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Retailing In A War Zone

Checkout regular contributor, partner at IPLC (International Private Label Consult) and private-label expert Malachy O’Connor reports on how Ukrainian retailer Silpo continues to trade and keep its customers happy as its retail teams work under the ever-present threat of attack.

I have my own experiences of conflict, though nothing on the scale of what we are now seeing in Ukraine.

I’ve heard plenty of warning sirens and actual explosions in Northern Ireland.

The rattle of gunfire is startling, but the bombs are especially unforgettable – the way both the air and earth shake, a violent separation of normality and obscenity. It makes an indelible imprint on your psyche, but the Troubles are history now.

War in Europe was history. In 2018, I made my first trip to Kyiv, in Ukraine, to speak at the Trademaster Private Label conference.

I was struck by the warmth of the people, their pride in their nation, and their determination to learn from outsiders.

Gradually, I built up my Ukrainian network, speaking at the Kyiv Logistics School’s educational events and investing in learning some Russian language, with twice-weekly lessons from my tutor, Katya, in Kyiv.

Then, in 2021, my IPLC colleagues and I commenced a private-label strategy project with СІЛЬПО (pronounced Silpo), Ukraine’s biggest chain of large supermarkets, which is part of the Fozzy Group.

The Silpo team had seen tough times. In 2014, Russian-sponsored separatists seized the Donbass region and Russia invaded the Crimean peninsula.

Silpo lost 12 stores, and the Ukrainian hryvnia currency fell to a third of its previous value.

This put massive pressure on company finances, but their resilience shone through, and they survived.

I visited Kyiv again in September 2021, and I met the entire Silpo management team.

Kyiv had changed in the intervening three years. It was still as proud, youthful and vibrant as ever, but serious investment had been made in its infrastructure.

The road to Boryspil Airport was smooth, and new stores and retail centres were springing up alongside the old apartments.

Going for a morning run with my IPLC colleague Remy, up Taras Shevchenko Boulevard and down through the park, past the University Metro Station, we breathed in a city filled with hope.

We visited lots of stores and the huge Silpo depot in Brovary, which services the Kyiv market.

Here, a very proud young project manager demonstrated the newly commissioned robotic picking trial. The stores were amazing.

They were the best supermarkets I have ever experienced. Of the 330 Silpo stores, about 100 are stand-alone concept stores.

We visited the Asian-themed store in the Ultramarine Centre and the Under the Sea store at the River Mall in Kyiv.

We also visited older stores, like the Silpo on Lisovyi Avenue, in the eastern suburbs, but the common theme was the sense of hospitality and service.

Silpo doesn’t have customers or shoppers. It has ‘guests’, and it wants to make every guest feel special.

The Unthinkable

Despite the tension and predictions of war in early 2022, it was very much business as usual for Silpo.

There were ambitious store-opening plans and new quick-commerce projects.

The logistics transformation was well under way, and the company had commissioned its own craft brewery.

The week commencing 21 February started like any other week, and the Silpo social-media team were busy creating their usual Facebook posts: 20% off Marco Cervetti wines, a funny video encouraging plastic packaging reduction, and highlighting the health benefits of kosher herbal teas.

However, on 24 February, the Russian Federation launched a full-scale invasion of Ukraine.

My tutor, Katya, and many of the Silpo team were awoken at 4am by the sound of missile strikes on military infrastructure and commercial airports.

I learned of the war when we landed in Turkey, on our way back from our Azerbaijan project. All flights into Ukraine were cancelled.

Boryspil Airport was under attack. Just a few weeks earlier, when making my travel plans, I’d had the option to fly back through Kyiv, but Biden’s warnings of an impending invasion were ringing in my ears, so I had opted for a return through Istanbul.

By the end of 24 February, there was vicious fighting in multiple locations, as Russian forces made a dash for Kyiv, Kharkiv, Mariupol and Melitopol – the key cities and airports.

A shocked world looked on, but Ukrainians still needed to eat, and so, the resilience that had been forged in 2014 kicked in again. Silpo and the other grocery retailers quickly assessed the situation and made their plans to keep the nation fed.

All Hands On Deck

Silpo is part of the Fozzy Group, wherein there are 68,000 employees.

The Silpo chain of supermarkets sits alongside the Fozzy Group’s other retail businesses.

