OBI (англ) финал

“Hunting for Customers” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores As part of the case study, participants are invited to immerse themselves in the activities of the large Do-it-yourself (DIY) hypermarket chain OBI, and develop a strategy to increase the number of customers and the average revenue per user (ARPU) through active approach to interact with clients. For this purpose, it will be necessary to analyse the existing standards of customer service and the key business indicators of the hypermarket’s activity (conversion rate, ARPU, profitability, and demand for various product categories), play the role of a ‘mystery shopper,’ and put oneself into a regional manager’s shoes.

CONTENTS

Introduction

3 About the Company

4 Inside the Store

The Players on the Modern 14 Customer Service in Retail Day Russian DIY Market

7 The DIY Market: Analysis, 11 Trends and Dynamics

17 Attachments

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2 “HUNTING FOR CUSTOMERS� Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

INTRODUCTION Vasiliy, regional manager at OBI, looked out the boardroom window that was overlooking the huge territory of the recently rebuilt «Aviapark» shopping mall. He looked at the orange building of the hypermarket OBI Khodynskoye Pole, which had only been opened recently, in December 2014.

Vasiliy was at the opening ceremony. The new store was consistent with the general concept of OBI hypermarkets and with the German high quality standards. It had huge potential – a great location within the mall and good accessibility put it in a special position among the city’s hypermarkets.

Vasiliy and his colleagues managed to combine the solutions used by the company in the Russian market and invaluable practical experience in international retail. In contrast to many other twostorey shops, OBI Khodynskoye Pole had a service centre located on each floor, a full line of cash desks, as well as additional entrances and exits to the mall.

“This is Europe,” Vasiliy smiled. There were no traffic jams, access was easy, and there was full infrastructure, with good proximity to major grocery and sports hypermarkets. He had special expectations regarding the new hypermarket OBI Khodynkskoye Pole, which was located in Europe’s largest mall. However, as a regional manager, he was responsible for the development of all of the company’s hypermarkets in Moscow, so he could not pick his favourites. More so, since he would soon have to develop a common strategy to

increase the number of customers and the ARPU through improved customer service and a more effective sales performance at the salesroom.

OBI CEO said oon a corporate TV channel: «Our economy goes through difficult times: people go shopping more rarely, spend less, save more, save for a rainy day, which, they believe, will happen very soon. I have, let`s say, cautious optimism for this year. Somebody will not go abroad and remember their six decares and gardens. Others will get an opportunity to finish building their cottages. Still others will finally start their home improvement. To attract customers inside OBI shops is just a part of the target. Marketing department is responsible for achieving it. Another part is to convert visitors into customers. And here I need your help. Here the real hunting begins...»

It is precisely this window of opportunity that Vasiliy wanted to take advantage of. New customer needs have arisen, and this means that it is necessary to improve the service system, work more thoroughly on personalised offers for customers, offer them more profitable products, and provide them with better support.

Colleagues gradually began filling the boardroom.

Vasiliy greeted store directors, colleagues from the marketing department, commercial (procurement) department, and HR department, who were

responsible for the development and training of employees.

“Good morning,” said Vasiliy to start the meeting, once the colleagues had taken their seats.

“Recently, we all celebrated the opening of the new store, and we know how much time and effort has been invested in it. We must constantly evolve

and not only expand our network, but also work to improve the quality of our services. All of you are experts in your fields, and with your help we can achieve more. As you know, we recently launched a project called «Hunting for Customers,» to increase customer traffic and volume of sales. We will be acting within a single integrated strategy, which will allow us to achieve maximum effect.

Soon we will need to estimate our budget and develop a plan that will allow us to achieve the following within three months: 1. Increase the number of store visitors by 10%, and secure a conversion rate* increase for at least 3%.

2. Increase ARPU by 30% through a more proactive approach towards the customer, basket purchases, and more intensive sales of high-margin products.

3. Ensure that there is an improvement in the quality of customer service, and that at least 90% of the sales personnel pass ‘mystery shopper’ tests.

I have prepared a brief analysis of the existing model of customer service and conversion rate, and I have evaluated the profitability and demand for various product categories. I will show you the presentation in a little while.

For the preparation of the strategy, I would like to talk with you in more detail about the factors that influence the customer’s choice of goods. When does a customer decide to purchase the product?

What missed opportunities and their causes do you see? In addition, we will analyse the planned and actual purchases, the reasons for selling less

volume than planned, and we will identify the main incentive to buy more.

All of this will help answer the question of how to improve customer service and how by improving the efficiency of sales at the salesroom we can increase sales at each store, within relatively short period of three months.

So, dear colleagues, pay attention to the screen!

Afterwards, we will discuss your observations and suggestions for the preparation of the plan and for the new “Hunting for Customers” strategy.”

* Conversion rate - the percentage of visitors turned into buyers

3 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

Итак, коллеги, внимание на экран! После этого обсудим ваши наблюдения и предложения для подготовки плана и новой стратегии «Охота за покупателем».

ABOUT THE COMPANY ____________________________________________________________________________________________

Bonus task Since the Russian market category has not yet emerged completely, there are several terms for this category – ready-made sauces, hot sauces, sauces for cooking. Within this category, there are several segments, which include pasta sauces, sauces for cooking of national dishes, etc.

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ABOUT THE COMPANY OBI – the large network of DIY hypermarkets – may never have come into being, had Emil Lux not founded his hand tool production company in Germany in 1948. It soon became clear that the production of hand tools was a very promising and profitable business. Then, in 1958, Emil Lux began to export construction and finishing materials to other countries. In 1968, Emil Lux met Manfred Maus, and they decided to combine 12 specialty stores offering household products under one roof.

1970 is considered the founding year of OBI, when Emil Lux and Manfred Maus opened the first store under that name in a large shopping centre near Hamburg in Germany. At that time, it only occupied an area of 870 m2 and employed 12 people.

The orange colour was chosen for the store representing a colour of energy, optimism and vitality. The image of a beaver became a symbol of home improvement and the ability to do everything with one’s own resources.

OBI’s business idea was unique for its time – it was the first DIY store. A whole range of products for repair and gardening was integrated into one store.

Prior to that, all the materials for home improvement and gardening had to be bought separately from

individual stores which, for instance, specialised in the sales of paint, hardware or lumber alone. OBI’s main business idea was to turn home improvement and gardening work into a pleasant experience.

