Hyper solution for hyper market

The following strategy would help to gain the market leadership by 50% by 2022 and enter Top 5 employers

of Kazakhstani labor market.2

Purpose Solution EffectPremises Purpose Solution Result

Undeveloped DIY modern

trade market, low level of

competition

Growth tendency in

construction of new

households

Discounters are

becoming popular

among the consumers

Although the income is

growing consumers are

price sensitive

Development of new

strategy to enter the

Kazakhstani DIY

market

E-commerce Omni channel

strategy

EDLP Strategy (Russian

adaptation)

Service-oriented

marketing strategy

Location & branches

Leader of the market in

5 years

Leroy Merlin in Top 5 HR

Brands

Premises

PurposeSolution

Result

Excellent Service

High Prices

Stroy cityStroy city

KurdasTastak

Kenzhehan

Sauran

Low Prices

Low Service

B) According to Perceptional Map there is opportunity niche for

business with excellent service and low prices which Leroy

Merlin could take.

D) Monthly earning in accordance to Minimum monthly wage is

increasing as well as the population of Almaty , thus we assume

that purchasing power is increasing as well.

a) Economic situation

b) Perceptional mapc) Production

d) Power of buyers 3

A) According to real estate exploitation, GDP and materials’

production growth, the niche of DIY market in Kazakhstan is

profitable from the economic point of view.

0

400

800

1200

1600

2010 2011 2012 2013 2014 2015 2016

0

50000

100000

150000

0

20 000

40 000

60 000

80 000

2010 2011 2012 2013 2014 2015 2016

Monthly earning used in consumption in Almaty,

tenge

Minimum Monthly wage , tenge

1,2

1,4

1,6

1,8

2013 2014 2015 2016

Population of Almaty, mln ppl

C) Leroy Merlin can cooperate with local companies which

produce dry mixes and paints, but import decor and electrical

goods from Russia and Turkey

Constriction materials Kazakhstani MarketAbroad Market

Dry mixes LLP "BIG-ELIT" , LLP KAZGER, LLP «Cement factory «Semey»

PaintsLLP "Concern Bakarassov", LLP "SaganColour", LLP «Alina Trade», LLP "SMASH LTD"

DecorFibradecor company (Russia), companies in Turkey

Electrical goods JSC «Prosvet», Electroncompany, JSC «TECHNO-AS"

Current Kazakhstani market situation have an entry opportunity for Leroy Merlin hypermarket in terms of

economic and demographic situation, reliable suppliers and perfect competition.

Source http://moluch.ru/archive/110/27023/:

a) EDPL strategyb) Segmentation 4 Kazakhstan lacks of DIY markets in the Self Service Format, where 12 DIY markets for 1.6 million of people.

Moreover, due to economic recession a buyer will more likely find a discounter rather than change the brand. We

propose EDLP and service oriented strategies to gain the market.

A) 58% of consumers will switch to discounter, 25% will likely

switch to another brand, 17% will likely to do both.91% is looking

at prices and 62% is looking for different types of promotion

Premises to go with EDLP strategy in Kazakhstan:

•Price sensitivity in choosing the market place

•Small share in DIY modern trade market gives an opportunity to

gain the market share from traditional trade market

B) Customer Segmentation by Life CycleYoung families 25-34: renovation in their new apartments:

main categories: Renovation, Construction

materials.

Characteristics: high price sensitivity, low

income

Adult families

• 35-54 repeated renovation:

• main categories Renovation,

Construction materials, Interior.

• Characteristics: middle level of

income, high assortment

sensitivity37%

Families

• 55+: have a summer cottage:

• main categories: Renovation, Garden.

• Characteristics: middle level of income, high price and assortment

sensitivity

B2B• Legal entities:

• Constriction brigades,

corporative tenders

• Main Categories: all

• Characteristics: Large

quantity, long term,

wholesale prices

30%

37%

20%

13%

C) Key concepts

Consumer insight Solution Effect

"Time is money"Increased level of service: Every shelf will have a button to call the consultant

Increased level of satisfaction by means of reducing waiting time

"Consumers go online"Omni channel Strategy: every consumer start the purchasing process online and continues offline

Unique customer experience

"Space optimization"Store space optimization for every member of the family: kids corner, products by categories

Increased level of loyalty

D) Hypermarkets chain

in order to gain the biggest

part of DIY market share in 5

years Leroy Merlin is planning

to open 3 hypermarkets in the

most developing regions of

Almaty

•Ryskulov st.- Momoshuly st

•Tole Bi st- Rozybakiyev st

•Kuldja tract

Locations:

c) Key concepts

Source: Nielsen Central Asia;

d) Chain

a) Dynamics

b) Opportunities c) Omni-channel

strategy 5

A) Dynamics of the market and number of customers shows the

prospects of e-commerce market.B) E-commerce gives new opportunities to increase market share

of customers, number of frequency of visits and average bill as

well.

