Drogherie: Format Self-Definition

Valeria MIRONOVA, Elena ROSTOVAwww.torgrus.com

The drogerie format, popular in the West, is increasingly beginning to penetrate the Russian retail business. Despite the free niche, small initial investments and rich experience of Western retailers, Russian operators face a lot of problems when developing this format.

The network format drogerie (drogerie) appeared in Germany in the 1970s in connection with filling the niche of mass food stores. The operators of the drogerie market were entrepreneurs who relied on hygiene products, household chemicals and perfumes, which are in high demand at all times. Based on the fact that a fast-turning assortment can be not only in the food segment, a separate niche was identified - drogerie.

Classics of the genre. The main advantage was that the development of the format did not require large initial investments. Drogerie goods do not need special storage conditions, the logistics of this format are much simpler than food ones, as it allows delivery with less frequency, the sale of the assortment in months and years makes it possible to reduce losses from decommissioned goods. Electric energy is spent mainly only on the lighting of the trading floor. At the same time, drogerie stores offer a wide range of products: the main categories are household chemicals, hygiene and cosmetic products, complemented by health products, accessories, jewelry, toys, underwear and a number of others. Thanks to a fairly free concept in the choice of assortment, which makes it possible to adapt to the target audience, the format became widespread in the West in a fairly short time and began to actively develop in Europe and America.

What is "drogerie"

1. German drogerie - drug store."Drogerie" is the designation "shops close to home" , This network self-service stores selling household chemicals, hygiene products and cosmetics, health products, accessories, jewelry, toys, underwear, etc. on a discount basis where you can buy non-food household goods . Household chemicals, perfumes, cosmetics, household goods - all this is much more convenient to buy in stores of the "Drogerie" format, after all, you won’t go to the supermarket for clothespins or washing powder?
2. Drogheri It has European origin, since the 70s - its roots should be sought in the history of small family shops, which gradually merged, eventually forming large retail chains.
3. Some European drogeries include up to 15 thousand stores . For example, in the German market over 9000 .
4. In Russia, the development of the format is just beginning with 2007-2010 .
5. Benefits for buyers:
   • Conveniently(the store is close to your house).
   • Fast(it will take only a few minutes to buy the product you need).
   • Wide selection of items you need(the range of drogerie format stores reaches several thousand positions).
   • Affordable prices(lower than in supermarkets).

• Drogerie = Drogerie is a small shop 100-250 m2, which sells: perfumery and cosmetics, hygiene, household goods, household chemicals, a limited range of food products, and in some countries, drogeries also sell over-the-counter drugs.
• The number of such stores in European countries is comparable to the number of classic "grocery" discounters in the country.
• This network format quite naturally arose as the niche of mass food stores (discounters and supermarkets) was filled. It happened in Europe 70s of the last century (not so long ago!).
• The format of the store is remarkable in the first place because expenses for the organization and operation of the outlet very low .
• Drogerie have high turnover rates per 1m2 of sales area 6-8 000 $ / m2 / year the best, 1500-2000 $ weak.
• Rent 22%, 55% personnel costs of total costs. Store opening costs RUB 1,370,000, inventory 2,000,000 rubles Payback 14-18 months.

1. 80% of the turnover is provided by regular customers living within a radius 1-2 blocks from the store.
2. The network must be dense enough and shops are small.
3. 5 minutes walk - this is the maximum effort that can be required from a local resident who comes for his daily traditional purchase.
4. Considering that the market capacity is finite, and the range of networks is almost identical (with the exception of differences in private labels), it turns out that the who first occupied a good premises, he got customers .
5. For example, companies boots currently owned over 1450 stores In Great Britain. The peculiarity of the network is that it also sells prescription drugs. They managed to find their way to the heart of the British. This is one of the few lovemarks(for the British) and they are trusted.
6. A.S.Watsons with over 10,000 stores in Asia is the world leader in this market. The Ukrainian network "DC", the Russian "Cascade" are included in this concern.
7. Leader in Germany Schlecker (in store 4000 sku, assortment core 75% ) followed by Rossman (9000 sku in store core range 8000 sku ), hereinafter Muller.

The history of the Müller chain of stores (Erwin Müller) - the Swabian counterpart american dream March 15th 1953 year started as men's barbershop in Nersingen, Bavaria near Ulm, today is one of the leading drogerie chains with stores in Germany, Austria, Switzerland, Hungary, Croatia, Slovenia and Spain.

About 600 stores throughout Europe, 24,000 people. Annual growth + 50 shops. Since 1967, Müller's branches have also been open on Mondays, thanks to which he went down in history as the "rebel from Ulm." Expulsion from the barbers' guild was obviously the least of Erwin Muller's interests.

