Strategy Planning for "alphabet of Taste"

Azbuka vkysa.

"The alphabet of Taste" is founded in 1992. Since 1997 the company develops as retail network of product supermarkets which basis for business philosophy uncompromising quality and freshness of assortment and personal service for each client are.

Today the company unites more than 80 supermarkets in Moscow, the Moscow region and St. Petersburg. Thanks to the unique concept and continuous development the Alphabet of Taste trademark remains to one of the brightest and recognizable Russian brands.

Mission of the company consists in creation of a world-best network of product supermarkets which aims to increase quality of life of people, setting standards of culture of trade and social responsibility of business. We give to our buyers the chance to derive pleasure from each purchase, to our partners – to build the long-term, reliable and open relations, to our employees – constantly to develop and receive a worthy assessment of a personal deposit.

The network of the supermarkets "Alphabet of Taste" is one of leaders of the Russian retail market and wins first place among product retailers on a goods turnover on square meter, possessing assortment over 18 thousand SKU from 900 producers and suppliers from 70 countries of the world. An official company auditor is Ernst&Young entering into "Big Four" of the leading auditing organizations of the world.

"The alphabet of Taste" became the first Russian product retail network which has implemented the quality management system based on the principles of the ISO 9001:2000 standard. In 2012 the company for the second time has successfully confirmed compliance to requirements of quality management system of the international standard ISO 9001:2008. Audit was booked by Det Norske Veritas fund, one of the most authoritative international certification authorities.

Top managers of the company for many years take the leading places in a rating "TOP-1000 the Russian managers" which is constituted by the business newspaper "Kommersant" and Association of managers of Russia.

Charity and support of social initiatives are an important element of business philosophy of "the Alphabet of Taste". The care of children and preserving environment remain priorities of social responsibility of the company traditionally.

Mission of the company

MISSION of the ALPHABET of TASTE – to create a world-best network

product supermarkets which gives an opportunity:

• To society – to increase quality of life of people, setting standards of culture

trade and social responsibility of business

• To clients – to derive pleasure from each purchase  

• To partners – to build the long-term reliable and open relations  

• – it is permanent to personnel to develop, participating with team of adherents in

lives of the company and receiving a worthy assessment of a personal deposit  

• To shareholders – to have material and psychological dividends from ownership

the best retail company in the world

Vision of the Alphabet of Taste on the main prospects:

• The alphabet of Taste is the company which is most successful in the market on

 to dynamics of growth of cost in case of moderate risks (Finance)

• The alphabet of Taste is the company which offers a product, most full

satisfying needs of buyers (Clients)

• The alphabet of Taste is the company which provides high quality for the account

uses of the best technologies (Business processes)

• The alphabet of Taste is the company which successfully attracts and is effective

uses resources

1. Marketing audit

FMCG retail market

Despite existing just slightly more than a quarter of a century Russian retail market is 5-th biggest in the world and estimated as approximately 315 bln. $.

FMCG-retail market (or fast moving consumer goods) in Russia consists of several huge chain stores, which devided into three segments: hypermarkets and Cash&Carry, supermarkets and discounters; and some smaller local chains, insividual stores, premium supermarkets etc.

Market is divided into three similar segments: 33% discounters’ market share, 39% for hypermarkets and 29% for supers, the last share belongs to traditional stores, private shops and to the premium segment.

The most powerful players are seven largest retailers: the list includes Russian and international chains and rate them by the annual revenue. The two Russian giants Magnit and X5 retail group places the first and the second positions and exceed transnational competitors in twice. Among a premium of segments it is the Alphabet of taste (25%), Aliye Parysa (21%), Globus Gurme (17%) and Bakhetle (13%).

Russian retailing is undergoing a period of retrenchment amidst ongoing expansion and growth. Russia’s biggest retailers are making better use of information technology and turn their focus on the development of effective multi-channel retailing strategies. Internet retailing, along with m-commerce, is expected to intertwine with traditional store-based formats, which will create multi-channel communication with consumers and boost traffic from non-store formats to store-based formats and vice versa.

2015 is expected to be the most unfavorable year in terms of value sales for the retailers and will see growth of 3% in constant prices 2014. Grocery retailers is expected to increase its sales performance from 2016-2019 supported by the macroeconomic environment, as real GDP is also forecast to experience increasing growth rates over the forecast period. At the same time, retailers will have to continue to solve the problem of substituting banned imported products and look for partners among domestic producers and foreign suppliers in the countries not affected by the sanctions.

Considering external environment audit, it is helpful to use Porter and PEST analyses to achieve profound understanding of the current situation.

1.2 Porter

1 strength of Porter:

As "The alphabet of taste" is a premium class retail network, appearance of competitors becomes complicated availability of barriers to an entrance to this industry. However, it is impossible to tell that a situation in the market it is stable, constantly there is "hostility" for reconquest though small market share. For an example it is possible to take legal proceeding in relation to "the Globe of Gurme" which suggested to exchange a discount card of competitors to exchange for the. Also the Alphabet of Taste Company has purchased the competitor of "Spark" recently that has allowed them to increase the number of the areas and to rely on the buyer of middle class (16% of the population of Moscow). When comparing strategy of the chosen companies, it is possible to find many similar moments in them. "The alphabet of taste" and "the Globe of Gurme" have begun the activities with "two capitals" of Russia, now stake on areas (however "the Globe to Gurma" has begun to develop suburbs of Moscow earlier (2006) on it "The alphabet of taste" catches up with the competitor, for bigger convenience of development now, they have entered franchasing system). To "Bakhetle and "Scarlet sails" have begun the activities "with suburbs", only one company was at first fixed in the market in Kazan and now develops the next large cities, and another has mastered the Moscow region and makes plans of expansion of networks for all country. Competitive struggle of these companies constantly increases pace, all of them have own production of food which is issued under own brand, give master classes on cookeries or various shares. However the most vigorous marketing activity is conducted by "The alphabet of taste", it is possible on it from all brands this most recognizable (from compared), system of franchising, they also accelerate business development.