In 1971, OBI began actively developing a chain of stores, and in 1994, the first store outside Germany was opened in Italy. By 2001, OBI had become one of the leading DIY companies in Europe.

OBI has been known to Russian customers for over 10 years. Two hypermarkets – located in Khimki and Tyoply Stan – opened simultaneously in late November 2003. OBI became the first DIY company on the Russian market, and its range of products quickly drew interest from a large number of Russian customers.

Further expansion of OBI in Russian cities began in 2005 with the opening of a hypermarket in Kazan. Currently there are 24 OBI hypermarkets in Russia. Eight of them are in Moscow, five in St. Petersburg, two shops in Nizhny Novgorod and two shops in Yekaterinburg, and one in Kazan, Omsk, Volgograd, Krasnodar, Saratov, Ryazan and Surgut.

The opening of OBI Belaya Dacha hypermarket in Moscow in November 2007 marked the company’s

most successful store opening in Europe, with 15 000 people visiting the store in the first few days of its operation.

Against the background of worsening situation in the Russian market, the company focused on increasing the ARPU, and managed to increase it by 7% compared to 2013. As a result, like-for-like sales increased by 8%1.To support demand, OBI tried to prevent an increase in prices of imported goods by negotiating with suppliers and reducing its own profit margin by 2%. According to Rosstat, the consumer price index for industrial goods from December 2013 to October 2014 increased by 5%, while product prices at OBI are not expected to increase in the nearest future. Overall, OBI is moving in line with the global trends, focusing on high quality customer service and creating an atmosphere of comfort for customers inside its stores. OBI is a large store that is easy to navigate and that offers a pleasant and convenient shopping experience.

high-quality and safe products. It is important for the company to provide qualified assistance and the best possible range of goods and services.

Highest operational standards form the corporate identity at OBI. This is a chain of super-safe, modern and clean stores that stand out through convenient shopping experience, merchandising concepts, equipment, and compliance with work safety regulations.

OBI is a socially active company. The company’s Russian stores operate a program to attract hearing impaired job applicants for vacancies in sales and cashier sections. Each year the company raises funds for the treatment of children with cancer. OBI cooperates with the regional public organisation for disabled people «Perspective» and with C. Khamatova’s and D. Korzun’s charitable foundation «Podari Zhizn».

OBI closely monitors the demands on the Russian market and tries to provide the highest possible level of service in its stores. The company’s mission is broader than simply offering customers

Like-for-Like (LFL) sales – in retail, this is a method of comparing sales data without taking the effect of the chain’s expansion into account.

Thus, if in the first quarter of 2014 the chain included 10 stores, while in the first quarter of 2015 it included 15 stores, the changes in comparable sales over the past year will be calculated for 10 stores.

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5 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

TEN FACTS ABOUT THE COMPANY 1

Since the founding of OBI stores, and to this day, there are many incredibly creative theories regarding the origin of the name of the chain. In fact, the word OBI is not an acronym, but derives from the word ‘hobby’ – pronounced in the French manner, with the stress being on the first letter.

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The company’s symbol is a beaver – chosen as a symbol of home improvement, since this animal is constantly busy in this regard. Furthermore, a beaver’s tail somewhat resembles a shovel – that is, a construction tool.

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In total, more than 570 stores in 10 countries operate under OBI brand, mainly in Central and Eastern Europe. Most stores (350) are located in Germany, while Russia has 24 stores.

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OBI employs more than 43 000 people worldwide. In Russia, OBI has more than 5500 employees.

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Staff involvement achieved a result of 84% in 2014, which allowed OBI to be ranked among the top three employers in Russia according to AON Hewitt.

For the second year in a row, OBI was named the best employer in the retail industry.

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The company operates a competition of innovative ideas and projects for all its employees. Titled «OBI Innovators,» it allows employees to express themselves and their ideas about how to make the company’s work easier and more efficient.

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In Surgut, OBI store is located on the bank of the river Ob, thereby creating a play on words.

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The company not only conducts charitable activities itself, but also attracts its customers to them. Thus, visitors at OBI hypermarkets were given an opportunity to join the campaign to create wooden figures of wild animals, which were transferred to the «Beautiful Children in a Beautiful World» fund, which aims to create comfort in hospital wards.

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In association with FC Zenit, OBI organised a children’s amateur football tournament in St. Petersburg. Some of the teams were representing various orphanages. Young athletes were given the opportunity to play against each other in a competitive environment, and to play alongside the footballers from FC Zenit.

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The AppStore has an application by OBI, titled «SadExpert» (Garden Expert), which allows users to set a reminder of the watering and fertilizing times for plants, and to obtain advice from OBI about looking after indoor and garden flowers. The app takes into account the weather forecast when delivering recommendations, and also helps searching for plants by the colour of inflorescences.

6 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

INSIDE THE STORE ____________________________________________________________________________________________

Bonus task Since the Russian market category has not yet emerged completely, there are several terms for this category – ready-made sauces, hot sauces, sauces for cooking. Within this category, there are several segments, which include pasta sauces, sauces for cooking of national dishes, etc.

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INSIDE THE STORE OBI hypermarkets are classical DIY stores of a large format, which corresponds with the large size of the goods themselves. OBI is proud of the number and quality of its customer services. In total, the company offers more than 25 kinds of services – from professional building advice to large-scale renovation works, making it the leader in the Russian DIY market in this regard2.

There are three ways to make a purchase at OBI: • Visit hypermarket in person and select the desired product.

• Place an order over the phone.

• Place and order via the Order and Collect service on the company’s www.obi.ru website.

OBI launched the Order and Collect service in early 2014, thus taking the first step towards implementing its e-commerce project. The service allows the customer to familiarize himself with the product range, to study the features of the goods, and make the right choice on that basis. Moreover, this method saves time and avoids a situation where the required quantity of goods is not available in the store on the day of the purchase. Today, the online range numbers approximately 30 000 products, and is constantly growing. The operating schedule of the stores allows the customer to plan his visit in the best possible manner. Currently, OBI is finalising details of the project which will allow the company to operate a system of online payment and home delivery of orders.

At this time, however, OBI stores form the focus of the majority of existing services. What does an OBI hypermarket store look like, and which services does it offer to its customers? All OBI stores are similar in size and product range, with the exception of the relatively smaller OBI Filion store in Moscow. The average commercial area of an OBI store in Moscow is approximately 1517 000 m2. For example, the total area of OBI Khodynskoe Pole hypermarket is 14 965 m2, of which 2241 m2 are taken up by the garden centre.

