From Conflict to Collaboration: Offering Consulting Solutions in War-Torn Markets

Let’s talk about selling consulting services in the war conditions, like we have them now in Ukraine. One of the small businesses applied for free consultations to KSE, is a merchandising consulting firm RSM (Retail System Management). Roman Kramarenko is an Engineering Graduate, has started his merchandising company a few years ago. He set growth goals, made projections, developed sales structures, and the war came and adjusted his plans.

Website: https://rsm.org.ua/
Facebook: https://www.facebook.com/roman.kramarenko.12
LinkedIn: https://www.linkedin.com/in/roman-kramarenko-50458320

While he is knowledgeable in the merchandising field, has experience in negotiating, selling and providing quality services, so much so he himself can consult and coach those who are interested, he still felt the need for an outside perspective. Oleg Zubchenok from Kyiv School of Economics Consulting Initiative funded by International Organization of Migration, pitched in with his insights. Being a bottomless well of ideas and resources, Oleg scooped insight after insight during the consultations, giving Roman more and more sides to look at and more and more points to consider.

Without going into too much details of Roman’s plans and questions, let’s just say that his current offers include Merchandising, Mystery Shoppers, Point-of-Sale Promotions, customizable consulting, and more.

To understand the pain points of retail merchandising industry in Ukraine, let’s take a closer look at the current retail marketing situation.

The current retail marketing situation in Ukraine reveals several pain points for the retail merchandising industry. SupplyChainDigital.com has a very good overview of the situation last year of the key issues faced by different players in the market. While Roman quoted more recent numbers during consultation, stating that many chains are returning to their pre-war operations, the main pain points remain:

1. Local Retail Chains in Conflict Areas:

- Difficulty in relocating and developing in safer regions due to partial occupation or constant shelling.

- Loss of stores and reduced presence in regions affected by war.

- Examples: "Econom" retail chain, which experienced a significant decline in the number of stores.

2. National Retail Chains:

- Challenges in maintaining operations and rebuilding resources in conflict-affected regions.

- Loss of stores and logistical obstacles.

- Examples: "ATB" and "Silpo" retail chains.

3. Specialized Retailers:

- Active expansion efforts in most regions to increase their presence.

- Franchising schemes as a means of growth, such as the "Myasomarket" chain developed by the "MHP" holding company.

- Examples: "Myasomarket," which grew its number of stores from 180 to 239.

4. Logistic Challenges:

- Disruption in supply chains and logistics due to ongoing conflicts.

- Difficulties in ensuring product availability and timely delivery.

- Impact on the overall operational efficiency of retail businesses.

5. Rebuilding and Future Growth:

- Limited financial resources and manpower for retailers to rebuild and expand their presence.

- Desire to explore new regions and markets for growth opportunities.

- Focus on strategies that ensure food security and adapt to changing market dynamics.

These pain points highlight the need for solutions and support in areas such as logistics, resource rebuilding, market expansion, and adaptation to challenging circumstances.

The FMCG industry in Ukraine, like in other parts of the world, also faces various challenges and pain points. The specifics of Ukrainian market include the ongoing war, geopolitical risks, energy and food insecurity, and economic instability. Here are some specific pain points and issues that big FMCG companies may face in the country:

1. Decreased consumer spending power: Economic instability and the war have reduced disposable income, impacting consumers' ability and willingness to spend on FMCG products.

2. Shrinking market: The war and internal displacement have led to a smaller consumer base, limiting the market size and growth potential for FMCG companies.

3. Supply chain disruptions: Ongoing conflict and geopolitical risks can disrupt the availability and distribution of FMCG products, creating challenges in maintaining consistent supply and meeting consumer demand.

4. Operational and logistical challenges: Damaged infrastructure and transportation disruptions due to the war make it difficult for FMCG companies to operate smoothly, including delivering products to remote or conflict-affected regions.

5. Increased geopolitical risks: Ukraine's geopolitical situation adds complexity and uncertainty for FMCG companies, with political instability, trade restrictions, and changing regulations impacting business operations and strategies.

6. Adaptation to changing consumer preferences: During crises, consumer preferences and priorities can shift. FMCG companies must adapt their product offerings, marketing strategies, and messaging to align with evolving consumer needs, such as affordability, health, and sustainability.

So where do the merchandising companies come in? Here are potential ways of addressing current retail and FMCG industries’ pain points in Ukraine:

1. Decreased consumer spending power: Help retailers attract and retain customers by optimizing product displays and improving in-store promotions. Offer cost-effective solutions that enhance the shopping experience, such as eye-catching signage and interactive displays. Provide guidance on effective pricing strategies and promotional campaigns to encourage purchasing despite reduced consumer spending power.

Next steps: Conduct an assessment of current in-store merchandising strategies and identify areas for improvement. Develop tailored promotional plans and implement attractive displays that highlight value for money. Regularly analyze sales data and customer feedback to fine-tune strategies and stay responsive to changing consumer needs.

2. Shrinking market size: Identify untapped market segments or niche opportunities within the smaller consumer base. Conduct market research to understand the unique preferences and needs of these consumer groups. Assist FMCG companies in developing customized product offerings, packaging, and marketing strategies to effectively target and engage these specific segments.