C) Omni-channel strategy would improve customer experience, sales, loyalty and business performance.

Turnover in e-commerce market

*compared with 2014

*

8 bln 312 mln tenge 11 bln 339 mln tenge

+36%20142015

30%

57%

13%

Current customers Potential customers Other

Customers of e-commerce market

Additional communication

channel with clients

Increase of customers

engagement

Creation of online sales channel

Increase in number of purchases

Increase frequency of online visits

Increase of average bill

1) Ekaterina thinks about

repairing her room

2) She opens Leroy Merlin

web site

3) Makes photo of her room

4) Chooses wallpaper

5) looks through the base of

foremen and choses one of

them (optional) 6) Goes to Leroy

Merlin hypermarket

7) Evaluates her

choice

8) Meets with the

foreman (optional)

9) Confirms & makes a

payment for the order

10) Happy

Ekaterina LM.kz LM

Using e-commerce would increase sales of Leroy Merlin as well as improve customer experience and brand

awareness.

a) TOP 3 HR Brands

b) HR Strategyc) Talent Acquisition

d) Talent Development6 Kazakhstani labor market feels the economic recession as hard as other industries and currently HR market is

focusing on three global trends: Optimization of resources, rewards and recognition, talent development.

Following strategy will provide Leroy Merlin a leadership position within Top HR brands by 2020.

A) TOP 3 HR Brands 2015 and their projects:

BI Group"We build the foundation of the future today": BI-Intern, BI-Magistrant, BI-Bolashak, Corporate university of BI Group

Borusan Machina"Continuous Improvement Board": a tool for improvement of everyday corporate and social processes

Algeum Electric"A schoolboy - a student - an employee": a program aimed to raise a future professional core in the energetics.

Gain 50% DIY market share within 5

years by means of acquisition of

qualified talented employees and their

everyday development.

B) Leroy Merlin HR Strategy

Recruitment criteria based on company values and TOP 10 skills 2020 according to WEF:

Organizational structure:

Control

GM

Board

of

Directors

CMO

CFO

HRM

Supply

Chain

HRBP

HR

Admin

Corporate

Internal

affairs manager

Recruitment

Manager

(outsourced)1 year LM France or Russia MT, within 5 years

-> Local Board of directors

C) Talent Acquisition

1

2

3

45

6

7

8

Young talented employees:

Qualified talented employees:

•Short term project internship program for

students: feel the business process

•University lectures on Retailing in the

format of simulation

•Qualification improvement trainings

Optimized Recruitment process: CV screening SHL test Phone Interview Assessment center Interview with LM

D) Talent Development - Raise a future leaders of the industry

TrainingsRewards and

recognitionMentorship

Involvement

programs

On-boarding program

(understanding of business

process,),

Soft skills development

(Top 10 skills of the future)

Hard skills (every month

professional trainings)

Personal

development plan,

monthly 1-2-1

meeting with line

managers on

achieving KPI, buddy

program

"Reward your

colleague program"

Sources: https://kapital.kz/business/46161/trendy-hr-rynka-v-2016-godu.html

https://www.weforum.org/agenda/2016/01/the-10-skills-you-need-to-thrive-in-the-fourth-industrial-revolution/ http://kz.hrbrand.ru/2015/projects-of-nominees/

• Quick bite of different

department,

• Three-days team strategy

development program

(each employee on every

level have an opportunity

to get involved in the

everyday operations

improvement process)

d) HR

a) Chain Development

b) Risk Matrix 7

Investment

=17,7Payback back

period

years

A) Chain Development Plan:

2016- 2020Supply Chain Department

Each department 5 year strategy development

Supply Chain PlanningSourcing and procurementSupply chain execution

Marketing Department Analysis of the market

Assortment & Matrix Development based on the needs on customersOmni-channel DevelopmentMarketing communications strategy

Finance Department Financial Model DevelopmentImplementation

HR Department Recruitment

Trainings development

Corporate Reputation Strategy Implementation

Business Development Department

Construction of first store in 2016

Construction of 2 other stores in 2018-2019Sales Operations

DepartmentCRM management system

Supply Chain management system

Channel Operations management

B) Risk Matrix

c) Assumption

C) Pay Back Period

Timely strategy plan execution with careful monitoring of risks would help to pay off within 17 years