Each hypermarket offers a range of more than 70 000 products, of both Russian and foreign production, including OBI’s own brands of CMI and LUX. Conceptually, there are four product areas in all OBI stores: gardening, construction, decoration, and appliances. OBI is especially proud of its garden centres. They completely live up to the name «Garden Paradise,» and inspire gardeners to create their own unique compositions. They offer a wide range of plants, garden machinery and tools, products for dachas and gardens, outdoor recreation, and landscape design. The product range of OBI’s gardening section is updated annually by 70%, allowing the company to lead the Russian DIY market in terms of sales in the gardening category. Exhibits created by using OBI products – placed on the shop floor at the company’s stores – inspire customers to renovate and improve their homes, providing them with new design ideas, and teaching them how to make their

houses and dachas more comfortable and cosy, and their gardens more beautiful.

In most hypermarkets the service centre is located next to the entrance. OBI service centre provides customers with general information and answers to all questions relating to the range of goods, orders, deliveries, returns, and warranty. Several collection desks of the Order and Collect service are located in the same area, equipped with an electronic queuing system. Next to the service desk is a cooler with drinking water and plastic cups, and the service centre stand also has a first aid kit available for emergencies. A navigation plan is located on the wall next to the store entrance.

Colour zones on the map and on the big signs below the ceiling make navigation and building of itinerary easier for the customer.

Apart from the store’s main entrance, information desks are also located at several points on the shop floor. Here, customers can call one of the expert consultants. Many products for home improvement require consultation, which in OBI hypermarkets is provided by specially trained personnel, free of charge for the customer. For example, in the garden centre, customers often have questions regarding the frequency of watering a plant, or whether a plant likes or dislikes the light. Similar consultations are needed in all departments, no matter if its about painting or plumbing. Professional experts offer their services to the customer in every department of the store,

helping to choose a product, to calculate the correct amount needed, and to place an order of any complexity. OBI has a multilevel system of training and testing its employees, ensuring that sellers can quickly and accurately respond to customer’s questions.

A lot of easier issues can be resolved by the customers themselves. The shop floor has devices for testing lights chandeliers, information stands explaining the functions, differences and advantages of the products, as well as equipment installation diagrams. Furthermore, it is possible to check the price of a product by scanning its bar code underneath the reading device located at the information stands on the shop floor. For those who are keen on the idea of home and garden improvement, and like to do something with their own hands, OBI conducts training workshops to help acquire the necessary skills for carrying out renovation works. In the «Garden Paradise» section, OBI staff will demonstrate techniques of planting, and talk about all the nuances of looking after the plants properly. All of this is absolutely free of charge. Furthermore, the company offers its customers a range of free services directly in stores, such as precise woodcutting, curtain sewing and tinting services, as well as overlocking of rugs.

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According to Infoline research data from 2014

8 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

If customers are not willing to conduct the works by themselves, OBI’s installation and renovation service will come to their aid. OBI spent a very long time looking for a suitable partner company which would be able to provide customers with highquality and low-cost renovation services, with a set price list for each type of work. Several years of cooperation with this partner have shown that customers are excited about this service and that it is good value for money. Customers can also use the services of a designer, installation and renovation services, as well as temporary storage facilities for storing things while renovation works are being carried out. Experienced designers will develop design projects and 3D models, using products from OBI’s own range.

When all items have been selected, they have to be delivered to the point of destination. OBI stores provide cargo and passenger taxi services for the delivery of purchases. When buying goods worth 20 000 roubles or more, all Moscow hypermarkets offer free delivery.

For customer convenience, payment at OBI stores can be made by credit cards, hire purchases can be arranged, and services for legal entities can be obtained as well. Gift cards of values ranging from 500 to 10 000 roubles can be purchased at any cash desk. These are issued in 12 varieties, and are attractively designed. New tenants are entitled to a 5% discount as part of OBI Club program. OBI cooperates with the development and construction companies in order to attract this category of

customers. People who have owned a property for less than one year can partake in the program, and the discount is available to them for a period of 12 months from the date of enrolment in the program.

Today, OBI obtains feedback from its customers through a special form found on its website, through the book of comments found at the information desks inside the stores, and by conducting quarterly surveys about visitor experience at the stores. The loyalty program is being developed, and will be re-launched by the marketing department in 2015. A free new OBI customer card will be widely disseminated among all categories of customers at the stores. It will allow buyers to accumulate bonus points and receive target offers associated with their personal history of purchases.

OBI’s main marketing activities are currently associated with seasonal campaigns. Outdoor advertising and short video commercials encourage solutions to gardening worries by using products from OBI: «Plant!», «Water!», «Scythe!»

«Put up your hammock.»* Furthermore, there is now a common tendency among major German companies to combine advertising budgets. Thus, within the framework of joint activities, one may come across non-rival German brands OBI, Metro and MediaMarkt on the same billboard.

CUSTOMERS OBI’s offers correspond with certain price specificity. The company never intended to position itself as a cheap DIY store which is willing

to sacrifice customer comfort, safety and quality or variety of its services for the sake of lowering its prices.

Unlike many other DIY stores, OBI hypermarkets are not of self-service type. Customers come to OBI stores to be told about the range of available products, and to receive help with making a selection. Therefore, to ensure that the store is successful, salespeople need to tell customers about the possibilities offered by OBI, and persuade customers to choose more expensive and highquality products that better suit their requirements.

OBI’s target audience is the family – mother, father and child. After all, home improvement is a common cause for the whole family, and something that unites everyone. Each store has conditions of safety for children; men are attracted to tools and building materials; while the gardening and decor sections are aimed at the female audience.

Therefore, the company’s advertisements frequently depict family images.

The strategic project for 2015 – prompted by existing market conditions and falling customer’s demand – is titled «Hunting for Customers.» A key objective of the project is to make OBI hypermarket employees literally ‘hunt’ for each client. This task is realised by increasing the ARPU, which currently stands at about 1800 roubles, by adopting a more proactive approach towards the customer, through basket purchases, sales, and service offers.

«Hunting for Customers» does not imply chasing

them down and trying to force them into buying products. It is how the company operates on a daily basis, regardless of the season or the store department. OBI tries to form the belief among its salespeople that they are offering the best products to the best customers in the best store with the best customer service.

