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Sunday 27.05.2018 | Name days: Loreta, Dzidra, Gunita, Dzidris

Stenders: franchise business struggles with control over partners

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Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU,  Stender soap factory director Janis Berzins

Stender soap factory director Janis Berzins

Control over partners is the biggest challenge in franchise business, because you need them to do everything right, not whatever they themselves want, Stenders soap factory director Jānis Bērziņš told in an interview to the business news portal BNN, also revealing the company aims at turning 4 million lats this year.

What are the main conclusions of managing 180 stores throughout the whole world?

Control over partners is the biggest challenge in franchise business, because you need them to do everything right, not whatever they themselves want. We have accumulated huge experience during these years. Our sales department employs five persons each responsible for particular countries. We have a subsidiary in Russia dealing only with logistics from a storage in Saint Petersburg and control over stores there, because we ourselves have not launched any stores there. It is not easy to manage such a network. Marketing has to be as precise as possible, so that no misinterpretations take place from the part of franchisees. They need to be fully aware of the image Stenders wants to create in the world, which also includes the attitude of the shop assistant, the make-up, the looks and the way how the shelves should look like. All this is strictly stipulated in the franchise contract.

How much does Stenders franchise in CIS countries, Asia, Europe or other territories cost?

The principles are more or less equal. Stenders franchise costs about 40 000 euro together with the equipment (furniture, design, uniforms) and a certain amount of the production. If the store is in a favourable location with a good pedestrians flow, it is possible to break even in two years time. Partners and clients trust our brand, business model, quality, professionalism and support. Upon starting up a franchise business model, our partner gets a full package of a ready-made business concept, trademarks and experience.

How many emigrated Latvians have concluded such a contract?

There was a moment Latvians that had emigrated were actively interested in concluding franchise contracts with Stenders. However, actual contracts have been signed with Latvians living in Sweden, Colombia and Hungary.

Are you really about to build another factory in Russia, where you already service 68 franchise stores?

Not at the moment, but it is possible. We have not carried out any calculations yet. Russian tax policy is forcing us do consider such an option. But I am not ready to give exact terms. We are trying hard to fully understand Russian culture and business ethics, differing from other states significantly. Similalry, we also have a subsidiary with sevens stores in Poland – possibly to break even in late 2011 after long-term losses. We have a few challenges there. We could not entrust full control to Poles exclusively.

How is Stenders going to enter the Chinese market with the European Regional Development Fund money if there already are 20 stores with Stenders franchisee – Beijing Bruder Trade Co?

We want to launch our own office in China to provide support to franchisees, because they have skyrocketing marketing costs there. It is very difficult to grasp that from such a distance. We go on business trips to China twice a year, but it is not enough for quality marketing and business support for our partners.

What is the turnover of 2010? Did you reach 3.7 up to 4 million lats?

Slightly less. We turned 3.6 million lats.

What are the approximate forecasts for this year?

We aim at turning 4 million lats.

How did you compensate for the downfall in 2009, amounting to a 24% drop, compared to 2009?

It is no secret the crisis helped us to optimize many processes, because we stopped the never-ending run and took a look around. We learnt we can purchase cheaper raw material and rent premises at lower prices. Similarly, we found out we were also perfectly fine with a smaller number of employees.

Have you returned to making profit?

Yes, we have. We made about 200 000 lats in 2010, which is nearly the same performance as in 2008.

Who are your main competitors in Latvia?

Stenders has entered the business cycle it no longer willing to be associated with a gift store. We want people to buy every-day skin care cosmetics from us. We orientate towards our main global competitors being L’Occitane and The Body Shop.

Why did you invest 300 000 lats in developing facial cosmetics if there is already a stable brand in Latvia – Madara Cosmetics? What do you think about Dzintars production?

We do not position ourselves as producing eco-cosmetics, which is why we do not share the same niche with Madara. The company is, to a certain extent, our competitor in the domestic market, while Stenders aims at developing abroad. It is where we are going to compete with huge, international brands, which is why it is important for us to extend our assortment also in the area of facial cosmetics. It is also possible we will develop eco-products line. Our facial cosmetics will find its place in the shelves in the second half of the year, initially for women only.

We have been analysing the activities of Dzintars and we respect them very much. Their direction is closer to ours. However, there are certain contradictions between the historical image of the company and the direction they are heading to. I would have developed that on the basis of another brand.

What are the advantages of having Zaļā Josta (Green Belt) signalling you are an environment friendly company?

It depends. These green and eco certificates vary with countries. German, French, Finnish, Swedish and other wealthy European states turn more attention to that. Clients in Russia and China do not consider it to be important.

You stress in your home page more than 70 types of soap and bubble balls are hand made? Doesn’t it surge the costs of the whole production, given the shrinking purchasing power in the domestic market?

Otherwise it would be another production with another recipe. We would have to introduce changes to produce it with the help of a conveyer, but it would not be the same as hand made production. We focus more on developing our assortment with an innovative approach, rather than on how to sell 100 grams of soap or a bubble ball at a cheaper price.

How unique and protected is Stenders soap making technology?

The very technology can, of course, be copied. It is already done. It is not an innovative and original product, but we have used interesting and effective raw material combinations together with impeccable service, packaging and brand. As in our case with China, Chinese care for the value added that the product comes from Europe. Our production is patented in all countries we are represented, because it is better to have a patent in each separate country in the European Union.

Is there a necessity to build a new 2.5 million lats worth factory?

The company is expanding all the time and we need additional premises. We owned a building plot in Marupe, but we sold it. So we are currently looking for a new one. Moreover, prices are more reasonable than before. It is difficult to adjust rented premises to all the production needs. We purchase new technologies, develop and grow. We will not yet launch the construction work, but we will have the first draft of the project developed by Andris Sīlis from architectural office Sīlis, Zābers and Kļava. We hope to start construction in the spring of 2012.

Will you manage to enter TOP 10 of the most beloved brands in a year’s time, given you ranked the 11th in 2010?

I am positive, if we manage to arrange all brand and marketing matters, in 2012 we will break into TOP 10 of the most beloved brands in Latvia.

Leave a reply

  1. Leonard says:

    I like this productions, it is just that I had thought it is more eco, but it ok

    Thumb up 0 Thumb down 0

  2. Kim says:

    Products are very, very good. Fantastic!

    Thumb up 0 Thumb down 0

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