dif­fer­ent from ours. Un­like them, we are fight­ing to get the price that would be af­ford­able for the consumer; this is our po­si­tion­ing which we prac­tice at Evroopt.

Ev­ery time a sup­plier wishes to raise prices for cer­tain goods, the com­pany wants proof that the price rise is re­ally nec­es­sary. And now what we see is that re­tail­ers ex­plain to sup­pli­ers why it is nec­es­sary to re­duce prices and prompt them to re­vise their price pro­to­cols by re­duc­ing the prices for im­ported goods.

Be­larus’ largest re­tailer has enough ar­gu­ments to en­cour­age its part­ners to act ac­cord­ingly. The first suc­cess came as 10% of Evroopt’s sup­pli­ers agreed to the com­pany’s pro­posal to re­duce prices for their goods. Around 40% of sup­pli­ers have asked for a lit­tle de­lay in or­der to pre­pare new price pro­to­cols.

“On the other hand, around half of the sup­pli­ers have not re­sponded to our pro­posal so far due to both sub­jec­tive and ob­jec­tive rea­sons. For ex­am­ple, some­one has pur­chased a con­sign­ment of goods at a high rate, and un­til they sell it, they will not lower the price. We know more or less well who has what, and have an idea when to ex­pect con­sign­ments at new prices,” said the Evroopt di­rec­tor.

Evroopt: Prices Go Down

The Evroopt ini­tia­tive is bear­ing fruit. For the consumer, it is im­por­tant that prices in Euroopt shops should start to fall. And for the Be­laru­sian re­tail mar­ket, the de­ci­sion taken by the com­pany is an im­por­tant sig­nal and an ef­fec­tive stim­u­lus to act ac­cord­ingly.

Ac­cord­ing to An­drei Zubkov, the so­cially re­spon­si­ble be­hav­ior is a kind of trade­mark of the Evroopt stores that he is in charge of. The com­pany keeps a close eye on the changes in the pur­chas­ing power of the con­sumers and makes sure the prices for the goods the com­pany sells are af­ford­able. The com­pany tries to pre­vent se­ri­ous in­con­sis­ten­cies be­tween de­mand and sup­ply.

On the other hand, the com­pany’s man­age­ment makes no se­cret of the fact that be­hind their so­cial re­spon­si­bil­ity stands eco­nomic ben­e­fit.

Evroopt Di­rec­tor An­drei Zubkov says, “In ad­di­tion to al­tru­ism, there is also ra­tio­nal­ism in our price re­duc­tion work. Consumer de­mand should be reared and sus­tained. You have to treat it gen­tly. It is re­ally easy to send prices up high and make the whole trad­ing busi­ness freeze. What will be not easy is to win peo­ple’s trust back af­ter­wards.”

This is why the Evroopt re­tail net­work has taken that un­prece­dented step, namely to re­duce prices for all prod­ucts. The com­pany prom­ises that if the Be­laru­sian ru­ble con­tin­ues to strengthen, the prices will def­i­nitely go down, which will make con­sumers even hap­pier.

An­drei Zubkov, Evroopt di­rec­tor

Newspapers in English

Newspapers from Belarus

© PressReader. All rights reserved.