News in April 2009 | |||
Maxim Andriasov: «The market is oriented onto the high quality of servicing»
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There is no need to introduce Maxim Andriasov to the fuel market participants. Although, on the other hand, a number of years have already passed since his departure to Moscow in 2002, and a new generation of managers has already grown up in the country. For those, who are not in the know, it would be enough to say: this is the person, who, being a part of the first TNK team, has hoisted a flag at the summit of the Ukrainian fuel market. One of the ideologists of the first jobber program.
And last autumn Mr. Andriasov returned to Ukraine to become the head of the Company’s retail business in the country, in the structure of «Zolotoy Gepard» (Golden Cheetah), TNK, and ÂÐ brands. In contrast to the hot days at the end of 1990-s, at present Maxim Andriasov is somehow in the rear part of the Company, bringing the part of the business, entrusted to him, to the compliance with TNK-BP standards. In his interview to «Energobusiness» Magazine the top-manager has advised about the changes at the domestic petroleum products’ market, profitability of fuel trading, and perspectives of the Company’s jobber network.
— What principal changes have occurred at the Ukrainian petroleum products’ market while you were absent?
— Everything has become more civilized and structured. Previously this has been a market of the medium-sized private players, while today I can clearly see the significant role of large companies. Considerable investments into the retail business are also rather evident. In general I can even see some growth in the intellectual and professional level of retailers. (Retail is the street trading. Under a certain wider interpretation, retail is the work with the mass customers. — Editor). Medium-sized private companies have management, which is professional enough. The progress is quite evident.
— Please tell us about the period of your activities in TNK Stolitsa. In particular, we are very interested to hear about the deal on acquisition of Magistral Company assets, which included the «Zolotoy Gepard» brand.
— While working in TNK Stolitsa I dealt with accretion and management of assets, being also responsible for network development in Moscow region, acquisition of land lots for filling stations, their construction, acquisition of filling stations, and participation in tenders on land lots’ sales. We have developed a network plan for several years, which included the detailed description of the shareholders’ expectations on the network expansion and on each individual filling station, and every year we have been methodically seeking for accomplishment of the objectives, set in the plan.
One day we came to the understanding of the fact that, to implement the plan, designated by the shareholders on the market share, we have only one way — the acquisition of a filling stations’ network, similar to the one of Magistral Company. As a result, this deal has become one of the largest for some time past at the Moscow market and the largest deal of TNK in the downstream sector. It goes without saying that this project has also been very significant for me personally. Everything has been arranged in a rather quick and interesting way.
— How would you evaluate this acquisition today, taking into consideration the current financial and economic realities?
— I believe the retail business is the most protected and stable channel of sales under crisis conditions, even in spite of the current recession in the demand, in contrast to the wholesale, trading, or exports, which are significantly impacted by the existing changes at the market and in the economy. But the retail business will exist forever, like the segment of day-to-day goods. It may work in a somehow worse mode, but certain profitability will be always present. And the reduction of sales’ volumes at present is an objective tendency all around the world.
— By the way, what position is occupied by the retail business in the world outlook of the Russian oil companies? As far as I remember, previously this sector has been considered as a kind of a stepdaughter in the house, where oil producing companies reign...
— I do not think that the retail business is an unnecessary burden for companies; otherwise we would not be observing such rapid development of networks and such large acquisitions during the last years. I can clearly see that the volume of investments into this segment grows from year to year. After all, the retail business means real «cash», and not only the image of the company.
Although, I do agree that the eternal question of where to invest money — into the retail business or oil production — is still on the agenda. But oil production and exports also have their own limitations — after all, it is impossible to export absolutely everything.
The issue of diversification of sales channels is still rather acute for any company, and the retail business is very important here. It seems to me that any oil company should support its own market, all the more in Russia.
— Do you believe there is a large between Ukraine and Russia in the fuel retail business?
— I can see no gap here; that is for sure. Moreover, sometimes it seems to me that, in some points, the local management system has been arranged even in a better way than in Russia (although here I am more oriented on the metropolitan companies). And I am speaking not only about TNK in Russia and TNK in Ukraine, but about the local market in general, which, in some issues, is even more structured and manageable than the Russian one.
