
The head of the Flagman retail chain spoke about the speed of decision-making and the absence of internal bureaucracy, which helps to actively move forward, as well as the process of selecting cities and locations for new openings.
The head of the Flagman retail chain, Dmitry Timchenko , in an interview for RAU , outlined the problematic issues and challenges facing the company in times of global change. The top manager mentioned the problem of personnel qualifications and the destruction of retail outlets due to a full-scale invasion. At the same time, Dmitry noted that clients deliberately prefer the company’s own brands, since Flagman is a Ukrainian manufacturer. The company abandoned plans to “abandon plans” for development, never laid off employees, there is almost no staff turnover, and during the great war, while other Ukrainian businesses were cutting marketing budgets, it only increased them.
— This year the Flagman chain of specialty stores celebrates its 24th anniversary. What periods were the most difficult?
— First, a difficult period occurred in 2014, when Russia first invaded Ukraine. Then the Flagman company chose its course: it was decided to change, in particular to increase customer loyalty, to include strict dumping and expansion. And it was decisions like these that saved us in 2014-15.
Then the coronavirus pandemic became a turning point, making adjustments to the business strategy. During this time, we learned to work flexibly and remotely, which for the most part helped the company withstand a full-scale invasion. We already had all the protocols on how to act and work.
Next, of course, is a full-scale invasion. However, we did not reduce staff either during the “Covid times” or during the great war, and now we have almost no staff turnover.
So, our main advantage over these 24 years is our experience of working with people and for people. The level of expertise and knowledge helps us take complex challenges and achieve consistent solutions, which we have successfully applied and will continue to use for further growth.
— Were the network ready for a full-scale invasion to begin?
— We, like most businesses in Ukraine, did not believe until recently that there would be a full-scale war. And on February 23, 2022, the owner of the company and I were in the office and, thinking that nothing would happen, we finished the working day. However, already on February 24 at 4 am we phoned and decided what to do next. Then we closed all our retail outlets, but with daily control over them. We have security protocols, rules for physical access to stores, etc. So the whole team understood how to act. And we worked in this mode for a month – until April 2022. Naturally, they continued to pay wages to all employees. By that time, about 50% of the staff had relocated, but in April they began to return.
We learned that in the city of Vinnitsa there is a shopping center in which several stores are open, and then I realized that we need to begin to gradually resume the work of our retail network.
“You made a rather risky decision because it seemed that in the first months of the invasion people were mainly buying essential goods.
“Given the travel ban for men, our entire target audience remained in the country. However, when we started opening, we didn’t understand whether there would be demand, but we took a risk.
The first outlets opened in the capital. At the end of April, 50% of retail was already functioning, in May – 80%, and in June – the high season for us – all the chain’s stores had already resumed operations. It is also worth noting that Flagman is a Ukrainian company, which simplifies the decision-making process and the absence of bureaucracy.
Another interesting thing: given that the men left to defend the country, their income increased. Therefore, in the first months of operation, many military personnel visited our stores, and now this trend is observed.
In general, our main marketing communication is that nature, tourism, fishing are restoration. Ever since the coronavirus, when everyone was encouraged to stay at home, we have been saying that we need to go out into nature.
So, even during Covid, we realized that we have a unique segment, because people, no matter what conditions they are in, need to restore both their physical and moral state.
— Currently, the Flagman chain has 55 stores in 29 cities of Ukraine. Tell us about the discovery and destruction of points during the war.
— During the full-scale war, the network grew quantitatively by more than 20 new stores. Recent openings took place in Kyiv and the city of Horishni Plavnye, Poltava region.
However, unfortunately, we lost five stores. Back in 2014, there was still a store in Donetsk, but we managed to remove it from it when the city was already under occupation. Then a rocket hit a store in Severodonetsk. Everything burned down at the point in Mariupol. We relocated many people who worked in Severodonetsk and Mariupol to other cities, and they continue to work in the network.
We also reacted in time and were able to remove everything from the store in Kharkov, located in the Cosmos shopping center, and from the point in Kherson on the right bank. However, if the store in Kherson had not been rented, but ours, I think we could have stayed there.
— What store formats do you have and what is the optimal one?
— We have M, L, XL format stores and a hypermarket in the capital. However, we have clearly determined for ourselves that the economically feasible and cost-effective format is 200 sq. meters.
— How do you choose cities for new discoveries?
— Before the full-scale war, our goal was to become a national retailer, that is, to open at least one store in each regional center. And they achieved their goal. As for other criteria, it must be a city with a population of more than 300,000 people. Next, we analyze the volume of the fishing goods market in terms of area and, accordingly, in money.
We look at the state of water resources and their specifics. There are regions in which there are many wild rivers and reservoirs. There are regions where there are many paid places for fishing or only one river. This issue is very serious for us, and the success of our work depends on its study. This is why product and assortment matrices differ in chain stores.
It is also important to simply assess what is happening in a certain city. I personally come to it and evaluate key locations – the center, markets, shopping centers, etc. Believe me, it is very important to understand how the city lives.
— By what criteria do you choose locations for openings?
— Now we have 80% street retail and 20% points in shopping centers and shopping centers. The situation with Covid and the big war highlighted the advantages of stores in the street retail format. When we open in shopping centers, we clearly understand that the traffic generated there has a beneficial effect on our sales. At the same time, it should be noted that we enter the shopping center as an anchor, so we ourselves are a powerful traffic generator.
