Com­pet­i­tive Ad­van­tage

Sys­tem­atic ap­proach and in­no­va­tive so­lu­tions are es­sen­tial for busi­ness suc­cess

Economy of Belarus - - CONTENTS - Ti­mofei KONEV

Sys­tem­atic ap­proach and in­no­va­tive so­lu­tions

are es­sen­tial for busi­ness suc­cess

Think­ing about To­mor­row

But it is not so easy! It comes as no sur­prise that busi­nesses at­tach great im­por­tance to the qual­ity eco­nomic plan­ning. In other words, im­me­di­ate gains have ceased to be the top pri­or­ity of busi­ness­men who want to come to the mar­ket for the long haul. They are more in­ter­ested in fore­cast­ing and strate­gic plan­ning; they want to know what fu­ture holds for them. What hori­zons will they reach? What will be the driv­ing force of their in­come? Where will they find new cus­tomers? What deals can they of­fer them?

These are not just idle ques­tions. The re­cent price havoc stem­ming from the tem­po­rary dif­fi­cul­ties at the for­eign currency mar­ket has demon­strated the abil­ity of some com­pa­nies to meet any chal­lenges and lay the ground­work for the fu­ture as well as com­plete help­less­ness of oth­ers that panic at any spec­u­la­tion and are ready to pass all the prob­lems (both real and imag­i­nary ones) on to con­sumers.

In these dif­fi­cult times the dif­fer­ence be­tween the one and the other is par­tic­u­larly ev­i­dent. And the cus­tomer is the first one to no­tice it. If the price for the same prod­uct in dif­fer­ent stores varies greatly, such a dis­pro­por­tion can­not be ra­tio­nally ex­plained and no eco­nomic cri­sis can be blamed for that. There­fore the Econ­omy Min­istry is obliged to in­ter­fere and in­tro­duce price ad­just­ments for cer­tain prod­ucts and com­modi­ties.

In­deed, if one kilo of pears in a lo­cal store costs Br31,000 while the same sort of pears at Evroopt is Br11,000 per kilo, no currency risks can jus­tify this sit­u­a­tion. If one tries to sell a kilo of peaches for Br27,000 while you can buy them

they say a good econ­o­mist can val­i­date any­thing. Par­tic­u­larly, if it is some­thing in the field of com­merce – any sell and re­tail prices, trade in­cre­ments, in­come, prof­itabil­ity, ex­penses, etc. to­day when the state has been loos­en­ing its grip on prices, the tasks of those re­spon­si­ble for draft­ing eco­nomic strate­gies of com­pa­nies may seem to be­come eas­ier – all they need to do is to put any price tags tak­ing into con­sid­er­a­tion only the consumer abil­ity to pay for the mer­chan­dise.

for Br10,000 or 11,000 at Evroopt the cri­sis has noth­ing to do with that. It is sim­ply that some re­tail­ers are too greedy and ready to pass all their prob­lems on to cus­tomers while other re­tail­ers, like Evro­torg (Evroopt chain stores), set an ex­am­ple of the so­cially-re­spon­si­ble busi­ness look­ing for smart eco­nomic so­lu­tions.

So­cially-re­spon­si­ble Busi­ness

I have men­tioned Evroopt for a rea­son. Not only be­cause as a cus­tomer I pre­fer to do my gro­cery shop­ping there, but also be­cause there are sev­eral ob­jec­tive in­di­ca­tors that make me have a closer look at this com­pany.

Ac­cord­ing to a re­cent study con­ducted by the So­ci­ol­ogy In­sti­tute of the National Academy of Sciences, Evroopt prices are 34.2% lower than those of their com­peti­tors!

Cus­tomers are well aware of that. In par­tic­u­lar, a pub­lic sur­vey con­ducted by the same in­sti­tute has shown that 85.2% of re­spon­dents liv­ing in towns where Evroopt stores are present stated that Evroopt prices for some prod­ucts are lower than in other stores. The most dras­tic dis­crep­an­cies were noted in Gomel and Mogilev. Ac­cord­ing to so­ci­ol­o­gists, 98.7% of Gomel res­i­dents and 98% of Mogilev dwellers be­lieve that Evroopt of­fers the low­est prices.

