Imagine your company has the opportunity to supply POS equipment to a chain of upscale clothing stores in Russia. You obviously have the tech part down, but do you have the Russia part down?
Before you pack your bags, let’s unpack some of the do’s and don’t of a retail IT deployment in Russia. The regulatory and retail environment is quite different in Russia than it is in the United States, and you need to be prepared.
Here are some do’s and don’ts that you need to consider:
DO: Learn From Others Who Have Gone Before You
There have been many successful retail IT deployments in Russia, from huge companies to smaller, more nimble outfits.
Consider Globus, a German hypermarket that has recently expanded into Russia. They partnered with U.S.-based NCR to bring the self-checkout experience to shoppers in several Russian cities. Self-check was a relatively new phenomena when they first rolled it out in 2015, but because of the ease of use and speeding up of the checkout process, it’s become enormously popular.
More recently, Russian retail chain Lenta partnered with Austin-based Revionics to provide price optimization, data analysis, and support to their very popular customer loyalty card program. From Retail Times UK:
Lenta will initially conduct a pilot rollout using Revionics across five product categories: industrial bread, ice cream, cooking oil, yogurt and air fresheners. The rollout will encompass both its traditional hypermarket stores and its newer supermarket formats. Lenta also plans to leverage Revionics Analytical Services, including Key Value Item (KVI) analysis to refine its KVI list and category roles, Store Zone Cluster Analysis to identify the best store cluster approach and improve efficiencies in the pricing process, and Elasticity Workbench to analyze how shoppers respond to prices.
The above retail IT deployment examples are case studies on how to be successful: Do your homework, leverage your strengths, offer something new to the Russian consumer, and partner with an entity that can help you get it right.
DO: Use Global Field Techs
A successful Russian retail IT deployment will depend largely on having skilled personnel on the ground who are familiar with the regulatory and logistical landscape. One of the components of any Russia plan is working with a corps of field techs who can sort through the equipment necessary to make your IT deployment work in the Russian retail landscape.
Flying in your own people is much more expensive than using locally vetted and sourced field techs who know the unique technical and regulatory landscape. Working with a global field tech provider such as Kinettix can aid with scheduling, staffing, managing, and supporting and a project. They can be on call 24/7 and offer scalable solutions to the ever-shifting needs of a Russian retail IT deployment.
DO: Look Beyond Moscow And St. Petersburg
Heard of Irkutsk? It’s a city the size of Boston, about 5,000 miles away from Moscow in a corner of Siberia. Russia has scores of cities like Irkutsk dotting the hinterlands. Moscow and St. Petersburg are the big players, and there’s a huge opportunity there. They can’t be ignored.
That said, the competition in those places is also intense. There’s less competition in Irkutsk or Vladivostok (pop. 606,569) or Omsk (pop. 1,178,391) or Tyumen (pop. 744,544).
An interesting report in Business of Fashion describes the retail landscape in Russia, but one sentence jumps out at us:
“When faced with the largest country on the planet, it is all too easy for outsiders to equate remoteness with insignificance. That couldn’t be further from the truth, say some Russian market experts.”
We agree; there’s nothing insignificant about a city of million in Siberia. You can read the whole Business of Fashion report here.
On the other hand, consumers in Moscow and St. Petersburg are more accustomed to marketing campaigns by international retailers and might be more receptive to your product.
Do a thorough market study before any deployment in Russia.
Now that you know some of the key things to do now, let’s look at what not to do.
DON’T: Skip the Importer of Record
You won’t be able to get your product and supplies into Russia without working with an established Importer of Record, or IOR. There are so many rules and regulations governing what can come into Russia, especially as it relates to IT deployments. An experienced IOR can help you navigate the way in. We covered this topic in-depth here.
DON’T: Ignore the Non-tech Aspects of a Deployment
It’s easy to get so bogged down in making sure all the routers and wireless connections work that it’s easy to forget about the human connections. Those are very important in Russia.
For instance, our sources in Russia point to one of the biggest impediments to successfully doing business in Russia is relying too much on English.
“English is not widely spoken in the IT community,” our source says. Or in any other community, for that matter. So using field technicians who are local and speak the language will make your product go far more smoothly.
Also, don’t forget that Russia is still very much a cash society. While the use of credit cards is increasing in Russia, by some estimates 20 percent a year, there is still a huge cash component.
So while looking at POS of sale systems, loyalty card programs, wireless payments, and touch-screen technology, consider the Russian consumer. Part of your job in a Russian retail deployment may be to play the role of educator.
DON’T: Go Solo
We highly discourage entering the Russian market alone. Even giant brands like McDonald’s rarely go it alone (they currently partner with Russian franchise partner Rosinter in running their new restaurants, and McDonald's has been the rare American company to go solo into Russia, starting in 1990 when the business environment was different).
If you are a telecom, we recommend partnering with a company in Russia that can complement your services or logistical support. And if your goal is to service the Russian retail market with security cameras for stores, payment processing, point of sale devices, or suites of other services to help make the retail experience more smooth, we recommend partnering with an existing Russian entity to make it happen.
You can read more about doing business in Russia by checking out our Ultimate Guide here. In the meantime, get at your map and study. There’s a lot more to Russia than St. Petersburg and Moscow, and your strategy needs to reflect that.
