The power of the magic word “discount” has long been appreciated by domestic retail chains that trade at discounts. There are much fewer discount systems in Russia that combine stores, cafes and hairdressers belonging to different companies under one brand. SB correspondents analyzed the practice of two of them - the Novosibirsk Golden Mean and Zelenograd Discount Territory
Who needs this?
A familiar entrepreneur living in Germany said that in his small town three local discount brands are fighting for the palm. When a few years ago Siberian Sergey Borodin decided to create a discount system, for a half-million-strong Novosibirsk it was a “completely adventurous” project.
“Until 1999, I specialized in the wholesale of perfumes and cosmetics, ” recalls Sergei Borodin. - I had a fairly large company by Russian standards. But Moscow was constantly trying to infiltrate our region. It was clear that sooner or later I would lose in competition with Muscovites. Therefore, in the end, I sold my company to them and was left face to face with the problem: what to do next? Organization of production or creation of an enterprise working in the service sector? As a result, I became interested in creating a system of discount cards.
“Four years ago, we published the Open Territory advertising newspaper, which was distributed free of charge to the apartments of Zelenograd residents and its environs, ” says Olga Panina, financial director of another discount system. - The competition in the advertising market is quite tough, and in order to support our publication, we decided to organize a parallel business. They came up with the “Territory of Discounts” brand, making it graphically identical with the logo of the newspaper. Thus, they killed two birds with one stone: they began to earn extra money and at the same time advertise the newspaper.
The essence of any discount technology is the issue of cards that entitle you to a discount at a number of outlets and help them form a circle of regular customers. In Russia, such programs are most often implemented within the framework of one company. It happens that the efforts to promote their products connect different firms. The most famous example is Alliance 777777, which includes large Moscow chains leading in their product markets, but not competing with each other (Old Man Hottabych - building materials, Sportmaster - sports goods, Arbat Prestige - perfumes and cosmetics, "M. Video" - consumer electronics, "The Seventh Continent" - food). In February this year, Vimpelcom launched its discount project, which decided to issue 3.5 million cards under the name BeeBonus for Bee Line subscribers in Moscow and the Moscow Region. So the well-known mobile brand decided to increase its competitive advantage in competition with MTS and MegaFon. By presenting a BeBonus card, Bee Line customers will be able to get a discount at a number of supermarkets, perfume stores, a fitness center, travel agency and car rental company.
In all these cases, the card is issued free of charge - as a bonus to some major purchase or promotion for regular customers. However, an independent discount business is arranged somewhat differently. Its purpose is the issuance and sale of cards that give the right to a discount at dozens and hundreds of outlets that do not enter into any alliances with each other. The more such firms, the more diverse their goods and services - the better; the more the discount system earns, the more money the buyers of its cards can save.
A classic example is the transnational Countdown system, operating in Russia with almost 2, 500 companies (including 1, 500 in Moscow). Among its participants are the largest insurance companies (ROSNO, PSK), leading newspapers (Izvestia, Komsomolskaya Pravda), metropolitan cafes and restaurants (Coffee House coffee chain). According to Natalya Centereva, Countdown’s manager for Russia, the annual “membership fee” for enterprises here ranges from $ 60 to $ 600, depending on the number of outlets and other parameters. Countdown card is designed for Russians with a monthly income of no more than $ 500. It costs a lot - $ 48. But, nevertheless, in our country about 350 thousand of such cards are issued annually. Buyers are attracted by the fact that they provide an opportunity to save not only in Russia, but also in other countries of the world.
Promotion from scratch
However, it is one thing to promote the world famous discount brand, and another to create a discount system from scratch. Moreover, in a city where they had never heard of anything like this before. The creators of the “Golden Mean” had to work hard to tell potential card buyers what their winnings would be. Almost 95% of all the money that was invested in this project at the start went to advertising.
Advertising costs, office rental costs and salaries in different Russian cities are different. As for the one-time investments in the organization of the discount business, they are small. You need to print at least 1000 cards and publish a catalog of companies included in the system ($ 1500-2000). This order is easily completed by enterprises producing plastic cards. At least two computers are needed - to serve customers and conduct accounting (another $ 1, 500-2, 000). In addition, if you want the new card to be compatible with different terminals, you will have to write a special computer program for it (no more than $ 1000). All costs pull a maximum of $ 5, 000. Further, the rate of return on business directly depends on how dynamically the managers who establish contacts with the stores work. The “territory of discounts” paid off in three months. If you sell more than 5, 000 cards a year, about $ 10 apiece, then the net profit from these operations alone will be about $ 10-12 thousand. In addition, most discount systems take annual subscription from participating companies fee. Nowadays, one or two Novosibirsk enterprises that pay a fee of 10, 000 rubles now join the Golden Middle. In a year (for 240 working days) this is another $ 75-150 thousand of gross income (excluding taxes and other costs).
Should I take money from stores?
“We are pleased to have our cooperation with the Golden Middle discount system, with which we have been working with for more than six months, ” says Vita Rodina, marketer at the Novosibirsk-based Podrya line store. - We got a separate cash desk serving customers with discount and plastic bank cards. Computer analysis shows that lately we have regular customers.