Next steps: Analyze consumer data to identify target segments with growth potential. Tailor product offerings, packaging, and marketing messages to resonate with the identified segments. Collaborate with retailers to create dedicated product displays or sections that cater to the preferences of these consumer groups.

3. Supply chain disruptions: Assist in development of agile and resilient supply chain solutions to minimize the impact of disruptions. Use technology and data analytics to optimize inventory management, improve demand forecasting, and streamline distribution networks. Establish contingency plans and alternative sourcing options to ensure consistent product availability.

Next steps: Conduct a comprehensive review of the supply chain and identify potential bottlenecks or vulnerabilities. Implement robust inventory management systems and leverage data analytics to improve demand forecasting accuracy. Collaborate with logistics partners to optimize transportation routes and explore backup suppliers to mitigate the impact of supply chain disruptions.

4. Operational and logistical challenges: Provide on-the-ground support to retailers and FMCG companies to overcome operational and logistical hurdles. Offer guidance on product placement and stock rotation to maximize visibility and minimize waste. Assist in logistics planning to navigate damaged infrastructure and transportation disruptions effectively.

Next steps: Conduct store visits to assess current product placement and identify opportunities for improvement. Develop guidelines and training materials for retailers to optimize stock rotation and ensure freshness. Collaborate with logistics partners to create contingency plans and alternative delivery routes in areas affected by damaged infrastructure.

5. Increased geopolitical risks: Stay informed about the geopolitical landscape and provide insights on local market dynamics, regulatory changes, and trade restrictions. Advise FMCG companies on adapting merchandising strategies and promotional activities to align with evolving political and economic conditions. Identify potential partnerships or local alliances to navigate geopolitical challenges effectively.

Next steps: Monitor political and economic developments in the region and their potential impact on business operations. Conduct regular assessments of regulatory changes and trade policies. Collaborate with local partners or consultants to stay updated on market dynamics and adapt strategies accordingly.

6. Adaptation to changing consumer preferences: Stay attuned to evolving consumer preferences through market research, data analysis, and consumer behavior studies. Provide recommendations on product assortment, packaging, pricing, and promotional strategies that align with the changing needs and preferences of consumers. Help retailers and FMCG companies leverage digital channels and social media to engage with customers and gather feedback.

Next steps: Conduct surveys or focus groups to understand changing consumer preferences and expectations. Analyze sales data, social media trends, and customer feedback to identify emerging patterns. Develop targeted marketing campaigns and collaborate with retailers to implement customer-centric initiatives that address evolving consumer needs.

If you read this far, you probably made the same conclusions as me: merchandising companies must become solution source for the retailers and FMCG companies. At present they are being dis-regarded by corporations as too small to know what needs to be done, but many small in a big network can become a powerful force. If organizing many small merchandising companies into 1 powerful alliance is not possible, a smaller alliance with a bigger partner is also a great option. They can form strategic partnerships with complementary businesses or service providers to enhance capabilities and offer a comprehensive range of services.

1. Build a strong network of industry contacts (alliances) to access valuable opportunities, resources, and market insights.

2. Focus on specialization and differentiate by developing unique expertise or niche capabilities.

3. Embrace technology solutions to improve operational efficiency, decision-making, and scalability.

4. Prioritize continuous learning, adapt strategies to meet evolving client needs, and stay updated on industry trends.

5. Provide personalized, flexible services with a client-centric approach to build strong relationships and earn trust.

By cooperating and forming alliances, RSM and other small merchandising companies can begin taking on bigger tasks.

In addition to the insights shared earlier, one key aspect that emerged from the consultations was the importance of adapting and repositioning the value proposition in such challenging conditions. Even in a war-torn country where businesses can completely abandon certain B2B services, it is crucial to flexibly adjust the value proposition by focusing on new conditions and challenges. By providing individualized services and demonstrating the benefits and value to each client, small businesses can showcase their unique advantages.

Furthermore, incorporating complementary services and forging alliances with partners can greatly enhance the value proposition and boost revenue and employee engagement. Collaborative partnerships allow for the expansion of services and provide opportunities for a more consistent workflow and increased utilization of resources.

During the consultations, contemporary methods and platforms for employee training, skill enhancement, and automation were also discussed as competitive advantages. Embracing these technologies and practices can streamline operations, improve efficiency, and create a competitive edge for small merchandising companies in the market.

By continually adapting, leveraging partnerships, and embracing technological advancements, small merchandising companies like RSM can navigate the challenges posed by war and create compelling value propositions that meet the evolving needs of their clients.

While this series of consultations are finished, RSM has now access to networking, special offers from partners and other value-added services so needed in small companies.

The Kyiv School of Economics (KSE) consulting initiative is focused on supporting Ukrainian SMEs affected by the war, but one of its value added offers is creating a network of small businesses beyond the borders. Through the Buddy program a Canadian dynamic and curious business can join this growing community. Imagine the possibilities of bouncing ideas, exchanging expertise, and initiating collaborations with fellow entrepreneurs.

If you wonder how to become a part of this growing community, don't hesitate to reach out. We will pair you with one of our small businesses, set up a Zoom meeting where you can meet each other and create a connection where all parties can learn and help each other grow.