Andreas Schmeidler: "We have the same brand offline and online - it's called TSUM"
After outlining the evolution of Russian’s biggest luxury department store, TSUM, with its fashion director Alla Verber, FashionNetwork.com discussed the retailer’s e-commerce strategy with TSUM Chairman Andreas Schmeidler.
FashionNetwork.com: What was your career path before you came to TSUM?
Andreas Schmeidler: For almost seven years I was the CEO of the Italian branch of Ventes-Privées. I started there in 2010 and I left in September, 2016. After that I was a senior advisor at PricewaterhouseCoopers and started at TSUM in December 2016 as a consultant, kind of a CEO of the digital department, until suddenly the shareholder offered me the job of Chairman of TSUM, which I accepted. I started in June, 2017.
FNW: So it's your first experience in Russia and in a department store. What were your first impressions when you started?
A.S.: TSUM, Russia, a department store - everything was really new for me. The first thing I noticed was the level of the staff. It's impressive. In every department you have very competent people. I also noticed the credibility of TSUM and of the Mercury group. We are continuously looking at ways to better represent the brand but it's never enough. Thanks to the great work of all the fashion directors new brands are coming in as well. So for me it’s a huge challenge and a huge opportunity.
FNW: What are your thoughts on TSUM's main competitors? Are they department stores or shopping malls in Russia?
A.S.: I think within Moscow, within Russia there are no other luxury department stores like this, TSUM is unique. We do have around 10% of Chinese traffic as well. So I don't think that freestanding stores, boutiques or shopping malls can compete with the shopping experience that we offer in TSUM. Every country abroad has its customs and heritage. The main difference is the size. TSUM is 70,000 square meters, which is not comparable to Italian department stores or other department stores which are much smaller. It means that we can better represent the brands. We make real corners, we make a real shop-in-shop feeling.
FNW: Is it more like Galeries Lafayette (70,000 square metres, in Paris) or Harrods (90,000 square metres, in London)?
A.S.: I would say that Galeries Lafayette and Harrods are more targeted at tourists. We’re more targeted for local middle-high class. So I would compare it to, maybe, Bon Marché.
FNW: What were your financial results for 2016?
A.S.: I can tell you that in the first semester of 2017 our growth was approximately 30%. And the digital side is around 10% of TSUM 's turnover (the website was launched in 2011 and was renewed in 2016). It is seeing triple-digit growth. We work with more or less 800 brands and there are more than 4,000 people working at TSUM.
FNW: So this 10% e-commerce segment is thanks to your experience?
A.S.: It's thanks to the team, to the brand TSUM, to the big investment and to recent changes made that were highly appreciated by the market. We follow certain rules. The same DNA that we have inside the store, offline, we bring online. There's one brand - it's called TSUM. It's the same thing online and offline, it's unified. We're all trying our best to communicate this message. We have pick-up points in TSUM, do same-day service in Moscow and Saint-Petersburg, we deliver to the provinces as well, with an average delivery time of 3 days.
FNW: What are the main problems with online commerce in Russia?
A.S.: As far as my experience goes… There are some traditional international players who have approached the market, certainly attracted by the size of the market, but not really knowledgeable about it. And then there are also local players that behave a little bit craftily. I'm Italian, I know what I'm talking about. Online is a world without rules, if you want to have it, you had better do what you want. Here, the way that they do online business is a little bit extreme, especially the local players. Our main competitors online are international and some local players.
FNW: Are logistics a really big problem in Russia?
A.S.: I wouldn't say so. Of course, if you order something from Vladivostok or Siberia it's normal that we have to take into consideration a longer delivery time, but it's only because of the distance. But I think that logistics are very well organised here. We've made very intelligent investments in order to make it much faster.
FNW: From January 2018 the tax-free system for foreigners will be introduced in Russia. What will be the consequences for TSUM?
A.S.: First consequence - I will be the first client at TSUM because I will buy everything here! It will be a very good tool for international customers. You can already find European prices here. We're totally aligned to them, sometimes even cheaper. And it will be an especially good tool for Chinese tourists.
FNW: Several years ago, the government decided to introduce customs fees for foreign parcels, deciding that the fees would apply to parcels worth 1,000 euros and over. Today a lot of Russian companies want to reduce it to 500 or even 200 euros.
A.S.: We're waiting for this decision with a lot of curiosity and hope. That would be the right decision, in my opinion. It will help to boost the local market and help the local players.
The company doesn’t disclose its turnover details officially, however, the analyst estimate of TSUM’s annual turnover is around 500 million euros.
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