In 1968, he opened a barbershop combined with the sale of non-food household goods, he laid the foundation for the Müller brand stores.

The range, which includes, among other things, CDs, toys and stationery, differs significantly from that of competitors. Slogan "You can compare our prices" .

Drogerie in Russia

1. In December 2011, Magnit opened 200th score.
2. The basis of the range - home care products - 46% , as the most capacious and most demanded category by the Russian buyer.
3. It is also the most promising: manufacturers are actively expanding their product lines, and the Russian consumer loves to try everything new.
4. Household chemicals take 14% .
5. Decorative cosmetics, perfumes, bijouterie - 18% .
6. Accessories - 5% .
7. Related products - 17% (women's and men's underwear, haberdashery, from sunglasses to batteries and food containers, manicure tools, curlers, hairpins, soft toys, food products that do not require packaging and special storage, drinks, etc.).
8. The drogerie trading floor is taking shape like a supermarket . High racks are placed along the edges, in the center - islands high 1.2-1.5 m. The most common are longitudinal and transverse arrangements of equipment. Passages - standard, from 1.2 to 2.2 m. The closer to the exit, the less demanded goods are exhibited, the calculation is for an impulse purchase.

Drogerie retail is developing in Russia according to the general canons of the fast turnover goods market (FMCG). This segment works with the non-food group (“non food”) and generates its earnings through active commodity turnover and low margins. According to analysts' reports, in 2016 the shortage of drogerie stores in Russia was about 60%. In 2017, the situation has not changed much. That is, it is actually a free market, which you can begin to explore right now. Moreover, 5-7 million rubles are enough to implement the project to launch one store.

Fundamentals of Drogery Trading

Drogerie stores are a European format for selling fast-selling non-food items. This product group includes:

• hair and body care products;
• decorative cosmetics;
• perfumery;
• goods for personal hygiene;
• means for cleaning, washing, decorating, flavoring, caring for clothes and shoes;
• bijouterie;
• small household appliances.

European stores also allocate from 15 to 20% of the area for the sale of dietary supplements and medicines, which do not require a doctor's prescription. In Russian networks, this is exclusively the pharmacy sector. Today there are pharmacies that are expanding their range with medical and decorative cosmetics, personal care products, but this is more of a pharmacy business, which in Russian realities differs from retail drugstores (see,).

The store area should not be large: from 100 to 250 square meters. m. At the same time, since the drogerie format is necessarily a self-service store, the trading floor should be divided into zones, taking into account the requirements of merchandising. The cheapest and most effective way of zoning is to arrange retail racks and slides.

The range of drogerie is formed from goods popular in the middle price segment, trademarks and products of own production. Of course, only large networks can afford production, which conclude contracts with manufacturers and receive their own product as a result. The cost of such goods is much lower, since the retailer does not need to pay the manufacturer for his trademark.

Usually the prices for the seller's own products are the lowest compared to analogues of other brands. But in European practice, there are many examples when a drogerie merchant's own products gained great popularity among buyers and, accordingly, stores raised prices and became leaders in terms of price offer.

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Who works on the Russian drogerie market

As of 2017, there are 96 drogerie operators in Russia. The largest:

• network "Smile of the Rainbow";
• "Range";
• "Southern Yard"

These are drogerie networks that open outlets in different regions of the Russian Federation and are actively developing through a franchise network (see,).

Rainbow Smile is a St. Petersburg project that has been operating since 2007. The network offers its customers a standard range of products for Russian drogery, comfortable trading floors, quality service and an online service for ordering goods.

The Spektr network is a Russian project of the world-famous Watsons drogerie group, also hails from St. Petersburg and has been operating since 1994. Today, Spektr is more than 90 stores throughout Russia that sell products of well-known world brands: Procter and Gembel, Colgate, Palmolive, Loreal and others.

The Moscow-based company Yuzhny Dvor is promoting a chain of drogerie stores with the same name. Yuzhny Dvor has been operating since 1991 and not only in the Moscow region, but also in Samara, Nizhny Novgorod, Saratov, etc. The network has its own website and is ready to cooperate with Russian manufacturers of drogery goods, as well as with lessors of retail space . Good to know in your city.

How to open a drogerie store

Having figured out what a drogerie store is, we can conclude that it is very difficult to launch such a project on your own. Low mark-ups, complex logistics, competition with the resourceful network business - all this will negatively affect the profits of the new enterprise. You can open a store if the entrepreneur initially has access to:

• to profitable contracts with suppliers;
• to production facilities for the manufacture of own goods (PL);
• to the developed schemes of transport and warehouse logistics.

