Text by Tatiana Katasonova
When a distribution company has subsidiaries in all parts and regions, it has a better view on the current situation in the whole country. Valta Pet Products is one of such companies. It is one of the leading implementers of client-oriented distribution models in the regions of Russia. We asked them about what is happening in the country: with pet product sales, situation in different channels, etc. Valta’s CEO Irina Golovchenko, shared her insights.
– Valta has 23 subsidiaries all around Russia. So, you should probably have relevant information about what is happening to sales in different regions.
– Unfortunately, the pandemic caused issues in every region. Therefore, operations of specialized retail are limited everywhere. Grooming salons were hit the hardest — they are all closed! Neither pets nor their hosts can get any grooming services. All of the pet stores are open, except those in the malls, that are mostly closed. Veterinary clinics are all allowed to keep working. But we see a trend, especially in big cities, like Moscow: small clinics with few doctors decided to close. Maybe they have little hope with current traffic, maybe there are other reasons. But I do not agree to this approach. The culture of veterinary prevention has been too weak anyway. In Russia people only go to the clinic when there is a serious problem with the pet’s health. I believe, that the clinics must remain open, especially now, in the spring, during seasonal aggravation of diseases when preventive therapy is of the most importance.
The breeders face an increased demand for pets. Puppies and kittens are being sold like hotcakes. Perhaps during the isolation people feel like taking care of someone. Many of those who were long planning to get a pet are doing it now. This is surely encouraging for breeders. And for the retailers.
I think that all the fresh-baked owners of puppies and kittens will soon come to pet stores and will buy food, accessories, treats. Therefore, for pet stores, this ‘viral’ situation is also promising.
– What is happening to your sales now? How do you deliver? Are there any issues?
– Our logistics runs like clockwork. Our employees received the mandated travel permits, they work in masks and gloves, we sanitize everything according to the requirements of Federal Service for Supervision of Consumer Rights Protection and Human Welfare, we check temperature, we introduced contactless delivery. So, it’s okay. We deliver about 300 orders in Moscow on a daily basis to all categories of customers. During peak demand we delivered up to 600 orders a day. Average deliveries in ‘pre-virus’ times were 350-380 orders. So now we are having a certain decline, but it is not critical.
In Saint Petersburg, we had a peak of 700 orders per week. Some clients made two or even three orders a week. As for the quarantine period, during the week of April 6th we had 548 clients and since April 13th it’s already 500, and the week has not ended yet. I do not see a critical decrease in the number of orders there either.
There have been less orders because there are fewer customers in stores. Demand from our client base decreased by about 15%, compared to peak sales, and by 10%, compared to the average for previous periods. But this still means that customers are ordering, everyone is active, the demand is there.
Previously we had about 6000 unique customers every week nationally. Now 5000, which is a drop in customers’ activity by 20%.
There are eventual order amount decrease of up to 30%. But it is more correct to do the comparison on a monthly basis and take seasonal aspect into account. For example, last year we did most sales of antiparasitic drugs in April, and this year we sold most of them in March. Therefore, if we compare March 2020 with March 2019, then obviously there will be high growth. But there will be loss, if we compare the months of April. Last year in May and June we had problems with Monge, when the supplies were suspended, so sales dropped. This year things are better; therefore, we will theoretically have an increase compared to 2019.
It is very hard to predict major sales trends at the moment. What is very important to me is that our clients remain active.
– This is not the first time that the company has encountered serious difficulties. Looks like Valta knows how to deal with a crisis, doesn’t it?
– Yes, looks like we already have immunity to any crisis. In 2007, we had a problem with Hill’s, when their distribution policy changed and we lost exclusivity on sales in Russia. That year was difficult for Valta, and 2008 was hard for the whole world — there was an economic crisis. In 2014, we had internal difficulties when Procter & Gamble sold Eukanuba brand to Mars. In 2015, there was one more crisis, but that time in Russia. The year 2019 was also very difficult for Valta: the volume-generating Monge brand was under restrictions for four months. 2020 will be difficult for the whole world again. Some strange pattern: a crisis in a company precedes economic crises in the world and in Russia. But I’m already used to it. We even got a joke about this: “Take care of Valta, and then the whole world will be at ease!”
Based on the above mentioned pattern, the year 2021 should be very good for us.
– Situation with pandemic is hard everywhere now. Are there any Valta employees who got infected with COVID-19?
– We had one case in the city of Lipetsk. The disease was severe, but the employee was not taken to the hospital: there were no beds, and she fought the disease at home. Now she has successfully recovered and is already working. But this employee has always worked remotely, so no one else in the company was affected.
– Well, the situation with customers is clear. Now let’s talk about sales geography. In which regions the performance is good and where you face issues?
– I can’t say that the coronavirus greatly affected the work of Valta in the regions. If at the beginning of the year there already were problems with the market or with bankruptcies of customers in some regions, then the situation is bad there now anyway. Those regions have neither gained nor lost much. A good example is the city of Arkhangelsk.
But the Vladivostok division feels great, the sales are growing there. The South looks very confident, except, probably, Volgograd. Moscow suffered the most in terms of sales. But this is partly understandable, because a lot of Muscovites have now left the city for the suburbs, where self-isolation is a little easier. They can at least go for a walk there and the population is not so dense. Therefore, next-door pet shops and veterinarians in the Moscow suburbs are now simply thriving. Usually, the Moscow Region began to grow in sales starting with the end of May, but this year it started in April.
In Saint Petersburg, we have a slight decrease in turnover, but it is understandable – the company moved to another location in March, we changed everything: warehouse, office, cash & carry. And the team has changed. In Saint Petersburg, we expected sales growth, because recently we have been underperforming there. However, now that our office is working remotely, it is very difficult to reach a ‘cold’ client. It is necessary to meet eye to eye, but for now, obviously, there is no such possibility.
Everything is very well in Voronezh (Central region) now – sales are above the budget there. Tula also feels great – there is no decline in sales there, it’s relatively close to Moscow though, but the trend is different. Yaroslavl manages to keep the sales on a usual level.
There are problems in Novosibirsk and Krasnoyarsk. Hard movement restrictions in Krasnoyarsk affected our logistics. The decrease in customer activity there is about the same as in the country as a whole: 10–15%. The same can be said about sales. Yekaterinburg, on the other hand, looks rather well.
– I spoke with many retailers, they have a drop in sales of 30% or more, and you say it’s 10–15%, how can this be? Does this mean that your customers are hoarding goods?
– Valta has a very high degree of regional diversification. more
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