There are 280 Fora proximity/convenience stores, 90 Thrash discounter stores, nine Fozzy cash-and-carry hypermarkets, 88 pharmacy stores, and Ukraine’s most extensive postal, courier and distribution network. There are company-owned food-packing and production facilities, too.

The two absolute priorities in the early days of the war were to keep Ukraine fed while keeping staff as safe as possible.

Non-essential projects were cancelled, and all available staff members were redeployed as store assistants, warehouse pickers, and production operatives.

New distribution routes were needed due to the practicalities of avoiding active combat zones or bomb-cratered roads.

Delivery planning was complicated further by the mass exodus of civilians from many cities. Getting into Kyiv’s western suburbs from Brovary was hard, but getting back out to reload was another story altogether.

The business adapted, but it wasn’t enough. Silpo had lost many skilled workers, as they were called up to the territorial units defending the cities.

The call went out for volunteers, and the people responded valiantly.

There was no shortage of food at this point, but they were still desperately short of HGV drivers to get it to where it was needed.

Silpo staff did their best, sleeping in city underground stations and suburban basements, and – despite their exhaustion and the threat of war – they brought an A game to their guests every day.

Around this time, a voice of comfort and reassurance was emerging.

The Silpo Facebook page had switched from herbal teas and 20%-off promotions to messages of comradeship, humanity, integrity and support. There were daily updates on opening hours, store closures, the impact of combat, and curfews.

The Silpo Facebook page became a reassuring voice, a virtual hug, and a source of inspiration for its ‘guests’.

24 February

Dear friends, together we have lived 16 hours of war – thank you, wonderful guests, for being with us today.

Tonight, and tomorrow, we will continue to make sure you have the necessary and delicious products on your tables.

Baguettes are ripening in the bakeries – we’ve reduced the assortment so that we can bake even more.

We’ve started packing cereals that will arrive in stores tomorrow, so you can replenish your supplies.

We will pass on your thanks to our teams in the field, who, despite everything, went to work in the stores, production units, distribution centres and delivery routes.

We have a long night ahead. We can only hope that it is peaceful.

But we are ready to meet new challenges side by side with all Ukrainians.

6 March

International companies that continue to work in Russia, wake up! Carefully reread the values of your company and find where it is written about cowardice, spinelessness, and greed.

Right now, people are dying in Ukraine: innocent children, men and women of all ages and professions – the same people that were previously your target markets and customer segments.

We see incredible examples of Apple, IKEA, Google, Microsoft, Nike, IBM. Ask yourself: is your company on this list?

Will the next generations forgive your small-mindedness and indecision? We have reached out to fellow retailers in other countries for their support, and you will feel it, you will feel public opinion, and you will feel your own conscience. Because you personally know exactly how to do the right thing.

To honestly look into your children’s eyes, who, unlike ours, do not hide in basements and bombardments, do not live without lights in hospitals, do not lose their parents every minute while you delay. You may be forced to adopt this decision anyway.

Maybe in a week, maybe in two, but the stain on your brand’s reputation will stay for decades. Do it now – refuse any kind of cooperation with Russia, which commits the genocide of Ukrainians.

If your leadership or shareholders have no conscience, state your personal position. Prove that you have a conscience.

11 March

The rhythm of the war. With the beats switching from silence to storm, under explosions and under new sounds, we go to this rhythm. We mix tonnes of bread dough every day and bake fresh every morning. We pack cereals, cut cheese, and even bake buns and donuts every day. And the cakes.

While real birthdays and anniversary celebrations are delayed until ‘post-victory’ ... we think these special days should still be a little bit special, despite the war.

As another resistance to the invaders. For we are not ready to give up our lives and be subdued by fear. We work, we act, we love.

Because Ukraine is fighting for its freedom with every cell, every breath. And we gratefully embrace everyone with whom we are together in the rhythm of this struggle.

23 March

Today it has been a month as we all fight for our peaceful life, for our independence.

A month of good fighting against evil and showing the world what real superheroes are.

A month when you took care of our defenders, transferring loyalty points to the Come Back Alive charity fund.

A month as volunteers working like wizards and every day helping to make victory closer.

A month as our supervisors leave their fear at home and head to their workplace so you can buy everything you need.

A month as our brave drivers search and invent new routes to deliver products to you intact and unharmed.

A month as we try to fill the shelves with everything you need. This month, all Ukraine has learned what war is and learned how unbreakable we are.

We have learned how it hurts us to review the news, but every news report gives us a push to new achievements.