- We were one of the first to join the “Territory of discounts”. As a result, we have a free line in the Open Territory newspaper and preferential rates for advertising, ”estimates Gennady Tsaparov, director of the Sesame Finishing Materials Store, evaluating the benefits of participating in the discount system. - And most importantly, there were people who came to us for shopping even from the other end of Zelenograd.
But at the initial stage, many store directors reacted to the new service with great distrust. “I had to spend a lot of time convincing them that joining the discount system would strengthen the customer base, ” says Sergey Borodin. From the very beginning, “Golden Mean” began to charge companies. First, 3, 000 rubles, then, when the partners were convinced of the benefits of working with the system, it was increased. Sergei Borodin believes that this is a matter of principle - quality services cannot be free. “Territory of discounts” went the other way. “Choosing the first partners, we stopped at the best shops and service enterprises in Zelenograd, ” says Olga Panina. - Firstly, they clearly understood what a “discount system” is, and easily made contact. And secondly, it had a positive effect on our image. Card holders began to realize that they receive high quality service at a lower (including discount) price. And they began to recommend buying them to their friends. True, there were misfires. Example: two equivalent appliance stores located in the same area. One has its own system of discounts, and he is not interested in our offers, the other generally considers discounts to be unprofitable. The fact that, entering the discount system, they actually provide themselves with effective advertising, could not be explained. But in the end we got a call from a third store on the outskirts. As a result, he became one of our most active partners.
Zelenograd residents do not charge entry fees from enterprises. And also fundamentally. This allows them to choose partners themselves and maintain the brand of “Territory of discounts.” “Six months after the launch, there was no end to those who wanted to join our system, which we wanted to achieve. Now you can choose the points that work most efficiently. However, if you compare the results of the activities of the "Golden Mean" and the "Territory of Discounts" (see page ???), then Zelenograd residents are more modest today. Cards are sold cheaper than in Novosibirsk, but there are fewer cards issued per city dweller. We did not immediately find the optimal discount size and Zelenograd stores. “We have a paradoxical situation, ” recalls Viktor Chernyaev, director of the Kapriz supermarket. - We willingly connected to the system, as the city has very fierce competition among supermarkets. And a month later they won in this fight. But at what price! People with discount cards in their hands stood in line at the checkout through one. We were almost at a loss and were forced to reduce the discount from 5% to 3%. In word, the discount is not as simple as it may seem.
Union with banks
One of the most promising areas of development of the discount business is an alliance with banks issuing payment plastic cards. The international Countdown system has been selling Visa-Countdown, MasterCard-Countdown cards for several years now, which allow you to pay with plastic and receive discounts. Very comfortably! The Golden Mean last year launched a similar project with the Golden Crown payment system in Novosibirsk. In 2002, they issued 25 thousand joint cards. “This move allowed us to dramatically expand our business, ” said Sergey Borodin. - In total, last year we issued 45 thousand cards, 10 times more than the year before last. True, at the same time only 24 outlets in Novosibirsk can serve the Golden Crown cards and give discounts on the Golden Middle system. “We also thought about cooperation with a bank to unite our systems, ” adds Olga Panina. - However, so far they have decided to abandon this idea, despite all its prospects. The fact is that “plastic” in Zelenograd is used by units, of settlement terminals - from a dozen to the whole city. Docking with a payment system actually means a joint business. And there is no bank in the city that could issue the number of payment cards we need, but the biggest problem hindering the development of the discount business is another. For cards to be actively sold out all over the country, a high solvent demand is needed. And the incomes of the majority of Russian citizens are small. “It seems to me that the time of discount systems in Russia has not come yet, ” said the creator of one of the first domestic discount systems, Extra Club, Viktor Shumilov. - Discount cards are designed for the middle class - people who earn decent money with their labor and know how to save them. So far they have become a significant force only in Moscow and several large cities. In addition, while consumers have long been accustomed to free bonus cards, few people understand the advantage of buying a card that can dramatically expand the range of discounts. But they don’t understand because they’re not well explained to them. A full-fledged discount card is still a completely new product on the Russian market, and you need to promote it according to all the canons.
Sales promotion programs
The structure of methods used by retail companies. According to research by foreign economists
Provision of discounts on coupons, certificates and discount cards by retailers - 60%
Simple discounts - 15%
Bonuses and gifts - 10%
Lotteries and contests - 5%
Other methods - 10%
Who is who
The Golden Mean Project
Eight people are employed, five of them are managers who are engaged in establishing contacts with partner companies. Over 50 thousand discount cards were issued, with a population of Novosibirsk of 1.5 million people. You can get discounts on them in more than 600 stores and service companies. The cost of entry into the system for firms is 10 thousand rubles. The cost of the card is 300 rubles.
Project “Territory of discounts”
Three people are employed. A little more than 2 thousand discount cards were issued, with a population of Zelenograd of 200 thousand people. You can get discounts on them in 30 stores and service enterprises. Expanding the circle of partner companies does not make sense due to the small number of outlets in the city as a whole. Logging in is free. The cost of the card is 160 rubles.
Author: Based on the materials of the magazine "My Business"
* The article is more than 8 years old. May contain outdated data
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08/18/2019