The number of visitors at OBI stores is currently falling, and one would struggle to come across visitors who go into the store by chance, and may conduct a spontaneous purchase. Most customers come to the store having already formed an understanding of what they need to buy at that particular moment. The challenge for OBI is to get 100% out of this small group of store visitors and buyers. More information about the conversion rate is available in the annex to the case.

PERSONNEL OBI’s services provide customers with a great degree of freedom of action. Customers may consider and select products on their own, but the store has everything to immediately come to the customer’s aid, if necessary. More than 50 experts in various fields work on the shop floor simultaneously, and can be contacted for assistance. On average, an OBI store has around 300 employees.

The social package for the employees at OBI includes a stable gross salary, meals at discounted prices, a 10% discount on OBI products, a medical insurance policy, free uniforms and shoes, gifts

* «Посади!», «Полей!», «Покоси!», «Поставь гамак».

9 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

which the employees receive on the New Year, 8 March (Women’s Day) and 23 February (Defender of the Fatherland Day), corporate events, and paid training . Young people under the age of 30 represent around 75% of the workforce at OBI. Therefore, the corporate magazine OBI LIFE has been designed in a stylish and attractive manner.

The magazine talks about the company’s projects, publishes interviews with employees who have achieved success, and introduces working teams from individual stores. OBI LIFE represents a unique communication platform, where employees share their experiences, opinions and impressions.

Salespeople on the shop floor are firmly attached to their respective departments. Elite sales personnel (master consultants) operate across the whole floor. There are approximately 7-8 master consultants working at one store during each shift, while in total, there are around 20 of them within a shop. Their main task is to arrange basket purchases. Master consultants start their working day anywhere within the store, and move around the shop floor together with the customer, forming a basket purchase. They are only targeting sales, and maintaining the store’s operational standards,

displaying products and price labelling are not part of their duties. Workshops conducted by OBI attract a steady flow of customers, but they do not diminish a master consultant’s work. According to statistics, only the sales of demonstrated products increase after the workshops, while the ARPU of the basket purchase does not increase significantly. Master consultants must spend their whole working day with customers, and only for this category of personnel does the income depend on personal sales.

HIGH-MARGIN PRODUCTS AND THE IMPACT OF SEASONALITY When designing its business activities, OBI pays particular attention to product display, merchandising, and sales of high-margin products.

Items traditionally displayed in the checkout area include energy saving lamps, brushes, masking tape, simple products for the kitchen (sponges, food films, tissues), as well as products of another ‘orange’ company, BIG (pencils, pens, lighters and razors). The shelves are often stacked with complementary and related products, such as batteries and tapes. There are special spots on the shop floor that are reserved for special offers

and expected impulse purchases – boxes with goods that are on special offers are located in the central aisle of the store. Even though the prices of such goods are favourable for the buyer, these are often high-margin products. Amongst OBI’s most profitable products are bags for debris removal.

On the other hand, goods that are always needed for carrying out renovation works, and are in high demand, such as plaster bags, are often not highmargin.

At OBI, as in the entire DIY market, there are two seasons of increased customer activity – the spring and the New Year. On the eve of 2015, thousands of New Year-related goods and several thematic collections went on sale at OBI stores, with real spruces always being a sales hit.

Depending on weather conditions, the spring season begins with the first warm days, and lasts until July. October and November are quiet months, after which New Year offers begin to appear in stores. Special seasonal offers are impossible to ignore at the customer’s. During the springtime, these are garden items and dacha furniture.

Goods that are on seasonal offers occupy large

spaces in front of the checkouts, so that visitors will be unable to pass by this section at either the entrance or the exit of the OBI hypermarket.

During the ‘dacha season,’ which runs from April to October, the garden centre accounts for up to 40-50% of the store’s turnover, on the average. In Europe, during the hot season, live plants account for 34% of DIY segment sales, while at regular times, 27% of sales come from accessories and tools. Traditional methods for DIY stores to combat seasonality include displaying related products, such as food and toys for pets, as well as holiday products.

The company also tries to derive maximum benefit from its services. For example, the delivery service accounts for up to 20% of the company’s total turnover, and since the introduction of the free replanting service at the OBI stores, the ARPU increased by 2.5 times due to the fact that customers bought not only flowers, but also vases for them3.

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Retail.ru. Getting ready for the summer: tips for DIY stores

10 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

THE DIY MARKET: ANALYSIS, TRENDS AND DYNAMICS

THE DIY MARKET: ANALYSIS, TRENDS AND DYNAMICS At the time of opening its first hypermarkets in Russia, OBI was entering an unconsolidated local market, where there were virtually no federal players, customers were not spoiled with high quality services, and had to turn to building material markets or strong local DIY chains in search for better prices.

In the early 1990s, the Russian DIY market had nothing in common with advanced European giant chains. The Russian market sprung up in an environment where there was no competition and, as a result, margins were high. Although the market changed dramatically with the advent of European hypermarkets, some differences have remained.

First of all, the product range is slightly larger in Europe. While competition on the Russian market intensified, building material markets got involved in the process. Margins decreased, but the strategy remained unchanged, so the emphasis was not on increasing the range of products and the number of suppliers, but on cooperating with the largest manufacturers that were capable of providing a minimum price and keeping it unchanged for a long period of time, such as a year.

It is worth noting that the DIY hypermarkets in Western countries really do focus on allowing customers to carry out repair and renovation works on their own, with the aid of the purchased goods. Specialist services in Europe are quite expensive, so in most hypermarkets, screens

installed on the shop floor provide visitors with detailed instructions on how to replace the faucet, apply wallpaper, or fit out an open veranda.

According to the Discovery Research Group analysts, potential DIY store customers make up approximately 70% of Russian citizens who are involved in renovation and construction. It is important to note that in Moscow and the Moscow Oblast, the share of such customers is about 3 times smaller than in the province, since residents of the capital and the oblast are more likely to turn to the services of professional construction teams and repair specialists. The share of professionals out of the total number of customers ranges between 7% and 10%.

This group of customers requires special attention, since professional clients in many cases significantly influence the choice of end users.

They fully or partially take it upon themselves to choose materials for construction and renovation works, and also provide advice with regards to choosing decoration materials. The influence is evident in the choice of both goods and stores.

