The largest Russian sporting goods retailer, Sportmaster, plans to launch 250 stores in a mini format in towns with a population of up to 50,000 people. All mini-stores will be established exclusively under franchise agreements, as the company prefers not to waste resources on expansion into Russian provinces. The first two stores under the Sportmaster Mini banner have been launched in the small towns of Kostroma Oblast and Krasnodar Krai, a source close to the company told the local press.
The retailer promises to integrate partners into its store management system, take care of supplies and logistics, draw up a business plan, and assist franchisees in streamlining operational processes and renovating store premises, Sportmaster disclosed.
Running a store in a small town in Russia is much different compared to operating in a big city, a source in the Russian retail industry who wished not to be named told local business newspaper Kommersant. The key difference is the much lower population’s purchasing power. The average monthly income in the small towns ranges between Rub 20,000 and 30,000 (€200-300), less than half of the nation’s average and only about 20 percent compared with the average wage in Moscow. This disparity is also taking a toll on demand in the sporting goods market, which is much weaker in Russian provinces, according to the source.
A resulting low business marginality of operating stores in Russian towns probably was the key factor behind Sportmaster’s decision to develop this direction through franchises, said Anna Rozhdestvenskaya, an expert with the Russian consultancy Franshiza. Besides, franchises run by locals could be more flexible in terms of offered product range, ordering the goods having the higher popularity in particular locations, Russian experts said.
Under the new format, Sportmaster plans to launch stores with a shopping floor between 100 and 300 sqm, which can hardly be called “mini” by the gauge of the Russian franchise industry, Rozhdestvenskaya added. The new scheme has certain disadvantages as the premises of that space are usually in the highest demand in the small towns, and their owners charge relatively high rental rates.
