with maslov n The brains behind Spar's launch into Russia is Dmitry Maslov, one of the country's new breed of entrepreneurial whizzkids who is relishing the possibilities ahead. Julian Hunt reports from Moscow Drive south out of the centre of Moscow and head to Varshavskoe Shosse ­ one of the many heavily congested six-lane carriageways that roar through endless cities of apartment blocks in the Russian capital ­ and after an hour you will come across something strangely familiar. There, by the side of the road, at number 146 Varshavskoe Shosse to be exact, stands a brand spanking new Spar supermarket. Welcome to the flagship store and HQ of Spar Russia. The 1,700 sq m EuroSpar has everything you would expect from a supermarket. It has a strong fresh and chilled offer, which, along with the serveover counters on the back wall, account for 60% of business. There are 20,000 lines, all sourced locally apart from 300 Spar value lines from Germany. And about 200 sq m of space is rented out to non competing retailers, including a Sbarro fast food restaurant. Dmitry Maslov, the amiable boss of Spar Russia, is clearly proud of his first store, which he says is on track to hit sales targets. It currently attracts 2,200 customers a day, mosly housewives from nearby flats and students from a local campus, and he is aiming for 3,500 a day. "There are plenty of good supermarkets in Moscow," says Maslov, in his perfect English. "What we have done that's different is create a store with really strong branding throughout and plenty of space for shoppers. We are not a discounter, but our position is to be the cheapest among the supermarket operators." The strong red and white branding is replicated above the store where the head offices of this fledgling retail organisation are located. And it's here that Maslov is masterminding operations in Spar's newest territory. Maslov's story is familiar among Russia's new entrepreneurial elite. He left university in 1991 as a fully qualified engineer, but quickly realised "he was not the sort of person who wanted to waste his life away for a few dollars a month". So he applied for work at the international fmcg companies that were setting up shop in Russia, eventually landing a job as a sales rep for a US tampon manufacturer. Three years later, Maslov set up his own distribution business and was soon handling 6,000 product lines in health and beauty, household, perfumes, cleaning products and, of course, sanpro. The Rusmed business ­ which Maslov still owns ­ blossomed and today runs a cash and carry depot and a distribution centre in the city. But by 1999, having survived Russia's economic crash, Maslov decided his business needed to change course. "The future for a distribution company was not clear because sooner or later we expected the big international retailers to come to Russia and most retailers would either join them or leave the market. So the demand for a distribution service would go down." At this point ­ just as Maslov was toying with the idea of setting up some form of franchise retail business ­ fate played its hand. Through a contact at Unilever, Maslov was introduced to former Spar boss John Irish. "His personal energy was extremely important in the process of bringing me to the understanding of Spar. If you meet someone you like, and you want to be like them, it really motivates you," recalls Maslov. Irish introduced the young Russian to Ian Hall who runs the Spar wholesale business in Preston, and again Maslov liked what he saw -- not least the fact that many people have worked for the business for 30 years or more: "very impressive for a young entrepreneur whose business had only been running for five years". From Preston, Maslov got in touch with International Spar in Amsterdam and was, by now, sold on the idea of launching the brand in Moscow. In all, it took Maslov two years to get all the ingredients required to launch this project -- the most important factor being the need to secure financial backing. His operation is backed by the "flexible and supportive" US Russia Investment Fund managed by Delta Capital. Again, fate appears to have played a helping hand because Paul Price, one of the fund's senior managers, and now a director of Spar Russia, knows all about the retail group ­ his family opened one of its first stores in the Republic of Ireland. By the end of last year Spar Russia was operational and the search was on for suitable sites. The Varshavskoe Shosse unit was leased in April and after just three and half months of intensive refurbishment Spar's new Russian operation had a new home and its first store. Maslov says the work was done so quickly because his employees ­ there are 20 HQ people and 130 in the store ­ are highly motivated. "We have a really good team that is ready to work 24 hours a day to get results," he explains. "They know this is a once in a lifetime opportunity to become the founding members of a team that will be opening 1,000 stores over the next 10 or 20 years." It's an ambitious target. But Maslov is deadly serious. For now, however, he is aiming to open 30 stores in the Moscow area over the next three years. To achieve that, Spar Russia is adopting a twin approach ­ finding existing units that can be converted as well as looking for new build sites. This isn't as easy as it first sounds. The city isn't blessed with hundreds of units suitable for converting to a modern supermarket format ­ many of the best sites have been snapped up already; most of those that remain are not conveniently located. Building from scratch is possible, but it can take up to 12 months to cut through the red tape. Maslov appears confident of acquiring two units by the end of the year, converting and re-opening by next spring. The focus for the first phase of his new build development in Moscow will be the EuroSpar large supermarket format. "We need high sales volumes which we can't get by opening neighbourhood stores from the beginning." He reckons one EuroSpar generates the same sales volumes as five or six Spar neighbourhood outlets. Nevertheless, smaller stores will be opened once Spar Russia has reached some sort of scale, says Maslov. Moscow is becoming a critical battleground for all new entrants to the Russian market. And there's plenty to be getting on with. It has a population of 15 million spread across a sprawling conurbation predicted to grow a further 25% over the next decade. Second: Muscovites have a decent level of disposable income. "Within this particular region, we will have enough work for the next two years. That's a good platform to develop the infrastructure and logistics and marketing before we go somewhere else," says Maslov. Franchising, of course, is at the heart of the Spar business model. But Maslov is not sure when that will be rolled out to retailers in Moscow and beyond. He points out that the first priorities are to gain critical mass and build consumer recognition for the Spar brand. And he cautions: "Franchise legislation does not exist in Russia yet. So we have to be three times more careful because taking the wrong steps can badly affect the strength of our brand. McDonald's have 40 or 50 restaurants in this city and they have still not started franchising their operations." Nevertheless, when the time is right to start franchising, Maslov is confident there will be a pool of quality operators from which to pick and choose. "We believe the market for retail franchising is ready because of retailers' fears about international chains. Our independent retailers are very much scared and they should be.We want to help by providing a solution that will allow retailers to lower their costs and expenses ­ that's what Spar is all about." And he adds: "The competition from foreign retailers excites me. Competition is fun if you do it right. We have already opened for business. So we have lots of advantages over them. Let them be scared of us." n {{FEATURES }}