The format of building materoal supermarkets in Russia can be called “Do it for me,” as we increasingly entrust professionals to carry out large projects, such as major home improvements and fitting out bathrooms, while home owners only select the materials and interior objects. Having said that, the new economic conditions are forcing a change in this model towards people carrying

out renovation and furnishing works on their own.

Often today, people are not ready to renovate the entire apartment, or carry out complex landscaping works. Buyers are choosing offers in the DIY segment, preferring, for example, to paint or plant something with their own hands. At the same time, however, demand for OBI’s renovation services has actually increased somewhat.

Furthermore, the American format of home commerce has become widespread in Russia, whereby you can arrange to have company representatives visit your home directly with some samples, get acquainted with the product range, and place a delivery order, which is sometimes even free.

The opening of the first Russian stores by major international DIY chains OBI, Leroy Merlin and Castorama in the middle of 2000s coincided with the growth of incomes across the country and a corresponding change in their customer model: demand for products in the segments outside the FMCG, including DIY, grew rapidly. For example, according to research, home renovation was ranked first among the Russians’ spending plans between 2012 and 20144.

Having managed to offer customers international standards of quality and service without overpricing on the existing competitors, international chains have contributed to a sharp growth of the DIY 4

market over the past ten years. Thus, according to Infoline, retail trade turnover in the DIY segment exceeded 1 trillion roubles in 2014, which represented a more than threefold increase since 2005. During the same period, the number of DIY hypermarkets increased from 62 to 329, with a fivefold increase in the total commercial area5.

Experts believe that Russia actually has potential to accommodate another 500 DIY stores.

Active growth of the segment occurred during the period before the crisis of 2008-2009. As seen from the graph of DIY turnover dynamics, the segment experienced a significant drop during the crisis period in rouble terms. This is primarily due to a significant dependence on the dynamics of real disposable income and housing market. In the context of the current crisis, dependence on imported goods, which account for about 40-50% of the total product range, will also become an important factor. Given the currency fluctuations, this may lead to a significant reduction in the volume of the market in dollar terms.

Before the crisis, Accenture predicted the annual turnover within the Russian retail sector to grow by 6.5% annually in dollar terms, reaching a volume of 43.7 billion dollars by 2018. Today, Infoline predicts a drop in sales by up to 8.2% even in rouble terms in 2015, and before the end of the crisis period, the market could potential drop by as much as 30% according to some estimates6.

I Infoline – The problems and perspectives for the development of the construction and furnishing materials market and DIY trade, 2014 Retail.ru

5,6

12 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

Active investment by major international chains seriously affects the entire Russian DIY market: total growth of their retail space amounted to almost 100 thousand m2 in 2013, while their expansion into new regions led to the closure of some local chains, and the share of sales of construction materials through retail markets and fairs gradually decreased from 15% in 2011 to less than 11% in the spring of 20147. The chain format of stores has the best prospects. In 2013, the share of retail chains in the total turnover of retail trade in building materials and other goods for renovation works in Russia already amounted to approximately 60%. DIY chains saw their total revenue increase by 18% in 2014, compared to 8.4% growth a year earlier. Typically, product margins at DIY chains range between 25% and 30%. The share of modern formats will continue

to grow, as the business model of chains is more efficient, as evidenced by the growth rate of total revenues of DIY chains, which exceeds the market average. Against the background of a decline in the share of building material markets and traditional shops, the share of modern formats will reach 7778% by the end of 2015, and 82% by the end of 20178.

Despite the fact that among the major retail segments, conducting offline DIY purchases has been described as comfortable by a majority of

Number of floorspace of DIY hypermarkets in Russia in 2008 – 2013

1200

30 % 28,0 %

26,8 % 24,6 %

970

25 %

20,3 % 770

209

10,5 %

96

10 %

200

5%

200

62

1441,5

1587,2

1782,0

1984,7

2177,6

2334,9

0% 2005

2006

2007

2008

2009

DIY retail sales, bln rub.

2010

2011

2012

2013

Growth in current prices, year over year, %

2014

12 % 18 %

150

13 % 13 %

1054,1 737,2

50

0

0 2005

2006

2007

2008

2009

2010

Floorspace of DIY hypermarkets, mln sq m

2011

2012

2013

Central

North Caucasian

Volga

Ural

Southern

North Western

Siberian

Far Eastern

Number 7 8

Accenture – mega analysis 2014: macroeconomics, customers, retail According to RBK Research forecasts

13 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

24 %

100

469,7 0

4%

8%

149

7,8 %

8%

250

220

400

290

350

200

15 %

360

Regional structure of construction materials’ retail sales turnover in 2013

250

600

500 12,0 %

450

800

20 %

570

The prospects for the segment in the coming years are estimated by market experts in different terms.

On the one hand, dependence upon imports and falling purchasing power reduces demand for DIY goods. On the other hand, a lot more people are planning to spend their holidays at home or on the dacha, which will stimulate demand for gardening tools and products for fitting out living space.

300

277

16,9 %

640

400

329

prior to going to the store, 18% - the possibility of ordering a product if it is absent from the stock, and 18% - having more delivery options available to them.

307

900

800

1000

1072

25,4 %

600

In the Accenture survey, customers who use multiple DIY sales channels identified the drivers of loyalty and areas that require improvement.

Product range leads 67% of the respondents to adhere to a particular retailer, while price attracts 66% of them and 56% are loyal towards retailers with a good location. Among the key services that require improvement for the development of multichannel sales, 38% of the respondents named the possibility to check availability of products online

The main trends in the market include the development of direct import from South-East Asia, an increase in the share of rouble procurement, an increase in the efficiency of category management, and stimulating online sales.

DIY retail sales in Russia in 2005-2014

1000

respondents (97%), while only 54% described online purchases in the same way, demand for multi-channel sales has increased within the segment, as 53% of respondents plan to start conducting DIY shopping online. Internet sales in the DIY segment reached 45 billion roubles in 2013, which represents a 25% increase for the year.