This month, like all the previous years of Silpo’s existence, we thank you for being with us! Because you are our support, our reason to push away the tears and overcome for you.

Let’s cry later. Good luck. The happiness of victory. Thank you, our independent guests! In our independent Ukraine.

So, into the second month of war, the dynamics are changing, and Silpo are adapting further, too.

Over 1,300 missiles have been fired into Ukraine by Russian forces since the invasion started. Each one of these prompts an air raid warning siren, where Silpo staff must react by closing the stores and moving quickly to the nearest shelter. The Kharkiv depot is closed since it cannot be resupplied.

The depot I visited in Brovary was destroyed in a Russian missile attack on 12 March.

One person was killed, another injured, and a huge amount of essential food and non-food supplies were destroyed.

The depot operation was moved to another location, which cannot be revealed for fear that Russia will target it for a second time.

Some stores have been looted by Russian troops and 68 stores are closed, with 23 destroyed, yet 80% of the network remains open and trading.

Silpo has created a new depot in Poland to receive donations of humanitarian aid.

This is then shipped into Ukraine and distributed to the towns struggling under the weight of internally displaced people.

European countries, especially Poland, have welcomed almost four million Ukrainian refugees, but war-torn Ukraine is dealing with over six million internally displaced people.

Some towns and regions are taking the brunt of this humanitarian disaster, so Silpo has created a special zone in 145 of its stores, where food donations from Europe are given away to guests for free.

So far, over 1,000 pallets of donated goods have been routed through the Silpo humanitarian depot in Poland.

Even in occupied Kherson, one Silpo store has stayed open and is baking bread daily, but its reserves of flour and other ingredients are dwindling quickly.

There are no stores open in Mariupol, where some residents have been able to escape, but the Russian encirclement has prevented any supplies from going in. Apart from the merciless bombardment, death from starvation and thirst is a real and immediate problem for the over 100,000 residents still trapped there, but, overall, morale remains high.

My contact – Ivan Palchevskyi, head of the press office with the Fozzy Group – tells me that most Ukrainians remain absolutely convinced of their eventual victory, and when I tell him that many people outside Ukraine agree with his assessment, he smiles for the first time in our hour-long conversation.

Nothing is certain, and unless there is a breakthrough in the ongoing peace talks, there could be a long and hard road ahead for Ukraine, for Silpo, its 68,000 employees, and their millions of ‘guests’. When I ask Ivan what is needed, he is clear and unequivocal about the priorities: “We urgently need more humanitarian aid.

“There is a massive need for shelf-stable foods, personal hygiene and medical supplies. If you are a grocery retailer or supplier, we need your ongoing help, and you can route it through our Poland-based aid depot – you can find details at Helpukraine.center. We will make sure that it goes where it is needed. Alternatively, you can work with organisations like Dopomoga Razom, who have created a coordination platform to move donated goods through Europe and into Ukraine Razom-ua.com/en-gb.

“We badly need trucks, trailers, and fuel. We have food in our depots, but we are critically short of the trucks needed to move it around the country. We need 10 x 5 tonne trucks, 30 x 10 tonne, and 40 x 20 tonne trucks – and every time that Russia targets a fuel depot, they make it harder for us to transport food. Donations from European supermarkets, suppliers, automotive and logistics companies could make a massive difference in this area.

“We have even asked Elon Musk to help by giving us his Tesla semi-electric trucks. We need food suppliers that can deliver direct to our stores. Our buyers can be contacted through the special platform Produkraine.org/en.

“The platform is also open for foreign manufacturers and suppliers who can place an offer of their products or respond to existing requests and agree on a contract. Offers can be placed on any consumer goods, but the priorities are eggs, dairy, meat, fish, beverages, baby and childcare, and household goods.”

I finished the call by asking Ivan what he felt we could do to help the four million Ukrainian refugees feel more at home after arriving in our countries.

“You will never make them feel at home because Ukraine is their home. We are grateful for your help, but they have had a tough and traumatic journey. Reach out to them, show them that you care, and maybe invite them around for dinner.

“They cannot be our guests at this difficult time – maybe they can be yours. Hopefully, this terrible war will end soon, and they can return to help us rebuild, but, in the meantime, please take care of our guests.”

© 2022 Checkout – your source for the latest Irish retail news. Article by Malachy O’Connor. For more retail news, click here. Click sign up to subscribe to Checkout.

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