Interview with Alexander, CEO of Vettorgpartner company located in Minsk (Belarus)

– Alexander, what is the current Vettorgpartner’s position in the pet industry in your country?

– My country is small, with a population of only about 10 million. And unfortunately, there is no official pet market statistics in Belarus. I’ll tell you how we estimate the market.

In our family business, I manage a wholesale company, and my brother manages one of the leading retail chains in Belarus, Doctor Vet. Literally all market players are familiar with each other. Major players, and we are among them, share their sales analytics with each other.

According to the latest data, Vettorgpartner ranks 3rd–4th place in terms of sales in Belarus. I would like to emphasize that we are talking about a pet specialty sales channel, including e-commerce. Information about grocery retail is not available.

– Alexander, we all know Belarusian leaders’ attitude of to the spread of coronavirus. There was no lockdown, retailers were open, but meanwhile the pandemic could not but affect consumer demand. What was the effect on sales on the pet market, and how did customer behavior change?

– Our government has chosen its own way to deal with the situation. Many people compared it to the Swedish one, but it is purely Belarusian – a complete denial of the COVID-19 existence and all the problems it had caused. But people behaved more responsible than the country leaders: they visit restaurants, public places, shopping centers less frequently. The drop in sales in the shopping malls, where we have our pet stores, was about 30%. We expected that some customers would prefer small pet stores near home, but this did not happen either, and the drop in sales there was even more significant, about 35–40%.

– How do you explain it?

– Customers were afraid to visit small stores and veterinary offices, where it is impossible to keep social distance. People thought it was dangerous. In this situation, the society itself initiated changes. For example, the government was not going to implement online schooling, but more than half of parents simply stopped allowing their children to go to school. And the authorities were forced to switch to distant learning in the last half-term of the school year. It was a decision of society, of parents.

– Do you have such a high level of public awareness and influence on the system?

– We have a clear separation – there is a state and a government on the one side, and there is a society on his own on the other. The awareness of people who self-restricted themselves in contacts and movements during the pandemic had a strong impact on retail sales. But at the same time, online sales were growing, but not as significantly as in Russia.

March-April is usually a high season for insecticidal medicines. Store assistants always remind customers to buy necessary protection against fleas and ticks. But this year the traffic in the stores was extremely low, and online sales of these medicaments are illegal. For this reason, this category sales missed its usual spring boost and were at an average level.

The summer was stable, without any curves in sales. In the beginning of autumn the major market players sales were growing by about 5–10% compared to 2019. It was a surprise, and I think the reason of that was simple. Our economy was still stable and the National Bank kept the exchange rate on the same level, but people started worrying about potential further economic upheaval. To prepare to any escalation, they are used to stockpile products, including pet supplies. The devaluation of the national currency happened immediately after the presidential elections, and Belarusian people withdrew more than a billion dollars from banks in August and probably spent it on stockpiling goods.

In September and October, almost all major pet retailers carried out “Black Fridays” and other promotions with discounts up to 40%. People reacted to this, and this is probably the reason why sales increased so much. Pet business is fighting its best to survive. Small stores are closing, some players are trying to sell their business, but the leading Belarusian pet retail chains: Doctor Vet, ZOObazar and Zoomarket are trying to benefit from the situation and open new stores. And not even in Minsk, but in the regions of the country. Therefore, customers are just redistributed in retail.

– What’s the situation with veterinary clinics? Do they still have visitors and sales?

– Small veterinary clinics faced a footfall and consequently drop in sales. Large veterinary clinics experienced a good sales growth throughout the spring. Probably, when people stopped going to theaters, cinemas and restaurants they switched their attention to their pets’ health. Maybe the stress of self-isolation also affected the dogs and cats, and they had health problems. Perhaps there are other reasons that we do not fully aware of, but we have an effect – the leading clinics have had a significant increase, as can be seen as well from the purchase of vaccines this year.

– According to you the pet market in Belarus didn’t really suffer any negative effects of the pandemic. Have you managed to reach your this year’s objective, and how do you evaluate the future of your business?

– Our wholesale company plans to grow by at least 25% this year. And so far, at the end of September, we are on the right track. But key customers, whose chains consist of 50 or more stores, are now facing serious problems. A drop of 25–30% is significant for them, and they are coping by agreements of rent reduction, by cutting other costs, and we as suppliers try to alleviate conditions for them, i.e. payment delays or rebates. All clients are still alive, and the overdue receivables in our company today is record low, because business in Belarus, even at such a critical time, is quite reliable in terms of obligations.

Usually our sales “grew” due to inflation: sales values “increase” and helped us demonstrate financial well-being and business growth to banks – this is important. But sales volumes remained at the same level or even went slightly down. So, with official 10% increase in value and 15% inflation in Belarus, we understand that this is more of a fall than an increase.

But, so far the value of Belarusian pet market is growing 10% a year. Belarus lags behind Russia, Russia lags behind Europe, but our market is still very capacious, it is developing, the demand for pet products is growing, because more and more pet owners want to care about their pets better and in a more civilized way. There is still enough space for all players.

The number of pets has also increased, as evidenced by statistics of new clients in veterinary clinics. Breeders did not stop their activities during the pandemic period, and almost all of new pets remained in Belarus due to restrictions and were distributed to new owners here.

Today there are about 300–400 thousand dogs and 400–500 thousand cats in Belarus. There is no official statistics, but I personally estimate that half of all pet owners visit veterinary clinics and pet stores and buy industrial food for their pets.

However, the issue is not the quantity.

For many years, our sales were driven by suppliers’ plans. For example, one of the international pet food market leaders estimated the planned volume of sales. Then these tasks went down from the manufacturer to the distributor and moved to the leading retail chains and other clients.

The key point was how much products we need to buy from the supplier, and then sell to our clients in order to maintain the terms of contracts or get something extra for selling more than planned.

With this approach it is the supplier who benefits, not a distributor or a retailer. And in the end the company or a retailer which will change this and will switch to planning according its own interest and capacity, and not under pressure from major suppliers, will become a real market leader.

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Source: Zooinform