THE PLAYERS ON THE MODERN DAY RUSSIAN DIY MARKET

THE PLAYERS ON THE MODERN DAY RUSSIAN DIY MARKET There are many players on the Russian DIY market, but in the last two years, their numbers have started to decline. The DIY retail network is gradually consolidating – the big players are taking a greater share of the market each year. According to RBK, the market share of the top 10 companies could reach 47-48% by 2016. In 2014, their share, according to Infoline estimates, amounted to 29.5%. According to various estimates, the three major foreign chains occupy between 17.5% and 23.5% of the market, and in the large cities, their combined market share is up to 40%. In 2013, Infoline named Leroy Merlin as the market leader (10.21%), with OBI coming in second with a score of 4.6%, and Castorama completing the top 3 with 2.8% of total sales. High investment activity of foreign players has led to a decrease in the number of Russian players. Most notable was the closure

of the Starik Khottabych chain, which operated in the interior supermarket format. Other chains that closed include Armada, Intekso, Azbuka Remonta, and Evrointerier.

In addition to the market leaders – international retailers OBI, Leroy Merlin and Castorama – there are a number of Russian players who occupy a significantly lower share in the market of household goods and renovation products, such as STD Petrovich, the construction company Saturn, Maksidom, Metrika, K-Rauta, and others .

Each chain maintains its own concept of attracting customers. Leroy Merlin offers lower prices.

Castorama actively distributes catalogues with seasonal discounts on certain product groups. OBI always guarantees highest quality and a high level of service.

15 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

LEROY MERLIN Leroy Merlin (part of Groupe Adeo) is an international retail company that specialises in selling products for construction, decoration, and furnishing of houses, villas and gardens. The first Leroy Merlin store opened in Russia in 2004, in the vicinity of the Ashan hypermarket in Mytishchi. As a general rule, if other French companies are already operating in a country, it is perceived by Leroy Merlin as an additional argument in favour of entering a new market. This move attracted customers’ attention, and made the stores accessible to them.

In 2005, another two Leroy Merlin stores opened in Krasnogorsk and Altufievo. Two years later, Leroy Merlin hypermarkets began operating outside the Central Federal District for the first time, in the

shape of Leroy Merlin Rostov-Orbital and Leroy Merlin MEGA-Novosibirsk. Today, 34 Leroy Merlin stores operate in 16 Russian cities. By 2018, according to open sources, the company plans to open 80-90 new hypermarkets.

The company tries to buy, rather than rent, the land for its hypermarkets. The parameters of hypermarkets depend on the specific location and operating conditions. Usually, it is a building with an area of between 16 000 m2 to 20 000 m2, of which 10 000 m2 to 12 000 m2 is reserved for the commercial areas that house between 30 000 and 35 000 product units. Each store consists of 15 departments and is divided into five areas: home, interior design, building materials, renovation, and gardening. Every day, the company’s provincial stores are visited by 4000 people, and those in Moscow by 6000 people.

A modern hypermarket cannot be limited to sales alone, so Leroy Merlin offers additional services, including glass cutting, curtain sewing, overlock, framing, paint tinting, as well as professional advice from salespeople and a free renovating school, where customers acquire important practical skills in renovating, such as plumbing installation, tiling, wallpapering, and many others.

The company pays a lot of attention to the development of its personnel, since a managerconsultant must be familiar with many subtleties of renovation and construction. The staff at Leroy Merlin spend a total of 298 000 hours per year in training in order to improve their professionalism and knowledge about the products.

10% of the company’s profits are distributed among its employees. This system differs significantly from the simple process of stimulating sales and obtaining a percentage from each specific sale by individual employees. Here, employees together contribute to a common bonus fund.

In Russia, Leroy Merlin follows the concept of “low prices every day,” which was developed specifically for our country, and is not being used by the company anywhere else in the world. One of the fundamental elements of the concept is the daily monitoring of other companies’ offers and timely reduction of prices. The company also issues products under its own brand.

In September 2012, to further motivate staff, Leroy Merlin created a system of profit sharing, whereby

CASTORAMA Castorama RUS is a subdivision of the international retail chain of hypermarkets which sell goods for home, the dacha, and renovations, and is part of the Kingfisher group of DIY companies, which has more than 1000 stores in ten countries of Europe and Asia.

The first Castorama store in Russia was opened in Samara on 28 February 2006. Most of the shops are located on leased territory.

Saratov, Yekaterinburg, Chelyabinsk and Orenburg.

The chain serves more than 3 million customers on a monthly basis.

Today there are 22 Castorama stores in Russia: in Moscow and Moscow Oblast, St. Petersburg, Perm, Samara, Tolyatti, Rostov-on-Don, Omsk, Krasnodar, Voronezh, Ufa, Nizhny Novgorod,

A range of 35 000 products is displayed on a large area, with the products of both foreign and domestic suppliers being represented. A large number of checkout desks, trolleys, baskets and

information desks contribute to a comfortable service with short queues.

Castorama offers a wide selection of products for construction, repairs, renovation of the interior, fitting out dachas, and garden care. The range is designed both for professional builders and ordinary customers.

16 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

CUSTOMER SERVICE IN RETAIL

MANAGING CUSTOMER SERVICE A key factor for the success of retail business is its ability to satisfy customer needs and to provide clients with good value during their visit to a particular store. Companies must subordinate all internal business processes to achieving this goal.

Efficiency of the process of providing value in the retail sector is assessed directly on the basis of interaction between the customer and the retailer in the buying process. According to NextepResearch, only 14% of Russians regard the quality of service in retail trade as relatively insignificant, while 25% refuse to take up an advantageous offer if the service is poor, and 61% are willing to conduct a profitable purchase in spite of bad service, but will not turn to the same company in the future.

The success of sales consists of several important components: product range, pricing, quality of service, and the convenience of shopping. For end users and professionals (builders), the significance of these factors may differ.

That is, customer experience inside the store is provided by several factors: directly satisfying the client’s need for a product, meeting his expectations with regards to the service process, and the general emotional experience of his visit to the store. In this regard, companies must know the needs and expectations of their target audiences for each of these areas.

Significant differences between the segments of DIY store customers (from people living in

their dachas during the summer, to construction workers who are working all year round) make the process of analysing customer needs more time consuming and costly. Several years ago, RetailTechnologiesRussia identified some of the most important factors for customers visiting the stores of the five largest chains of building material retailers. The following factors received a valuation of more than 80%: the salesperson’s visual appearance (96%); the visual appearance of the store and the shop floor (93%); the store personnel’s attitude towards the customer (88%); about the procedures (86%); and the consultants’ responses to questions and complaints (82%). This and similar surveys dealing with other segments of the retail trade show the versatility of customer service requests in retail chains. Accordingly, DIY chains can rely on standard customer service practices and standard ways of evaluating the effectiveness of this process both for the Russian and the global retail markets.

efficiency of the outlet. If the performance of the outlet can be assessed by internal company data alone, the evaluation of interaction requires the customer’s involvement in the process.