From the other hand, it is impossible not to take into account the fact that Ukraine is considerably smaller, the market is not that huge, and it is much easier to work here. Partially, this is the reason why all processes are much faster here, and players know each other better. In Russia the market is very inert, and everybody needs much longer periods of time to get into the swing.
— Where do retailers earn more – in Russia or in Ukraine?
— The profitability of filling stations is better in Russia. Ukraine is an importer of oil and petroleum products, while Russia is a fuel producer and a powerful oil producing country. Therefore, gasoline prices are lower in Russia. From the point of view of profitability in the petroleum products’ retail sales the Ukrainian market is very similar to the Russian one.
In particular, the payback period of a filling station is 5—8 years. That means there are no super-profits here, if you are asking about that. Honestly, I even cannot clearly understand what a super-profit is, and how you can get it in the retail business.
— Many people believe «Zolotoy Gepard» is one of the exemplary networks, which, according to a number of parameters, is the market leader. Accordingly my question is: are you going to develop it?
— The business of «Zolotoy Gepard» has been an ideal private business. Its owners have achieved what they wanted. This acquisition, besides the expansion of our presence at the market, will let us make TNK network more full-fledged and as accurate as possible. This is my principal objective at this position.
Firstly, we should arrange a uniform network of TNK and ÂÐ. At present our filling stations work under different brands; they are totally different. Of course, the current economic situation has somehow adjusted the speed of implementation of our plans; the deadlines have been reconsidered, and I cannot announce them for now. But, conceptually, nothing will be changed.
— But, after all, the brand of «Zolotoy Gepard» is successful now, whereas the scheduled re-facing will require financial costs, and there is a risk to lose a part of your customers…
— I would not argue that the current network is efficient, and the trading has been arranged in a proper way. But we are looking into the future and can see only a uniform brand there. The issue is not in the name, but in the package of services, which the customers expect to get at a filling station under this or that brand.
Research results show that a visit to a filling station is on the list of stressful situations, since such visit always includes a loss of time, a risk of an accident at the filling station itself, and a risk of deception and questionable quality of the fuel. And if the customer knows that he or she gets an equally high level of service at any filling station of a well-known brand, then his or her choice of a network will be automatic.
A visit to a filling station will not depend on these or those circumstances, existing in the customer’s life; on the contrary — his or her business time-table will take into account the visit to a particular filling station. And he or she will already know that everything is perfect both for the customer and the car. We are moving to that objective and making our stake on a uniform brand, and this brand is TNK.
— You have been an active participant in the launch of the first TNK jobber program. At that time such program has created a furore; however, at present you can quite often hear an opinion, saying that was a mistake, and the scheme is nonviable in principle. What do you think of that?
— The jobber program at that phase of market development has been a new thing for the market, and for the company that has been the only and more or less fast way to enter the market. And we have attained our objective. At present we have considerably revised our approaches to the jobbers’ business, at least in the sense that today the highest importance is given to the quality and not the quantity.
In some time the whole jobbers’ network will be re-branded in accordance with our corporate style. Uniformity will also be present here. As a result, we will establish such a level of the whole network that will absolutely comply with our Company’s standards.
For instance, in Russia everything is written down in a contract with the owner of each filling station. We have certain commissions (expert groups), which go to the filling station and check the fulfillment of all clauses of the agreement. We also have special training programs for jobbers and their staff. In general, this is a separate industry. And therefore we can guarantee the quality at all filling stations, where the «orange spot» is present at the front.
Please believe me, there are successes in the jobbers’ networks. We should simply implement the practice on this kind of agreements in a proper way. And now the filling stations’ owners themselves already understand that the market of fierce price wars and low-quality fuel sales has already passed away. Some signs of that still exist, but they impetuously quit the stage.
The current market is oriented onto the high level of services, and jobbers themselves note that, while implementing our standards, they get a growth in the sales at their filling stations. And as for the viability of the jobber scheme as such, it works all around the world.
Source: Energobusiness