The Group pays special attention to building trust-based and mutually beneficial relationships with all suppliers, since its assortment, the quality of its goods and complex solutions are important elements of M.Video– Eldorado’s business model and have a significant impact on the customer experience at the selection stage. Everyone benefits from successful and effective cooperation with suppliers: the Group, our partners, our customers and the market as a whole.
According to the study conducted by IRC LLC,1 in 2020 85% of consumers used brick-and-mortar stores to select appliances and electronics. Thus, the hybrid/omnichannel model is better suited to the needs of today’s shoppers, and it gives suppliers an opportunity to demonstrate the most complex features of their products and innovations, which is extremely important for manufacturers. The Group, together with suppliers, is constantly working to find and promote new ways to interact with customers. In 2020, the Group launched new services, including video consultations with promotional staff inside stores, and continued to promote brands online as well as partner promotions on third-party platforms.
In 2020, the coronavirus pandemic had a major impact on the nature of supplier relations. The majority of the key changes and challenges were related to supply restrictions due to the introduction of lockdowns and other restrictive measures affecting production. Given the fact that the Group is the largest retail player in the Russian consumer electronics market, relationships with all key suppliers are long-term in nature and are based on a joint planning process for confirmed, guaranteed deliveries over a horizon of several months. In turn, suppliers maintain an agreed inventory in their warehouses. Thanks to all this, the Group was able to minimize the impact of the restrictions on the supply chain and quickly adapted to the new business environment.
One of the results of adapting to the changed conditions was the modification and improvement of the system for evaluating and selecting suppliers in terms of the speed of decision-making about the possibility of concluding contracts.
Also in 2020, M.Video–Eldorado Group continued its switch to EDI for commercial purchases. To date, the Group has digitalized 80% of its commercial procurement transactions. The total monthly number of packages of electronic documents exceeded 40 thousand; 85% of incoming documents are handled automatically, which reduces the risk of errors in routine operations, reduces costs and accelerates payments and financial closure.
As a result, in 2020 the Group continued to implement initiatives aimed at developing strategic partnerships with suppliers and launched a number of projects with key counterparties:
Our vendor collaboration also extends to joint marketing campaigns
Since our store shelves give our vendors a key point of contact with customers and a place to promote their products, they are an important part of the Group’s marketing and advertising activities.
There are three key areas in the implementation of joint marketing initiatives with suppliers: the arrangement of in-store brand zones, events and media opportunities.
Collaboration with suppliers has a major impact on the attractiveness of the Group’s brands and ensures both the depth and quality of the Group’s offer, as well as favorable conditions for purchasing electronics at competitive prices due to:
To date, the Group has established relationships with more than 300 suppliers. The largest vendors include global leaders in the household appliances and consumer electronics sector such as Samsung, Apple, LG, Sony, Huawei, Bosch and others. The assortment presented at M.Video and Eldorado accounts for about 73% of all sales in the Russian CE market, which is an indication of the successful management of the Group’s product portfolio. The Group is a very important partner for major global vendors.
Together with its suppliers, M.Video–Eldorado Group is constantly working to expand and improve its assortment by studying its customers’ preferences and needs and maintaining high standards in terms of the products it offers.
The premium segment accounts for 7% of the Group’s GMV. The Group previously identified a trend toward an increase in the gradient between products in the first price quartile and premium segment products.
GROUP’S ASSORTMENT IS MADE UP OF INNOVATIVE PRODUCTS REQUIRING EXPERT SERVICEЕ
At the moment, two consumer trends stand out in the market:
To meet the demand for basic household appliances and consumer electronics on the part of price-sensitive customers and to create models that were previously represented only in high price segments, in 2019 the Group began the production and sale of appliances under its own private label Hi brand, which is available through its Eldorado network. In 2020, the Group introduced mid-price TVs to the Russian market under the Novex brand, an M.Video private label. The Group continues to develop its own private labels: as of the end of 2020, it was selling more than 150 models of large and small household appliances under its own private labels. In the future, the Group’s private label products may account for up to 15% of unit sales in the categories where they are represented.
The premium segment is another area for developing the assortment available at Group stores. The household appliances and customer electronics industry is one of the most innovative, with new products, services and solutions constantly appearing. M.Video–Eldorado Group has traditionally been a strong player in the market for innovative premium technology, including smart household devices, equipment for remote security (such as security cameras), all kinds of household robots, wearable devices for health monitoring, etc. At the moment, innovative and premium products account for about 21% of the Group’s GMV, and we plan to increase it to 27% in the medium term.
Moreover, the Group is constantly working to develop an ecosystem approach to retail, within which M.Video–Eldorado, in addition to its own product assortment, offers customers opportunities for promotions and events, additional services, accessories and content that greatly enrich the customer experience, including the installation of appliances, extended insurance and guarantees, digital services for the protection and configuration of smartphones and laptops, trade-ins and paid recycling of old equipment.
With goods.ru, M.Video and Eldorado follow a white label format—that is, they integrate the necessary product categories and partners on their sites using their platform and marketplace solutions. For goods that are placed in the online storefront under the goods.ru brand, last-mile arrangements and service are provided by goods.ru, and a customer pickup option is also available.
At the moment, within the framework of integration with goods.ru, more than 10 thousand items and complementary goods are available to customers in 250 categories. The Group also works under direct contracts with more than 100 suppliers: major appliance manufacturers such as Bosch, SEB, Smeg and Whirlpool, as well as leading retailers in their segments, such as 220 Volt and holodilnik.ru. In the future, the Group plans to connect with Decathlon, Koleso.ru, Dochki-Sinochki and a number of other major players.
Devices sold through the marketplace are marked as “partner goods” on the retailers’ websites. M.Video and Eldorado provide logistics, warranties and service for merchants’ goods; service for goods sold through the goods.ru platform is provided by the partner. If a customer needs to exchange or return a purchase, they can contact the network’s stores and follow the standard procedures.
The Group’s marketplace will focus on further expanding and deepening the range of household appliances and electronics and complementary goods and services available, and also maintaining and working with inventory as the foundation of its business model. A wider assortment will enable the Group to optimize operations with search queries, attract additional traffic and increase conversions on its websites.
In addition, M.Video and Eldorado have already been working for several years with partners through the vendor catalogue, offering customers individual models from the inventory of accredited manufacturers. The online catalogue enables shoppers to access both the regular product line and additional offers from suppliers. Retail partners are able to display their product offerings through the online storefront. In this case, the Group does not purchase these goods but can facilitate their sale, delivery and all related services for customers. This approach enables the Group’s customers to order any appliance model, including rare or exclusive ones, thus expanding its assortment without additional risks in terms of working capital, and the manufacturer increases sales and can test customer demand for experimental models.