Here, retailers are faced with several problems. First of all, without establishing a system of motivating customers to participate in the evaluation process, data will be received from less than 30% of the personnel9, and all segments of the store’s audience will not be represented. Secondly, the monitoring database generally does not reflect factors that could affect the customer’s choice at the time of

the evaluation. For example, long queues may have formed due to a sudden influx of customers, and those who could not obtain personal consultation would have been left dissatisfied. Furthermore, the system cannot provide customers with the desired answers. For example, some customers may outright refuse to participate in the survey, if they are unable to leave their contact details to obtain the results of the research. Choosing the method of evaluating the level of customer service requires all the existing problems and market specifications to be taken into account.

Core competencies Key factors affecting the choice of the DIY shop*

Most major retailers formalise their service standards within special documents, which allows them to solve several problems at once: to form similar customer experiences in all their stores; to simplify the training and adaptation process for new employees; to specify the sequence of actions in emergency situations, and to list sales techniques that are successful for customers of this company, in particular. However, the main goal is to evaluate the interaction between customers and shop floor workers, and to increase the

Product range

Pricing

Service quality

Range width

Attractive pricing

Qualified consultants

Range depth Unique products

Attractive discounts and bonuses

Extreme importance

9

ProLAN

Shopping convenience

Service Individual approach High importance

Medium importance

* Based on ad-hoc consumer research by Demind

18 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

Convenience

QUALITY OF SERVICE AT OBI To assess whether customer service on the shop floor complies with the company’s accepted service standards, OBI usually employs the ‘mystery shopper’ method. With the help of a specialised third-party company, OBI inspects all its points of sale on a monthly basis. At the end of their visits to each store, OBI’s ‘mystery shoppers’ fill out cards which are divided into 9 sections: customer’s navigation within the store (1); the visual appearance of employees (2); greeting the customer (3); exploring the customer’s requirements (4); demonstration of the product (5); dealing with complaints (6); closing a sale (7); additional sales (8); and farewell (9). By analysing the notes on the card regarding the compliance of each sub-section with the accepted standards, the company obtains a percentage score for each of its stores as a whole, and also for its individual elements10. For example, at the beginning of 2015, the results obtained by the ‘mystery shopper’ allowed OBI to find out that the work of its staff on the shop floor required improvements in categories 3, 7, 8 and 9, and that budgets and training time could be allocated more effectively.

It is important to understand that the effect of communicating with representatives of specific companies can become apparent only after a certain period of time, as well as in other retail outlets. Therefore, OBI also asks visitors about their attitude to the store as a whole, including the product range, ease of purchase, and service.

Such surveys are conducted on the shop floor on a quarterly basis. They take away 7-10 minutes of the visitor’s time, and at the end, the company gives a small gift to those who pass the survey.

By managing customer service on a consistent level, the company can secure a long-term competitive advantage for itself, and successfully resist slower market growth and changing customer patterns that are typical for the DIY segment and retail trade in Russia today.

OBI operates a transparent system of career development. Starting their career as salespeople of the second category, sales employees can graduate to the level of a first category salesperson, then a senior salesperson, head of department, deputy director, and finally, director. Within the company, there are examples of salespeople

who have gone on to become store managers.

Evaluation of personnel, as a result of which staff members may achieve promotion, takes place every six months.

Traditionally for the retail sector, OBI views the results of its assessment of customer service as part of the key performance indicators (KPI) of the employees. The main peculiarity lies in the fact that staff bonuses at OBI are of a collective nature, while direct correlation between personal bonuses and the volume of personal sales only applies to master consultants. For all other OBI employees, including

salespeople, bonuses are calculated by taking the entire department’s collective KPI into account. If a store fails to meet key monthly targets, then nobody receives a bonus. If the targets are met, then the amount of the personal bonus will depend entirely upon the results achieved by the store as a whole and by all employees with the same functionality.

For example, as part of the motivational employee program “Hunting for Customers,” results of the ‘mystery shopper’ test will have a weight of 30% among all collective KPIs.

Calculating the sales staff bonuses:

Bonus = Cf x(0.5 x Kr1 + 0.3 x KR2 + 0.2 x Kr3) whereby Cf – the coefficient of «sales growth in the store.» If planned targets are met precisely, then the value of the coefficient is equal to 1. When the plans are fulfilled by less than 70%, a lower coefficient of 0.7 is introduced. If sales grow by more than 50%, then the coefficient value grows to 1.2 Kr1 – the ARPU increase, % Kr2 – results of the ‘mystery shopper’ research, % Kr3 – conversion rate of visitors into buyers, %

10

См. Excel

19 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

STAFF TRAINING AT OBI Corporate training of the line staff is extremely important within the DIY retail segment. Totally OBI staff spends more than 15 thousands hours on trainings to improve professionalism and their knowledge about products. According to the chain’s policies, all employees on the shop floor must be able to not only show where a particular product is located, but also help the customer make the right choice. Therefore, they must be familiar with the whole product range at the store.

To attain the position of a master consultant, the store’s best employees – usually those with technical education – must go through in-depth training on the knowledge of the product range and its peculiarities in each department. Besides corporate training of the line personnel, there are trainings for managers too. Management skills improvement significantly influences the actions and results of the company.

OBI trains its salespeople at its own two corporate training centres – the “OBI Service School” – in Moscow and St. Petersburg. The school had its first graduates in 2011. Since the school has been operating, specialists have trained more than 3500 employees – new employees, mentors, senior specialists and managers in Moscow and the provincial regions. School service specialists have developed more than 45 original educational programs and more than 40 electronic courses.

Any newcomer at OBI, regardless of his/her

position and experience, must go through a fiveday training course at the school.

Training at the «OBI Service School» is designed in accordance with the most modern methods, including e-learning courses and practical interactive tasks. Participants put all the acquired knowledge and skills into practice, explore the business processes at OBI hypermarkets, and trips to the shop floor are organised for them. During the training, participants get to know each other, and rally together, which helps them in the future to build a career in the company.

In the early days of their work, specialists familiarise themselves with the store, are shown where they will work, and are told about the conditions – they have to understand whether or not this job is really what they had been dreaming about. Currently, staff turnover at OBI is less than 40%, which is an outstanding figure for the retail industry.

