Variety Discount Retail Chain Flying Tiger's store portfolio is divided in the proportion of 40% street locations and 60% stores operating in shopping centers and malls. Experience shows that these proportions are optimal for us. That is why galleries will always be in the circle of our interests, says Igor Kostenyuk (IK), Country Manager Flying Tiger Copenhagen in an interview with the editors of Retailnet.pl / SCF News
What is the state of Flying Tiger Copenhagen after three lockdowns? Igor Kostenyuk: We currently have 45 stores in Poland. We haven't had new ones since 2019, but also, which I consider a success, we didn't have to close any. The last openings were shops in Warsaw in Galeria Młociny and in Centrum Janki. 2020, due to the pandemic, has put our expansion plans on hold. Hopefully 2021 will allow us to further expand the store network. We are currently watching the market closely.
Does the pandemic change your location strategy? IK: Our portfolio is divided in the proportion of 40% street locations and 60% stores operating in shopping centers and malls. Experience shows that these proportions are optimal for us. That is why galleries will always be in the circle of our interests. So the direction remains the same. The pandemic has obviously revised our plans, but the market potential for a chain like ours is 80-100 stores. We are therefore at the halfway point of the development of the fixed-line network in Poland.
Which of the challenges during the pandemic turned out to be the most difficult for you? IK: The biggest problem, visible especially in the first phase of the pandemic, was a significant decrease in footfall, and thus turnover. The huge fear and immediate change in the behavior of customers who were afraid to leave the house caused the turnover to drop by 50% in March, and in April these drops reached even 90%. In some stores, it happened that we could count customers entering during the day on the fingers of one hand. Street locations, i.e. those that could have been open during lockdowns, did not save this situation at all. Their potential was significantly limited by the restrictions on the limit of people staying in the store. We also have locations in our portfolio where the lack of tourists means no turnover. An example is our store in Krakow. We have a great location at the Main Square. It did not help. The store recorded huge drops. Overcrowded warehouses were another challenge. Each visit to our store is to be a discovery, which is why our offer changes every 2 weeks. These changes are scheduled six months in advance. With 2,500 SKUs. only 700 products are the so-called core assortment available all year round, the rest is 1,800 SKUs is an in and out range, i.e. seasonal - adapted to the campaign, season, holidays and other occasions. As we were unable to sell the goods that had already been ordered, more surpluses accumulated in the warehouses.
How did you deal with the stocks? IK: Intensify working with the goods between March and November we ran a series of promotional campaigns with large price reductions. We could also choose many valuable products from overstock, which we donated to charitable foundations with which we cooperate the Dr Clown Foundation and the Anna Dymna Foundation "Mimo Everything". We also managed to sell some of them online using well-known sales platforms. Now we will strengthen the online sales channel, because in the second quarter of 2021 we plan to start our own online store in Poland. The first Flying Tiger Copenhagen online stores were launched on the Scandinavian market, now we want to offer such online shopping opportunities also to Polish customers.
At what stage is the preparation for launching the online channel? IK:In 2019, we created a pilot e-commerce solution for our market in Denmark, which was launched in January 2020, and then in June 2020 in Sweden. It is a sales channel with huge potential and awaited by our fans. Therefore, in Poland, we are in the process of implementing operations within the framework of a ready platform. Of course, we are planning an opening campaign, mainly on social media. Thanks to the experience of recent months, we know how important it is for customers to choose from several delivery options - directly to the customer, to parcel machines and with the possibility of collection in stationary stores. We expect great interest from customers also from smaller towns where our stationary stores are not located. The Flying Tiger Copenhagen brand is already so recognizable and liked, that the decision to launch an online store was just a formality. The biggest challenge in the Internet business will be the cost of logistics, because the shopping basket is small usually there are 3-4 products and their value is also not high. The average price of the product is 3-4 euros. However, we are counting on competitive offers from suppliers. It is optimistic that these prices are falling every year as competition increases.
How does your cooperation with shopping centers look like in terms of renegotiating lease agreements? IK: We are constantly negotiating the terms of the lease. The market has changed a lot after the pandemic. There has been a very visible transformation in the relationship between tenants and landlords. It is obvious that galleries want to stay as long as possible on yesterday's terms, but we do not have this option. It must be a win-win cooperation. One thing is certain, we can no longer agree to extend the lease for another six months, as was the case after the first lockdown, when the condition for the release from rent was the extension of contracts.
What would be the most sensible solution in terms of contracts? IK: In my opinion, we need a solution that gives a certain sense of security for both sides. I propose a flexible and complex rent. The basis would be a lump sum, i.e. the basic monthly fee, and the second component is a percentage of the turnover.
What are the first steps you took after the lockdown was lifted? IK: In May, we ran a large marketing campaign under the slogan "It's great to be together". It was an international action for all markets in which we operate. This time we do not see the need to use very aggressive sales actions. We have no worries about the trafficking, because the recent loosening of the lockdown has already shown that queues are forming to our stores. Customer shopping habits have changed and this is our strength. At the moment, two segments are popular premium A-brands and economy brands such as us.