These fig­ures speak for them­selves. They tes­tify to the fact that the Be­laru­sian busi­ness sec­tor has true ex­am­ples of so­cially-re­spon­si­ble be­hav­ior. Evro­torg does not want to shift the bur­den of con­stantly grow­ing prices, es­pe­cially for im­ported goods, on their cus­tomers. The de­clin­ing pur­chas­ing power should be off­set not only through the govern­ment ef­fort (ad­just­ments of salaries, pen­sions, ben­e­fits, al­lowances and price ad­just­ments for cer­tain goods), but also by the pri­vate sec­tor vol­un­tar­ily agree­ing to cut some of its prof­its.

This sum­mer, for in­stance, Evroopt stores were sell­ing some sta­ple goods (dairy prod­ucts, frank­furters, sausages, cheese) with­out sales markups! In the most dif­fi­cult for most of us times when we all felt the im­pact of the grow­ing prices Evro­torg was sell­ing these goods vir­tu­ally for free, cov­er­ing all the trans­porta­tion and ser­vic­ing ex­penses.

On the other hand, it is crys­tal clear that pri­vate busi­nesses can­not af­ford big losses. There­fore Evroopt’s low prices are not an act of char­ity, but care­ful cal­cu­la­tion and smart eco­nomic strat­egy. As a mat­ter of fact the path this com­pany has cho­sen to fol­low is a well-known ap­proach in the world of eco­nomics. But so far no other re­tailer in Be­larus has ap­plied it on such a scale and so con­sis­tently.

First of all, high turnover of the chain store al­lows plac­ing big­ger or­ders which means bet­ter de­liv­ery con­di­tions and lower prices.

Se­condly, the com­pany’s lo­gis­tics cen­ter (the largest in Be­larus) and a well-thought stor­age and de­liv­ery sys­tem help re­duce ex­penses and en­sure that prod­ucts are fresh and of high qual­ity.

Thirdly, Evroopt buys sea­sonal imports, for in­stance, fruits and veg­eta­bles that do not grow in Be­larus, di­rectly from sup­pli­ers by­pass­ing all in­ter­me­di­aries, hence keep­ing the prices as low as pos­si­ble.

And fi­nally Evroopt has been ac­tively de­vel­op­ing a line of its own brand prod­ucts. These goods are cheaper by de­fault than the com­peti­tors’ prod­ucts as they go from the pro­duc­tion fa­cil­ity di­rectly to re­tail out­lets. There is one more thing. I think ev­ery­one is fa­mil­iar with the TV com­mer­cials of OGGO green peas and sweet corn or Babushk­ina Kukhnya pel­meni which are Evroopt brands. Ev­ery time they ap­pear on TV, ra­dio or in magazines Evroopt has to pay. And this money is sup­posed to be in­cluded into the price of a prod­uct.

Evroopt does not do that. It is clear why Evroopt prices are lower than those of its com­peti­tors by one third. But many Evroopt prod­ucts are twice and trice as cheap as prod­ucts sold in other su­per­mar­kets! Es­pe­cially it is true for ex­otic fruits that do not grow in Be­larus and have to be im­ported. So why peaches, nec­tarines, grapes and pears from warm coun­tries are much cheaper in Evroopt stores? The an­swer is sim­ple – thanks to the in­no­va­tion ap­proaches!

In One Bun­dle with Pro­ducer

When trav­el­ling in Italy’s pic­turesque Apu­lia prov­ince with its cap­i­tal city Bari a Be­laru­sian tourist is likely to be sur­prised by not only the gen­er­ous Ital­ian sun, de­li­cious pasta and lovely scener­ies, but also when in the midst of a peach or­chard hid­den by the brunches of peach trees bended un­der the weight of ripe fruit he will see a sign fea­tur­ing a fa­mil­iar blue and yel­low logo with the word Evroopt writ­ten in Cyril­lic! Some more kilo­me­ters away he will see a vine­yard and a nec­tarine or­chard with the same sign…

Can it be true that the Ital­ians sold the Be­laru­sian com­pany their best farm lands? Can it be true that Evroopt cul­ti­vates here the fruits that the Be­laru­sians like so much?