All this can be obtained only by working with a large retail chain. And the networks themselves are also interested in cooperation with small businesses. Literally every Russian drogerie merchant is expanding the network. The more outlets, the higher the turnover and the greater the profit. Therefore, if an entrepreneur plans to open a drogerie market, then first of all he should analyze the franchise market from drogerie merchants (see,).

General list of requirements for regional partners:

• a room on the ground floor of the building with access to the shopping street (hall area from 100 to 250 sq. m);
• experience in retail business;
• willingness to learn and adhere to the franchisor's business standards;
• lump-sum contribution - about 1 million rubles;
• starting capital 5-7 million rubles;
• monthly payments of 3% of turnover.

In return, the franchisee receives contracts, products, trade equipment, an accounting system, transport services and a host of other business tools that are needed to successfully start with their own retail store.

Costs and payback

On average, a project to launch a drogerie store requires about 7 million rubles. This money will be enough for repairs, equipment, staff training, filling the store with goods and a marketing campaign.

The payback period for such stores is about three years. According to Drogery Retail LLC (the owner of the Rainbow Smile chain), the profit per square meter of retail space in their store is 20 thousand rubles a month. That is, a store with a hall of 100 square meters gives a monthly profit of 200 thousand rubles. The annual profit is about 2.4 million rubles.

Useful to read. Franchisee requirements, franchise conditions and income planning.

All about wholesale and retail.

On a note: . The most popular offers of franchisors for trade and services.

Conclusion

The success of a drogerie shop mainly depends on how profitable the place is chosen to open it. It is best to organize such a retail outlet in a small room on one of the main streets of a residential neighborhood. Residents of nearby houses will be regular customers of such a store. The more houses in the area, the faster the business will pay off and the organizer will be able to plan the opening of the next outlet.

This article will talk about such a popular store format as drogerie. They have already gained considerable popularity in European countries, but in our country they are just beginning to develop and gain their demand. First of all, we will understand what such stores are, and then a brief description of them will be given.

What is the Drogery format?

So, drogerie is a small store with various cosmetic, perfumery, hygiene, household products, as well as household chemicals and a small assortment of food products. Sometimes drogeries may also sell over-the-counter medicines.

There are also many such stores in Europe, as well as various grocery discount points. For example, the German market boasts more than 9,000 drogeries. Such retail chains emerged after the proliferation of supermarkets and discounters with food products. It happened in the 1970s. We can say that this happened relatively recently.

The advantage of this store format, first of all, is that the cost of operating and organizing a brand is not too high here, and at the same time, drogeries most often have a rather impressive turnover per square meter of retail space. And also the cost of developing and maintaining such an enterprise is lower than that of grocery stores.

Where are the savings from?

First, it is important to note that the savings come from the initial investment. So, in drogerie, almost all goods do not need special storage conditions. This suggests that there is no need to purchase various expensive refrigerators and freezers that will be intended for one or another type of product. In the trading floor, it is not necessary to observe medium-temperature slides for arranging vegetables, yoghurts, fruits, etc. In addition, there are no low-temperature baths. Such a store does not need special remote units and a highly expensive air conditioning system.

The second savings factor can be called conventional logistics. Thus, by virtue of the fact that the drogerie assortment does not have any perishable products, supplies of goods can be made less often, and transport can be loaded more efficiently. It also reduces the availability of expired goods.

The next factor that helps to save money is less energy consumption. Since it mainly goes to lighting the trading floor, in contrast to grocery stores, where all energy costs are often spent on various units and refrigeration equipment. It often happens that the electricity limit simply does not allow the use of a particular room for arranging a grocery store, which cannot be said about the drogerie.

This format of stores, like food discounters, receives 80% of its turnover from regular customers who live in the vicinity of the outlet. At the same time, the network of stores should be dense, and its premises should be small. Those people who live within a five-minute walk from the drogerie will come here daily.

If we take into account the fact that the assortment of such networks is almost always the same, here the customers will be received by the one who first occupies a profitable premises. Thus, we examined the main characteristics of drogerie, learned what it is, and understood what advantages these retail chains have.

At a time when people are saving money and reducing the number of trips to large hypermarkets and hardware stores, there are new prospects for the development of drogerie stores. This type of retail appeared in Russia not so long ago. But experts predict a good pace of expansion of drogery chains in the regions: 20-30% growth in the number of outlets and turnovers in the coming years.

Drogerie is a European format of non-food convenience stores where, in addition to household chemicals, household goods, cosmetics and tights, you can buy over-the-counter drugs and dietary supplements. Drogerie in the West is a great replacement for classic pharmacies, as the format of the institution is friendlier, it is more pleasant to go to it for medicines for coughs or mild colds than to a pharmacy, which is associated with more serious diseases. In European countries, the number of drogerie is comparable to the number of classic convenience stores. In Germany, the retail format "drogerie" has more than 9 thousand units. In the UK, Boots alone owns over 1,400 drogerie stores.

