26. Centr Obuv

Country

The company is operating domestically in more than 900 stores and covers more than 300 cities in Russia. It started its business in 1992 as a shoe wholesaler, later shifted its strategy to develop as a retail chain. It also has stores in Ukraine (Dnepropetrovsk, Kiev, Krivoi Rog, and Kharkov) – the country has cultural and habitual similarities when it comes to consumer behavior; moreover, competition in such low price segment was attractive and lucrative as there were not so many players at the market. Further on the company is planning to enter Slovakian and Baltic markets.

Year of entry

2011

Industry/ business area

The company is Russia's leading and largest shoe retailer with the 4.3% market share⁴⁵ (in segment fashion, according to the rating of Russian trade networks INFOLine Retailer Russia TOP-100, 2011);

Two distinct brands:

• family stores Centr Obuv,

• Centro for youth shopping of the fast-fashion format.

Complementary goods along with accessories can also be purchased in stores.

Entry mode

Franchising of Centro stores in Ukraine (100 stores), Poland (65 stores)⁴⁶ and Baltic countries (Latvia, Litva); the company is planning to proceed with foreign markets penetration using M&A strategy (the target is twice as many stores for year 2013⁴⁷)

Motives

The company was diversifying horizontally as it was successful at the domestic market in Russia; the format itself is rather promising at new markets as well.⁴⁸

Firm specific advantages used on the foreign market

• Fast turnover of goods and fast fashion concept (format of stores);

• Low pricing, economies of scale and substantial purchasing power;

• Strong marketing, high brand recognition in Russia;

• Usage of specific software for supply chain optimization (namely inventory management)⁴⁹;

• High expertise while working with Chinese suppliers and smooth supply flows.

First mover or follower

Follower at the Ukrainian and Polish markets as shoe retail industry is competitive.

Type of state involvement in the process of internationalization

No or insignificant state involvement as the industry is rather competitive.

Evaluation of the success of the internationalization

This is a successful example of gradual internalization into countries of similar consumption patterns (Ukraine, Poland, countries of the Baltic region).