How Russian brands-manufacturers cope with the crisis situation today

Over the past few decades, Russian business endured a number of crises. In 2022, he faced new challenges. What is happening in the market, how to minimize losses and is it possible to get into surplus?

New Old Challenges

Having barely recovered from the consequences of the pandemic, Russian business is undergoing again a test of strength. At first, the market situation developed according to almost the same scenario with the coronavirus crisis: there was a rush of demand, prices for many products increased significantly, and the supply of services and goods, on the contrary, decreased due to a drop in international traffic and a decrease in imports. The ruble fell. Many borders were closed, communication between states stopped. The business had to rebuild production and processes again in an emergency manner. Companies from a number of areas, for example, tourism, were forced to stop activities.

However, the similarity ends there. The sanctions crisis brought completely new shocks. There were problems with making payments; some applications, services and software became unavailable to users from Russia. Cyber-attacks have become more frequent. Working with many foreign partners is now almost impossible, the rest raised prices and switched to full prepayment. Domestic companies are forced to look not for a temporary replacement, but for a complete alternative to many imported positions, to change the sales market. Some industries have faced an outflow of specialists or a target audience abroad. Absolutely everyone suffers due to problems with packaging and a number of consumables. The planning horizon has shrunk literally to a week, which was not the case even in a pandemic. Together, this led to previously unprecedented turbulence in the market, the suspension of a number of industries and the rise in price of the final product.

The new crisis, unlike the pandemic, has already affected almost everyone. For example, more than 65% of small businesses – and this is every second in the niche – faced problems due to the economic downturn, sanctions and lower demand. In general, 86% of Russian companies experience difficulties. The list of the most affected industries now, which were affected directly by the sanctions, includes mining and finances, as well as perfume and cosmetic, real estate, services, in particular healthcare, automotive and cinemas.

However, despite the difficult situation, many entrepreneurs do not lose optimism. The lessons of previous sanctions and pandemics also affected the situation. In addition, the key rate in May again became comfortable, sharp jumps in rates stopped, prices are gradually returning to their previous indicators. The demand “comes to life”. In a word, the window of opportunity has reopened.

You can’t just stand, you should act

Now the Russian market is transforming rapidly. However, the redistribution will be short-lived, so in order for a business to remain in service, it is necessary, first of all, not to freeze and respond quickly to changes. To do this, it is worth narrowing the planning horizon and focusing on priority tasks. Problems need to be solved as they arise, without a reserve for the future. That is, to focus not on plans, but on the current situation.

Secondly, flexibility is important. Entrepreneurs must be ready to reformat business into related industries, change the principles of work, approaches and even a product. The concept of MVP (Minimum Viable Product) will be useful here – creating a minimum viable product. It will allow you to test hypotheses with minimal risks and costs, identify trends, reduce the cost of development, develop the initial client base, and occupy a niche. And most importantly, to reduce the risk of large financial losses in case of failure. The successful launch of new projects will allow diversifying the risks that have increased significantly during the crisis.

Assets also need to be diversified. Now it is important for business to reduce costs as much as possible and “turn on” the austerity regime. But it should be rational: without loss of quality and team.

Companies specializing in the sale of goods should in no case allow sharp price jumps. This will affect greatly the loyalty of the audience and can stimulate its transition to competitors.

The sore point is the search for new suppliers and contractors. Here you should concentrate as much as possible on local companies.

It is also useful to engage in personal “upgrade.” Managers should organize training for themselves and employees in professional and personal development programs.

Growth in crisis: a successful case

The importance of active, operational actions and a comprehensive campaign is confirmed by the examples of graduates of the Digital Marketing Academy. In particular, the Siberian brand SWOOD managed, using the listed recommendations, to minimize losses in record time and get to surplus.

The company creates handmade leather accessories. The workshop employs 7 people. The production used mainly imported materials: leather, threads, glue, fittings – from the EU, as well as processing products from Japan. In March, leather supplies stopped, for other items, suppliers significantly increased prices, for some of them raise was up to 80%.

The company’s owners responded quickly to the changes and bought up leftovers of imported leather. Due to the formation of a stock of materials, the brand managed to keep product prices at the same level, which had a positive effect on audience loyalty. In parallel, a high-quality analogue from a domestic manufacturer was found. Despite the crisis, the company began to expand its range to cover the possible needs of consumers as much as possible. The focus was on the likely most sought-after goods. This made it possible to raise sales quickly.

The owners of the brand undertook actions aimed at strengthening the corporate spirit. At the very beginning of the crisis, the leaders staged a “reboot” for the team: they went on a hike to the mountains for several days. As a result, the team rested and rallied. After returning, a tradition was born to order pizza “for everyone” every Thursday. She became popular among employees and gives them a sense of stability, which had a positive effect on the quality and results of work.

As a result, the company minimized losses, retained the team, expanded production, audience and stimulated record sales growth. Revenue increased 1.5 times. The founders of the brand invest part of the funds received in the reserve payroll fund in case of downtime for the future. But generally they are optimistic.

By Margarita Bylinina, marketolog, entrepreneur, founder of the Digital Marketing Academy

Previous ArticleNext Article