There are some reasons: no internal barriers for career progression, company`s aspiration to become a place, where people can combine hobby and profession. Moreover, OBI doesn`t limit the staff age and segments all participants into young (“combine work & hobby”), active (“no internal barriers for career progression”) and experienced (“The age is not a barrier”). The main thing is to have the willingness and ability to work.

Another important detail in the work of the staff at OBI is the standard of service. How to give the correct advice, and what to do if there are buyers?

Trainees carry with them a pocket guide to certain services, which a novice can conveniently open and find the necessary information. The same type of booklet also exists on customer service, describing the basic skills of working with the client. There is also a more advanced format of communicating the standards: videos that are shown to employees at the school in order to discuss special cases relating to customer service.

Of course, there is also a system of both external and internal monitoring. All of this makes it easy to analyse which performance standards are failing and where, and what needs to be worked on in the near future.

evaluate the attitude of staff members towards their work and the company, as well as to evaluate the performances of managers and HR services.

Research shows that engagement is closely linked to business results and impacts on sales figures, turnover and customer satisfaction.

In 2014, employee engagement at OBI was 84%, which is a very good figure. Corporate training contributes to the growth of this figure and towards getting more out of the store employees.

According to OBI, high level of service and customer-orientated policies achieve double digit sales growth every year, also increasing traffic and brand awareness.

OBI devotes a lot of attention to research and increasing employee engagement – the emotional and intellectual state that motivates employees to do their job as well as possible. Initially, the concept of engagement was used by social psychologists to assess the degree of people’s adaptation to the role. However, further studies about employee engagement have been used by companies to

20 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

ASSIGNMENT A week later, Vasiliy was once again standing at the boardroom window overlooking «Aviapark,» waiting on his colleagues.

A lot of work had been done during that week – results of the ‘mystery shopper’ survey and material on conversion rates had been studied, the analysis of high-margin products and their display on the shop floor had been carried out.

During the week, Vasiliy managed to visit OBI hypermarkets on a few occasions, familiarise himself with seasonal offers and new products, receive feedback about the service centre, and observe how consultants work on the shop floor.

Vasiliy’s colleagues at HR provided him with detailed information regarding development opportunities and employee training. Together they came up with some interesting ideas with regards to improving employee engagement.

Pieces of the puzzle slowly began to come together, and Vasiliy already had quite definite ideas about the ways to increase the number of store visitors by 10% and the conversion rate by at least 3%. In addition, the task of raising the ARPU by 30%, which seemed quite difficult not so long ago, could also be solved quite elegantly, through intensification of high-margin product sales and more competent work from staff at the stores. All of this simply had to ensure an improvement in the quality of customer service and in the results of the ‘mystery shopper’ test being passed by personnel at the sales departments.

When all colleagues had assembled, Vasiliy could hardly wait to share his strategy with them, especially since each one of them had contributed to its development. All that remained was to agree on a clear plan, carefully consider the budget, and work through all the main points in more detail.

Vasiliy was full of optimism, and enthusiastically began his presentation.

How would you approach the analysis of these problems if you were in the position of Vasiliy and his colleagues?

You have a week to develop a strategy to increase the number of customers and the ARPU through active approach to interact with clients.

21 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

ATTACHMENTS

ATTACHMENT 1 The largest DIY retailers in Russia by revenue in 2013 Brand

2009

2010

2011

2012

2013

2010/2009

2011/2010

2012/2011

2013/2012

Leroy Merlin

677,3

957,3

1361,0

1806,8

2217,0

41,3

42,2

32,7

22,7

OBI

444,8

586,3

694,9

839,4

865,1

31,8

18,5

20,8

3,1

Castorama

192,6

278,1

370,3

528,7

533,0

44,4

33,1

42,8

0,8

Petrovich, Uroven*

133,7

168,9

262,4

358,3

436,3

26,3

55,4

36,6

21,8

Maxidom

242,5

283,1

338,4

395,9

379,7

16,8

19,5

17

­4,1

Metrika

104,2

131,6

181,5

265,6

312,7

26,3

37,9

46,4

17,7

StroitelniyDvor, Teplootdacha, Polovik*

115,6

216,0

250,1

295,7

283,0

86,9

15,8

18,2

­4,3

K­rauta

167,0

203,6

237,9

283,1

271,2

19,8

16,8

19

­4,2

Cuperstroy, StroyArsenal*

133,7

171,3

215,8

240,5

252,4

28,2

25,9

11,5

4,9

Baucenter

124,6

141,5

201,1

228,5

241,0

13,6

42,1

13,6

5,5

* The revenues of a group of companies that owns several brands in the DIY market Source: InfoLine. “DIY Market of Russia. The results of 2013, Forecast till 2017“

23 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

ATTACHMENT 2 Growth rate of residential buildings, issuing of mortgage loans and real disposable income of the population

20

148,5

150 19,0

15 13,0 10

11,0

100 88,6

11,0 9,0

6,6 5

0

­5

200

23,1

4,5 16,5

43,5 29,7 5,6

5,6 4,4

4,1

3,9

4

2013

2014 — 2015

0,5

1,9

1,9

2008

2009 ­5,0

2010 ­3,2

2011

2011

­6,7

50

5,2 27,0

Dynamics of mortgage loans,%

25

0

50

­76,7

­100

­10 New housing supply Real disposable household income The nominal volume of the retail market DIY (RUB) Mortgagedynamics Compound annual growth rates for 2014-2016 Growth rates in current prices for DIY market Source: RBC.research

24 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

ATTACHMENT 3

Housewares

Machines

Darden

Iron­ mongery

Domestic order

Dalle

Instruments

Parquet / laminate

Auto­accessories

Wood materials / doors

Map of the Store

Colouring

Lightings

Packing of goods

Service center

ENTER 25 “HUNTING FOR CUSTOMERS” Business case for developing a strategy to improve the quality of service and increase sales in OBI stores

Cornices / curtains

Wallpaper

Bathrom furniture

Cash­desk

Promo­ zone

Electroinstallation

Heating / airconditioners

Bathroomaccessories

Bathroom­ accessories

This case study was prepared

by Changellenge>> — the leading case organisation in Russia www.changellenge.com info@changellenge.com vk.com/changellengeglobal facebook.com/changellenge

This case study was written for OBI www.obi.ru