The development strategy in Russia 1
After a three-year continuous fall, the volume of the clothing market in 2018 showed real growth of 1.8%. However, consumption is still far behind the level of the pre-crisis 2014. Now Russians spend 21.3% less money on clothes than in 2014. At the same time, in 2018, prices for clothes increased by only 2.4%. This growth is below the level of consumer inflation. Such a dynamic is the result of the policy of the retailers. Russian Apparel market 01
Russian market in global scope Source: Statista Source: Statista Russia is 9th large apparel market in the world with a revenue of 41394,07 mln. Euros In 2018. But in terms of per-capita sales volume it is at 13th place with 53,2 pieces of different apparel purchased annually. 3
Russian apparel market data This statistic displays the apparel market volume in mln units and bln rubles between 2013 and 2018. Over the time period observed, the value of Russian fashion market peaked in 2013, at approximately 2.8 bln units. Since then, the market value has decreased slightly, though market value grew in rubles and recovered in Euros. Source: Euromonitor, Statista 4
Apparel Import to Russia Source: Federal Customs Service, Ru-Stat This statistic displays the value of clothing imported to Russia annually between 2013 and 2018. The clothing imports to Russia generally recovered after decline in 2015-2016, reaching a level of ~6 Billion Euros. Since 2015 import has recovered with CAGR 8% The knitwear and other apparel import have nearly the same ratio this years. 5
Average monthly household expenditure per capita on apparel and footwear in Russia. This statistic presents the average monthly household expenditure per capita on apparel and footwear in Russia from 2001 to 2017, in Russian rubles. The general observed tendency was that Russians spent more money on apparel and footwear every year. In 2001, they spent 226.1 Russian rubles (3,1 Euros) on clothing and shoes each month. In 2017, the figure increased to around 1,471 Russian rubles (20 Euros) per month. This was a slight decrease from the value of 2016. Source: Statista 6
Leading apparel retailers in Russia This statistic shows the leading apparel retailers in Russia, based on the number of stores. With 632 stores, O'Stin is the leading retailer in the Russian apparel market. Gloria Jeans and Sela rank in second and third place, with 511 and 333 stores respectively. Source: Statista 7
The main competitors shops The Superdry Direct Competitors are following Brands: Tommy Hilfiger, Calvin Klein, Armany, Lacoste, Levi’s and Guess. As it follows from the data presented on the chart, Levi’s has the strongest position among all of them. The Second place belongs to Lacoste. CK, Lacoste and Levi’s use a franchising model while all the rest have only their own monobrand shops. The brands having a franchising program also have much more their own shops. Однако – тенденция! Source: Shop & Mall 8
The existing retail space in Moscow St. Petersburg Vladivostok Nizhny Novgorod Yaroslavl Kazan Samara Voronezh Rostov Krasnodar Sochi Leaders Krasnoyarsk Novosibirsk Tumen Yekaterinburg Ufa Omsk A B C Group “A” includes the most developed markets among Russian regional cities. It has a high purchasing power of residents. Each of the cities is a large industrial center with an excellent economic base. Group B are the cities with a smaller size of the retail market and wages, and an average of 370 sq. m. of high-quality retail real estate per 1 thousand inhabitants. Nevertheless, these markets have a high volumes of retail turnover, which makes them attractive for retailers. Group C. Most of its cities are relatively young retail markets, have a small amount of high-quality retail real estate and a lower turnover per capita. Source: JLL 9
Key Statistics Vacancy in high-quality shopping centers in Moscow has decreased in 2018 over 2017 from 5.5% to 5%. It is expected to increase the share of vacant space in the market as a result of the opening of a significant number of new shopping centers in 2019. Vacancy in such objects, as a rule, is higher than in long-functioning shopping centers. Source: Shop for Shops 27% 13% 9% Moscow St. Petersburg Yekaterinburg Three leading cities in Russia consume over half of the whole apparel market. Moscow is the leading city, amounting to a share of 27 percent, followed by Saint Petersburg, accounting for 13 percent. Yekaterinburg is ranked third, representing nine percent of the Russian apparel market. 10
In 2018, 63.5 million orders were fulfilled in the online stores of clothing and footwear included in Russian TOP1000 with revenue of 166.7 billion rubles. The average check was 2,600 rubles. Online retail market 02
33% 19% Apparel & Footwear share in eCommerce by number of orders Apparel & Footwear share in eCommerce by Revenue 33% of all online orders of the 1000 largest stores in 2018 were made in online clothing and shoes stores. Since the average check in the sector is lower than average in ecommerce market, share by revenue was also lower - 19%. The conversion visitors to buyers in the sector of apparel and footwear in Russia is 10%. Apparel & Footwear in eCommerce Source: DATA Insight 12
91% 2% 7% Clothes, shoes, accessories Only shoes Other categories 81% 4% 15% 60% 20% 20% The TOP1000 Russian online retailers included 93 online clothing and shoe stores. 60% of the sector’s stores sell clothing, shoes, and accessories, 20% only shoes, 20% other categories of goods. At the same time, the share of online shoe stores accounts for only 2% of sector orders. Online clothes and shoes sector structure 13
Leading online stores in Russia This slide presents the leading online clothing, shoe and accessory stores in Russia in 2018, based on online sales value. Wildberries.ru is Russia's leading online clothing store with sales worth approximately 63.8 billion roubles (869 million Euros). Source: Statista 14
We plan to ensure maximum coverage of the target audience of Superdry in Russia, working in all cities across the country and using all major sales channels. Superdry strategy in Russia 03
Analysis of price statistics for similar product groups of Superdry and direct competitors operating in Russia shows that we will have an advantage in price over all competitors except Levi’s (30% cheaper on average) and Guess (the same price). Competitive advantage of Superdry 16
To achieve the target sales volume of 115 million euros, we plan to use all the main sales channels - a network of our own stores, online sales and wholesale sales to multi-brand stores and franchisees. We will open stores in the following cities: Moscow, St. Petersburg, Rostov, Krasnodar, Sochi, Kazan, Ufa, Samara, Yekaterinburg, Omsk, Novosibirsk, Krasnoyarsk, Vladivostok. Omnichannel Strategy After that, we expect in these cities the emergence of interest in the brand, which will be enhanced by marketing. As a result, sales growth through online channels and the emergence of new wholesale partners who will sell products through their own stores in the region. We consider our online shop as well as Wildberries and Lamoda marketplaces the main online channels. 17
Store opening schedule 18
19 Sales plan, Mln pieces Number of stores operating Revenue figures
Revenues by channel, Mln Euros 20
Financial highlights 21
Key Figures. Net present value Net profit Internal Return rate Discounted Payback period Capital needs Payback period Target annual revenue Net Cash flow 72,46% 90,6 mln Euros 9,3 mln Euros 116,3 mln Euros 72,1 mln Euros 29,9 months 29,1 months 36,4 mln Euros 22
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