Text: Tatiana Katasonova\r\nPicture: Royal Canin\r\n\r\nRetail Director of Royal Canin in Russia and the Republic of Belarus tried to estimate what is the online sales share in the pet industry in Russia is.\r\n\r\nThis year, the Russian Pet Business Summit was held in a new format: the traditional conference was supported by online live stream. It was sponsored by Royal Canin, which not only helped bring together Summit participants in different parts of the country, but also tried to measure the significance of the word "online" for today\u2019s pet industry. Ivan Kondrashev, Retail Director of Royal Canin in Russia and the Republic of Belarus, shared the results of the survey and his view on digital sales.\r\n\r\n\u2013 Ivan, you stated not long ago that Royal Canin successfully passed the acute period of coronavirus restrictions and even used new opportunities the crisis brought to the market. What are your comments on the current situation on the pet market today?\r\n- The crisis has affected the industry segments in different ways. We see that the middle segment is losing customers \u2014 many of them have lost revenue, and they have switched to economy products. Consumers of the premium segment are usually more stable, they have a stable income or easily find a new well-paid job if they lose one.\r\n\r\nSince Royal Canin operates in the premium segment, our sales are less affected by the pandemic then with some other suppliers. We have a high share of loyal customers, people do not switch to other products even in difficult economic conditions. We easily adapted to quarantine restrictions, since we have been developing online formats in the company's operations for a long time already, and our employees are used remote work. I think this is the reason why our performance did not suffer.\r\n\r\n\u2013 What do you think about new sales channels development?\r\n- The top-50 Russian pet retailers have online stores. But even three years ago many of them did not understand how to build a business model and compete online.\r\n\r\nToday, the pet industry is actively developing e-commerce, and I think our customers and clients will invest more and more in their online activities \u2013 not only in their websites development, but also in working with consumers in the digital ecosystem in general.\r\n\r\n\u2013 Are there many companies all over the country who have already understood the importance of development of omni-channel and adopted it as a strategy?\r\n\u2013 According to my observations, for many retailers an online and an offline consumer are still different people. But this is not so. I can buy from a brick-and-mortar store or order online, expecting to get the same experience. Usually, sales people in a traditional store just want to sell the product, not realizing that a customer who left this time without a purchase, might return for it to their online store or contact a veterinary clinic that operates under the same brand.\r\n\r\nSome of our customers have different promotions in online and offline stores, and some even have different prices. So the two channels are developed in parallel spaces. The final transition of the pet market in Russia to the omni-channel model will be completed when the difference between channels is completely erased, and the consumers will get the same experience while being in the retailer's ecosystem, whether they came to the store or opened the app at home on their smartphone.\r\n\r\nThe value of online trading will continue to grow. Currently only 12% of purchases of pet products are made online. So it\u2019s a huge new niche to develop.\r\n\r\nOn the other hand, a Russian consumer is still very attached to offline. There was a peak of internet sales in spring, but it\u2019s passed, today customers are returning to brick-and-mortar stores.\r\n\r\nNevertheless, the speed of offline retail development is likely to slow down. I am sure that our partners will evaluate how intensively they should open traditional retail stores and whether it is necessary now. Does it make sense to develop offline without preparing for expected growth of online consumers? This needs to be analyzed.\r\n\r\n\u2013 Royal Canin made a research about the development of e-commerce at the at the Russian Pet Business Summit in summer. Ivan, share the insights you\u2019ve got and your conclusions, please?\r\n\u2013 First, market players still consider pet food to be one of the fastest growing product categories in e-com, and this trend will continue for many years to come. Pet food sales will continue to grow even after the quarantine restrictions are lifted.\r\n\r\nAll research participants believe in online retail: more than half of respondents believe that the growth in this channel will be over 30% or higher. It's an explosive rate indeed.\r\n\r\n80% of the industry's representatives stated at least 10\u201312% share of their online sales today, and this will remain so until the end of the year. If any companies have a smaller share, then, in my opinion, it's time for them to rethink operations. As judging by the market players' opinions, the pet market is moving towards e-commerce even faster than we planned. The survey participants presumed that every third or even every second customer will buy online by the end of this year.\r\n\r\nAll respondents noted that service and delivery speed will play an important role in e-commerce development of in the near future. Other factors are new customers, better loyalty of existing customers, and the development of new categories in the channel.\r\n\r\nRespondents consider gaining new customers to be one of the sources of growth. In Russia, very few pets are provided with industrially made balanced diets. Therefore, there are good opportunities for converting more and more pets to better nutrition and using pet care products in general.\r\n\r\nI would like to add that e-commerce offers good opportunities to expand the audience and attract those who still do not know what a specialized pet store is. According to our data, it is about 30% of pet owners.\r\n\r\n\u2013 How successful was the 4th Russian Pet Business Summit for Royal Canin as a sponsor? It\u2019s pandemic which made it impossible for Royal Canin representatives to participate. But you reacted fast and sponsored live streaming. What do you think about the new online format?\r\n\u2013 The summit is a great opportunity for all pet industry players to network. We as a sponsor are happy it was so successful, and a big part of this success was the innovative format. People were involved regardless of whether they were physically present or watching an online live stream.\r\n\r\nFor example, Royal Canin had a booth in the foyer, but without physical presence of our employees. We invited Summit participants to follow the link on our page posted on the stand. We had more than 150 visits, and people did not just visit the page, but participated in a webinar and viewed useful materials.\r\n\r\nMany of our employees attended the conference "virtually" attended and they were pretty impressed. Currently they literally speak with quotes from the Summit. I think this is an important indicator of success \u2014 to manage to transmit right words and right thoughts to people, forming a common industry language. And when people in the industry speak the same language, development of the entire industry forward is inevitable.\r\n\r\n\u2013 Royal Canin shares knowledge with the market, train its clients and customers. In fact, you\u2019re a company educator. What results does this educational activity bring, do you see market changes?\r\n\u2013 It's an honour for us to be called an educator. We are always happy to share our knowledge. We believe we can only develop together with the whole market.\r\n\r\nFor sustainable future, at least 80% of growth must be assured by the growth of the entire category of pet products and services. In other words, we want to grow by enlarging the entire pie, not only our own piece. All together we need to attract new customers, open new services, and increase the size and frequency of purchases. How to do this? Building a pet care ecosystem.\r\n\r\nThis is why we encourage our partners to develop different sides of business and talk about the opportunities of new services: vet clinics, grooming salons, etc.\r\n\r\nThe Russian pet market has a huge potential for development. We are convinced that such an approach will bear fruit, the market will increase significantly in a few years.