Fozzy Group in the Conditions of the War
Destroyed stores and supply chains, lack of goods, danger to employees, drop in the number of financially sustainable people – those are the realities that the Ukrainian retail business has faced as a result of the war. Nonetheless, the business continues operating, finds ways to its optimization, and resumes gradually the work of sales points ensuring that the Ukrainians have the most essential things.
Dmytro Tsyhankov, Cognitive Director at Fozzy Group, has told about the business reorganization in the context of the war, changes in the consumer basket, and revival of its operations.
Fozzy Group is one of the largest domestic retailers with more than 700 shopping facilities across the country and leader among them by the total floor space. Fozzy Group develops retail chains of different formats: Silpo supermarkets and Fozzy wholesale hypermarkets, Fora convenience stores and Bila Romashka pharmaceutical supermarkets. Fozzy Group networks also sell products under their own trademarks.
On the Most Daunting Challenges in the Early Days of the War
From the first days of the full-scale invasion of russia to the territory of Ukraine, more than 20% of the Group’s sales points were unable to operate. For instance, the Silpo supermarket network lost 23 stores – they were ruined as a result of armed hostilities.
“In the first weeks of the war, the most burning issues were: logistics, supply of stores with food products, and our employees who were simply in the shocking state,” says Dmytro Tsyhankov.
The business was forced to take prompt decisions on the evacuation of personnel, stores, warehouses and the deployment of secure logistics chains.
Logistics in the Conditions of Hostilities
The war significantly damaged the logistics of Fozzy Group. During the first weeks, a warehouse for frozen food products was destroyed. The retailer succeeded in switching to direct supplies to stores from product suppliers and increasing significantly the number of partners.
“We succeeded in ensuring partially the logistics by means of railway transport. It was impossible to get to Chernihiv that was half besieged by the enemy troops by car or by using some other routes that people simply feared to take. Railways helped us a lot, and we continue our fruitful cooperation with them,” says Tsyhankov.
The cost of logistics also grew during the war, and the delivery routes became longer.
The Company succeeded in rearranging the work of warehouses close to the capital city, but the most important supporting factor in this regard became a logistics hub opened in 2021 in the Western part of Ukraine.
On the Consumer Basket and Own Production
The food basket of consumers changed sharply immediately after the beginning of the war. In the first days, Ukrainians mostly bought long-lived goods, such as cereals or salt, for example, and only then fresh products. Tsyhankov tells that there was a deficit in certain groups of imported commodities, and the mix of goods was comparably lower, with the problem resolved at the cost of own and local production or new suppliers.
For a certain period of time, the Company suspended manufacturing its own goods, however, already in April, Fozzy Group succeeded in launching, close to Kyiv, a cereal packaging facility and reactivating own production by confectionary shops in stores.
As and when certain territories of Ukraine began to be freed from occupation, the Ukrainian retail business started restoring its operations there. In late April, the Silpo chain stores opened their doors for consumers in Kharkiv, Sumy, and Chernihiv. The war has caused our Company to stop or put on hold new projects. However, to date, Fozzy Group is cautiously optimistic about the future and begins to build plans.
“After our victory, we expect there will be favorable background for communication with guests – we will find time both for joy and for festivities,” summarizes Dmytro Tsyhankov.