BOOK NETWORK "REPUBLIC" GOT HOLES IN THE BUDGET

The network of shops of Vadim Dymov owed about 150 million rubles to its suppliers. The company delayed payments, and in January its management even asked the partners to wait because of the lack of funds. Experts attribute this state of affairs to the rapid growth strategy that the company has been pursuing for the past six months. So, can the “Republic” successfully get out of this situation?

The company acknowledged that in the past year they encountered financial difficulties, which were explained by the errors in sales forecasts and errors in calculating of the time of the sales of goods, presented on the counter. Considering the fact that over the past year, the top management of “Republic” has changed several times, the reference to the mistakes, made by previous management, is justified tactics in this situation. 

We should remind that in the summer, the former head of the company, Ilya Krivorot, has resigned. He managed to work at the company for five years. He was replaced by Mikhail Akhmedov, who previously worked at “K-Rauta”, the Finnish chain of large DIY stores (“Do it yourself”). However, he did not work even for several months, when Ilya Timchenko, who previously headed the departments in the networks of electronics stores, was replaced to this position. The choice of a director’s figure is a kind of symbolic for the “Republic” network, since it is associated with the possible transformation of the business and with the transition of the network into new trading niches. It is assumed that the new leader will expand and update the format of outlets through electronics and a new range of products.

The necessity to modernize the “Republic” network is long awaited, as a dozen years have passed since the company was founded in 2006. During this time, the market has changed greatly, as there has been a digital transformation. In 2018, the company was able to make a profit of almost 30 million rubles, receiving 1.8 billion rubles as revenue. But leaving everything as it was before would be a very short-sighted move.

Experts emphasize that book retail last year reduced sales by 4%, while e-commerce grew by 24%. Thus, the monetization of the sale of books offline almost equaled the sale through online stores (24.9 billion compared to 20.1 billion). This trend allows us to predict that in 2020, online book sales can bypass traditional trading through network stores.

It is worth noting that the leadership of the "Republic" understands market trends. Despite the fact that the stores are open only in the Russian capital and cities with over one million people (St. Petersburg, Yekaterinburg, Novosibirsk), the company is engaged in delivering orders online to other cities.

It is assumed that this year, instead of a strategy of aggressive territorial expansion, the company will choose a strategy for the development of digital channels. It is possible that the company will be able to catch up with the trend, regarding the integration of sales formats, combining trade areas with recreation and entertainment areas. The initial format of the "Republic" was copied from the French company “Fnac”. It is possible that in the current situation, the chain of stores will become a conductor of new trends in the world of digital technology. Of course, if the company will be able to negotiate with contractors and not get bogged down in debt obligations and ambitious plans.