As a mat­ter of fact, the Be­laru­sian com­pany has not bought the farm­lands, or­chards and vine­yards. Nor will the Ital­ians ever sell them. They are too proud of their nat­u­ral wealth and ev­ery new gen­er­a­tion pre­serves the tra­di­tions of their an­ces­tors by cul­ti­vat­ing high-qual­ity peaches, nec­tarines and grapes. How­ever the har­vest in these lands does be­long to Evroopt!

Ac­cord­ing to Evro­torg pur­chas­ing of­fi­cer Daniel Mus­abye­mu­ngu, such co­op­er­a­tion with the Ital­ian fruit pro­duc­ers al­lows to sig­nif­i­cantly cut the prices for fruit as the plan­ta­tion own­ers do not have to look for cus­tomers and there­fore they are ready to sell the fruits at a lower price. It goes with­out say­ing that this ap­proach suits the Be­laru­sians just fine.

By the way, ev­ery plan­ta­tion, be it a nec­tarine or peach or­chard, or a vine­yard boasts a Euro­pean qual­ity cer­tifi­cate. Their framed copies dec­o­rate spe­cially des­ig­nated boards in ev­ery vine­yard and or­chard bear­ing the fruit for Evroopt. They cer­tify that the whole cul­ti­va­tion process start­ing from tree plant­ing, fer­til­iz­ing, wa­ter­ing to har­vest­ing is in con­form­ity with the EU stan­dards. By the way, this is a mat­ter of prin­ci­ple for Evro­torg – Be­laru­sian cus­tomers have to know for sure that the qual­ity of fruits sold by Evroopt is truly Euro­pean, says Daniel Mus­abye­mu­ngu.

Mr Mus­abye­mu­ngu has per­son­ally vis­ited the plan­ta­tion sev­eral times this year. The Be­laru­sian party has been vig­or­ously con­trol­ling all the stages of fruit pro­duc­tion from shoot plant­ing to har­vest­ing. But the daily su­per­vi­sion of the cul­ti­va­tion process of peaches, nec­tarines and grapes as well as their har­vest­ing and ship­ment to Be­larus is ex­e­cuted by Evroopt’s strate­gic part­ner in Italy – Frutta Lo­gis­tica slr.

By the way, fruit pick­ers work from 5am to 11am, not only be­cause it is very dif­fi­cult to work in the heat but also be­cause the fruits be­come very vul­ner­a­ble un­der the sun­light and easy to be dam­aged dur­ing trans­porta­tion, Frutta Lo­gis­tica slr Deputy Di­rec­tor Se­bas­tiano Frazzetto says. Se­bas­tiano is a great ex­pert in every­thing what con­cerns this fer­tile land. He has a PHD in agri­cul­ture and a farm pro­duc­tion econ­o­mist diploma. I could not find a bet­ter guide to the Ital­ian or­chards.

Nec­tarines are stacked in huge 15- to 20-liter buck­ets first and then they are trans­ferred into plas­tic cases that can hold from 200 to 250kg of fruit. A trac­tor trans­ports the cases from the or­chard to the road and loads them to a big truck. At 11am sharp the fruit pick­ers (res­i­dents from the neigh­bor­ing vil­lages) leave. Their work for the day is done while we are fol­low­ing the truck with nec­tarines whose jour­ney to the Be­laru­sian su­per­mar­kets is only be­gin­ning.

At the pack­ag­ing fac­tory the fruits are trans­ferred to re­frig­er­at­ing units. Be­fore be­ing dis­patched to the pack­ag­ing line, nec­tarines and peaches have to be cooled down. It may be 38°C out­side but here it is only 3°C.