Regarding street locations, the main selection criterion is car traffic and parking availability. We choose densely populated residential areas, make sure that there are markets, shopping centers nearby – that is, everything that generates traffic. Of course, foot traffic, the absence or presence of competitors, and rent also play a role.
Another important point is the geometry of the room. We open mostly in square or rectangular locations with ceilings higher than 3 meters. However, I would like to note that we are a flexible company, so if there is a good location to open, but the premises itself does not meet all our requirements, we still consider this option.
If we talk about points in shopping centers, then the ideal option for us is a shopping center on a regional scale. We have a point in the capital's Academ City shopping center, which geographically covers a large piece and is one of the turnover-generating ones. In total, 70% of our space is rented, 30% is our own.
— Who is your target audience?
— Our active target audience is men 30–40 years old, but women also buy, but mostly for gifts. In the marketing department, we are building educational programs for children and youth under the general name Flagman Kids, and developing the Flagman Woman concept. Thus, we strive for our target audience to be any person from 3 to 103 years old (laughs).
— Do you see any changes in seasonality?
— For us, the off-season period is deep autumn and winter. However, this is being leveled out for now. If previously seasonality was clearly expressed, now it is not.
— Tell us more about the number of VTMs and how you build a marketing strategy.
— We conducted our own marketing research and asked people why they love us. Among other advantages, respondents note that this is a Ukrainian brand. And taking this into account, we will continue to build our marketing communications and emphasize that we are a Ukrainian brand. Our clients know about VTM and consciously choose them.
If in 2014 70% were trademarks and only 30% were private labels, now it’s the other way around – 70% VTM.
When we first started developing production, there was one private label, Flagman, and then we divided the products into categories and now have four highly competitive private labels – Flagman, Carp Pro, Azura and Forrest.
Our product is truly unique because we have our own designers and developers. And the development of VTM is a big advantage over competitors.
— Where is the production located?
— What can be done in our country, we produce, for example, bait for fish. And now we understand that there are many manufactories, so we can cover certain needs with internal resources. By the way, in the city of Horishni Plavnye there are as many as five textile factories!
Most of the products are made in China, but with strict quality control by our product managers. There are also categories of TMV produced in Japan and Korea, since these countries have the highest quality.
— Fishing and tourism are a segment that not everyone understands. Do you have problems finding personnel?
— Considering the specificity of the segment, 90% of the staff are men, but the percentage of girls who are there are professional fishermen.
Of course, in retail we attract people who have a practical relationship with fishing, tourism and really understand this. However, we are not categorical. It happens that people come without experience, but with great desire and within a year they become real professionals.
— Are there problems with finding people for certain office vacancies?
— The big problem is the qualifications of personnel. It happens that people come, play the role of a marketing director, earn money and leave for another company. We understand that these are air sellers, workers. From our experience, the majority of top management has a lot of theory and little practice, is focused on narrow business processes and cannot work in multitasking conditions. The reality of the labor market is that there are few professionals. And it is much easier and better for us to use the company’s internal resource: to raise a person and bring him to the required level so that he fills this or that vacancy.
— How do you maintain the service at a high level – secret shoppers, handling complaints?
— Previously, we attracted companies for secret shopping, but we realized that they did not give us the kind of feedback that we expected. Therefore, for these purposes there are people who really understand the subject and are impartial.
Of course, there is a department for handling complaints. We can say that the number of negative reviews we have is close to zero. And all because we give quick feedback and are flexible in resolving any customer issues. In addition, one of the functions of store managers is to resolve issues locally.
— How are you developing e-commerce?
— We will soon present a new, convenient and modern website and mobile application. We are actively working on this. All of our stores are pick-up and delivery points. In addition, we are developing the commercial component of social networks and attracting other, modern and relevant resources for online trading. We actively use artificial intelligence; we can say that it is our full-time employee.
— Tell us about your loyalty program.
— We have our own Flagman Fishing Club (RKF), and our message is this: everyone who has our loyalty card is a member with access to the benefits of a club member. This includes a direct discount that accumulates up to 15%.
There is a large user base, which is replenished daily through expansion into new cities.
I would like to note that in addition to the loyalty program, RKF is implementing social initiatives – actively supporting the Armed Forces of Ukraine and volunteering.
— How exactly does the RKF support our fighters?
— Since 2014, we have been supporting and helping military units with various equipment and things upon request. We actively collect, purchase and donate necessary military items upon request: cars, night vision devices, rubber boats and boots, much more.
And since 2015, the company introduced fishing rehabilitation measures, when many military personnel who participated in the ATO began to return home. And it was fishing rehabilitation that helped them restore their moral balance. Since the end of 2022, our events have been held throughout the country – from Kharkov to Lviv. They are visited by military personnel with wounds and injuries of varying severity.
Military rehabilitation occurs through stress reduction, nature therapy, social support and friendly meetings, which contributes to improved health, because fishing is primarily a physical activity that improves general physical condition.
— And, of course, tell us about your plans for 2024.
— The Flagman network continues to expand. A new store will soon open in the city of Bucha. And this year there will be more news about discoveries.
In big cities, we are now looking at promising, small cities to which population migration occurred due to a full-scale war. We will work to improve the skills of employees and services, as well as expand those retail outlets that already need to be expanded.
And of course, we hope that the state will support Ukrainian business and contribute to its development, and not vice versa.
And most importantly, we will do everything in our power to develop and popularize fishing and recreation culture in our beautiful country!