“The format for Russia is quite young. “Podruzhka” entered the market in 2005, “Magnit Cosmetic” in 2010. Each of the trade formats in Russia has its own target audience. The latest Nielsen consumer sentiment study found that 78% of Russian shoppers enjoy shopping and perceive shopping as a pleasant pastime. Interestingly, the Russian consumer is consciously willing to pay more for the benefits of drogery," says Firuza Kozhageldina, Head of Corporate Relations non-food market Nielsen Russia.

According to Euromonitor International, the volume of the Russian drogerie market in 2013 was estimated at 59.8 billion rubles, in 2014 - at 65.7 billion, the forecast for 2015 - 70 billion rubles. According to the consumer society "Drogerie - Soyuz", the average bill in stores is 250-500 rubles, the average traffic per day is 250-450 people. "Drogerie has a wider selection than a standard convenience store. I think if neighborhood groceries and drogeries are relatively close and serve the same area, then it's likely that there will be a split in stock and grocery stores will either drop household items altogether." and expand the product line, or reduce to a minimum the representation of such goods on their shelves, - says Ksenia Grevtsova, Head of Retailers Development "MAGAZIN MAGAZINOV". -some groups of goods to keep affordable prices with a minimum margin.

The main advantage of this format is a convenient location and a wide range of products. 90% of drogerie buyers are women. “The audience of drogerie in Russia is completely different. There are “hard discounters” like “Ruble Boom”, which are focused on the lowest prices and the low-income category of citizens. the average trend, then drogerie is not a store for the poor, - says Dmitry Kalachev, director of Trade House Vprok. - In my opinion, "beauty" (cosmetics, skin care products, hair care products) and household goods (cleaning, kitchen, shoe care products) that sell well and have a good margin".

There are prerequisites for further growth of the drogerie format, and experts are seeing a growth in the segment. Regional players see no other way than extensive growth. They are pursuing a very balanced financial policy, as a rule, have a low debt burden, and this is holding back expansion. “Regional chains, firstly, cannot afford to have a large share of unprofitable stores (as a rule, new stores bring losses in the first year), and secondly, they have already experienced several crises and remember well how banks can suddenly close lending and leave the company in a difficult financial situation. At the same time, there are still entire regions where there are no significant network players, so there will be growth, and most likely it will be measured in double digits (20-30%) both in terms of the number of points and in terms of turnover," he believes Dmitry Kalachev.

According to Vladimir Kukushkin, general director of the BEAUTY MARKET network of perfumery and cosmetics stores, the capacity of the drogerie market in Russia is 12-15 thousand stores. By the way, the format is constantly transforming, and now many chains are moving into beauty - cosmetics, tights, goods that are difficult to sell in grocery retail, reduce the share of household chemicals, which just flows into hypermarkets. Drogerie began to select customers from the classic "perfumery-cosmetics" format, selling cosmetics and perfumes in the high price segment with a markup of 40-60%, which is significantly lower than that of large cosmetic retailers.

A photo: WG / Anton Petepletchikov / Inna Zubareva

The main factor that distinguishes Russian drogeries from European ones is pharmaceutical products. Nevertheless, there are already attempts to sell dietary supplements and parapharmaceuticals in our drogeries. "We are not talking about medicines that are sold exclusively in pharmacies. In terms of assortment, the bets are made on herbal teas, tonics, as well as cosmetics for body and face care, which are traditionally in demand in retail. In our opinion, this is a new and quite promising format for in terms of pharmaceutical products, it has every chance to compete for the consumer with pharmacies, especially in remote regions where the availability of pharmacies is low. etc.," says Natalia Prokopyeva, chairman of the board of directors of Evalar (signed a direct contract with the Magnit network).

According to Roman Ivanov, CEO of R&D Pharma, sooner or later the legislation will change in Russia and classic drogeries will become possible: “First of all, a change in the mentality and capabilities of the target audience of such stores will be required. As you know, these are middle-level housewives. Now in our country this category of society cares about how to feed their households. Currently, there is a steady decline in sales of parapharmaceuticals and cosmeceuticals in pharmacies. This is due to the crisis of macro- and microeconomics. I do not believe that against this background, drogeries will gain popularity in Russia. "

So far, the drogheri themselves adhere to this point of view. “I believe that in Russia it’s more likely not about legislative obstacles, but about the habit of buying and trust in the format. I know that one of the Moscow chains tried to implement pharmacy departments on its premises, but sales did not go. I still don’t see the prerequisites for such a scenario," sums up Vladimir Kukushkin.