First, fruits are washed with del­i­cate brushes, and then dried un­der pow­er­ful ven­ti­la­tors.

At this stage all fruit im­porters to Rus­sia, Be­larus or Ukraine wax the fruits in or­der to bet­ter pre­serve them dur­ing trans­porta­tion. The fact that waxed fruit does not breathe and that it is im­pos­si­ble to wash away the coat­ing does not bother them much. The main thing for them is to pre­serve nec­tarines and peaches for as long as pos­si­ble. Evroopt has a com­pletely dif­fer­ent ap­proach. The com­pany be­lieves that Be­laru­sian cus­tomers have the right to get fresh fruits that are not af­fected by the pro­cess­ing. There­fore un­like other im­porters in the CIS, Evroopt does not want its fruits to be waxed. It is thanks

to its elab­o­rate lo­gis­tics sys­tem that the com­pany can guar­an­tee the ul­ti­mate fresh­ness of the fruit. There­fore the fruits sold at Evroopt su­per­mar­kets are marked with the “Fresh” la­bel guar­an­tee­ing their high qual­ity.

But I di­gress; let’s get back to nec­tarines. Af­ter dry­ing up they are man­u­ally sorted out to get rid of the sub­stan­dard ones. Then nec­tarines are placed on spe­cial trays and are sent to a spe­cial unit where with the help of laser equip­ment they are weighted and mea­sured in di­am­e­ter. De­pend­ing on these pa­ram­e­ters nec­tarines are di­vided into seven cat­e­gories and are sent to dif­fer­ent pack­ag­ing lines where they are in­spected once again and hand-packed into boxes.

This cut­ting-edge pack­ag­ing line op­er­ates so quickly that it takes less than 10 min­utes for ev­ery nec­tarine to get from the re­frig­er­a­tor to the box.

The boxes, in turn, are put on eu­ropal­lets and a worker wear­ing a T-shirt with an Evroopt logo se­cures them with a spe­cial tape, at­taches a con­sign­ment note hav­ing Minsk, Be­larus as the fi­nal desti­na­tion and su­per­vises the load­ing into a reefer truck with a tem­per­a­ture of 3°C.

Three days later this very con­sign­ment of nec­tarines ar­rives in Minsk and six hours later Evro­torg trucks de­liver the fruits to Evroopt su­per­mar­kets all around Be­larus and cus­tomers are able to en­joy the high-qual­ity Ital­ian prod­ucts at the most com­pet­i­tive prices.

By the way, my visit to the vine­yards was no less im­pres­sive. Ev­ery sum­mer day vine­yard work­ers go alone the long rows of plants in­spect­ing them and cut­ting off the ex­cess fo­liage that blocks the sun as well as re­mov­ing sub­stan­dard grapes. Ac­cord­ing to Se­bas­tiano Frazzetto, a vine­yard should not waste its en­ergy on unattrac­tive grapes as cus­tomers should be treated to the best fruits. Since the grape is a very del­i­cate fruit the pack­ag­ing is car­ried out di­rectly in the vine­yard. The grapes are put in boxes, the boxes go into reefer trucks that set off to the Evroopt re­tail chain in Minsk.

To sum up, it takes just three or four days max­i­mum for nec­tarines or grapes to get from or­chards to a cus­tomer’s cart some­where in Osipovichi, Pinsk or Minsk (by the way, they have to pass through seven or eight fron­tiers on the way!).

Ac­cord­ing to Evro­torg ex­perts, at least 80 reefer trucks with peaches and nec­tarines ar­rived in Be­larus in the last two months. The de­liv­ery of these fruits is still in progress while the grape sea­son is gath­er­ing mo­men­tum.

Soon Be­larus will get its share of the kiwi har­vest from Latina prov­ince and a lit­tle bit later the de­liv­ery of oranges and tan­ger­ines from Ce­cily and Cal­abria will start. As for the prices… There is no need to be a fore­teller to de­ter­mine that a consumer will choose Evroopt su­per­mar­kets as those who can use their com­pet­i­tive ad­van­tages al­ways win.

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