EBIT

(taking 20% of revenue)Tax(CIT- 20%)

Cash flow from

operating activities

from 1 factory

10 000 000 000

187 756 800234 696 000 46 939 200

563 270 400

17 780Average number

of sales(per month)* Average bill

=5 500 9 779 0000Revenue in 1 month

in year from 3 markets

Cash Flow

/

Low HighMiddle

Low

Mid

dle

Hig

h

Probability

De

gre

e O

f In

flu

en

ce

Financial

Legal

Organizational

Reputational

Macro

environmental

1

2

3

4

5

14

52

3

Bachelor of Business Administration

Exchange semester in Corvinus University of

Budapest, Hungary

«Kazenergy» scholarship holder

Winner of «Damu» start-up project competition

Internship in Dostyk Hotel, Almaty

Office Assistant, Financial Aid Office, KIMEP

University

Volunteer of «AIESEC» International Student

Organization

Volunteer of «Y-PEER KAZAKHSTAN» International

peer education network

Crea’ture

Bachelor of Business Administration

President Scholarship holder

Marketing manager, Crystal Spring, Almaty,

Kazakhstan

2nd place ISPRO olympiad 2013, Jakarta, Indonesia

1st place International Math Olympiad 2014,

Moscow, Russia

3rd place Regional Geographic Olympiad 2014,

Astana, Kazakhstan

Bachelor in Economics and finance

Development Manager, Retail Consulting, Almaty,

PR Specialist, AGT Kazakhstan, Almaty

Digital Intern, Buzzon Digital Agency, Almaty

2nd place Changellenge Case Competition 2014

Organizer of Astana Economic Forum, Astana

Graduate, KIMEP University

Bachelor of Business Administration

Marketing & PR University, EUROBAK, Almaty

Internship in Microsoft, Almaty

Volunteer of «AIESEC» International Student

Organization

Internship in Kommest-omir, Almaty

We Create the Future

APPENDIX 1The risks associated with implementation of the suggested strategy are evaluated and ranked by the probability

of occurrence and the expected influence to the business.

Unstable economic environment, inflation

Increasing taxes for imported goods

Challenging process of implementation

of innovative HR strategy

Outflow of loyal clients

Decrease of income of population,

outflow of clients to markets

Risk analysis

Low HighMiddle

Low

Mid

dle

Hig

h

Probability

De

gre

e O

f In

flu

en

ce

Financial

Legal

Organizational

Reputational

Macro

environmental

1

2

3

4

5

14

52

3

2016- 2020Supply Chain Department

Each department 5 year strategy development

Marketing Department

Finance Department

HR Department

Business Development Department

Sales Operations Department

Demand Planning and Forecasting

Supply Network Planning

Inventory Planning and Optimization

Logistics Planning

Warehouse Management System

Transportation Management System

Inventory Management System

Supplier Relationship Management

Supplier Integration

Contract Management

Financial Model Development

Implementation

Analysis of the market

Consumer Behavior Analysis

Assortment & Matrix Development based on the

needs on customers

Shelving & Merchandising Strategy Development

Omni-channel Development

Marketing communications strategy

Development of Web-site

Optimization of pre-delivery and delivery processes

Technical support

Test implementation & bug fixing

Recruitment

Trainings development

Corporate Reputation Strategy Implementation

Talent Development Programs Design

Talent Development Programs Implementation

Construction of first store in 2016

Construction of 2 other stores in 2018-2019

CRM management system

Supply Chain management system

Channel Operations management

APPENDIX 2Chain development plan

Key features Strength Weakness

Location12 months, Stroymart, Baumarkt, Salamt, Tastak, Kenzhekhan Comfort, Kurdas-7

Price Kurdas-7, Kenzhekhan, Sauran, Tastak 12 months

Assortment 12 months, Salamat, Armada, Tastak Sauran, Stroymart

Infrastructure12 months, Stroymart, Baumarkt, Salamt, Tastak, Kenzhekhan Comfort, Kurdas-7

Brand Identity Comfort, Tastak, Kurdas-7, Salamat, 12 months Sauran

Service 12 months, Comfort, Stroymart, Armada, Tastak, Sauran, Kenzhekhan, Kurdas-7, Baumarkt, Salamat, StroyCity

E-commerce12 months, Comfort, Stroymart, Baumarkt, Salamat, Armada StroyCity, Kurdas-7, Kenzhekhan, Sauran, Tastak

APPENDIX 3Competitive analysis