Why ATB of Gennadiy Butkevych pays to the treasury more than other retailers

Author : Ukrainian economic reviewer specializing in wholesale, retail, and services

Source : 112 Ukraine

Studies have shown that the economic crisis has turned into a growth factor for retail discount stores
20:31, 6 October 2017

Open source

Rating of Ukrainian companies with the highest increase in amount of taxes paid showed very interesting dynamics in the retail segment – retail discount store ATB-market, co-owned by Dnipropetrovsk businessman Gennadiy Butkevych, demonstrated the best result. In comparison with the previous year, revenues of the state budget from ATB grew by 20% and exceeded UAH 6.5 billion. Besides, the chain demonstrated the best results in rating of the largest payers of duties to the Consolidated Budget, compared to other chains. Gennadiy Butkevych believes that the economic crisis has turned for his asset into some kind of take-off ramp, owing to which ATB demonstrates the leading performance today.

It is not a secret for anyone that the population of Ukraine has grown poorer at catastrophic rate over the last couple of years. Economic crisis, reduction in revenues, inflation, and intolerable burden of payment for utilities services did not contributed to prosperity in any way. Subsequent to the emptied wallets of consumers, the retail market began declining abruptly – both in cash and in kind. Nevertheless, the average sale rates of discount stores, calculated per one point of sale, remained in 2017 comparable to 2016. For example, turnover of ATB chain even increased by 16.5% almost to UAH 47 billion. Experts explain such increase in trade turnover with two key factors – inflation and intensive growth of the chain, as declared in Gennadiy Butkevych's strategy.

Some statistics
Recent marketing research has shown that the major factor influencing the decision to buy any product, for the overwhelming majority of Ukrainians, is the price now. Upper price segment shrank by 20%, premium segment tends to 1% in total volume of goods sold in general. Meanwhile, sale of products in mid-price segment increased by 10% over the last year. Finally, sales to the most budgetary groups of products declined insignificantly. Experts explain this situation with decrease in buying capacity of the poorest sector of society. People are buying less confectionery products in preference to cheaper bread and buns.

“Consumer behaviour over the last couple of years reminds their behaviour during the recessions of previous years. Both then and now, buyers chose discount formats of trade. The only difference of the current situation is that aspiration to buy online dominates in the non-food retail sector,” states Borys Markov, top manager of Gennadiy Butkevych.

Threats and challenges
Unfortunately, lack of real reforms, constant changes in “rules of the game” between the state and entrepreneurs, imperfect and non-transparent protocol for coordination between controlling bodies and business impact most negatively the retail trade sector in general. Gennadiy Butkevych and other entrepreneurs did not see the widely announced changes to the Tax Code. Rates of the property tax increased instead, having immediately led to increase in rental rates for commercial property. Besides, due to increase in excise duties for alcoholic beverages and tobacco, an even greater decline in consumer demand will occur in retail chains in the nearest future, entailing the decline in sales of these goods.

Formula for survival
Today, the retail sector faced the situation when all trading chains without exception have to compete with each other in discount sphere. The only difference is that if discount stores are able to spread the policy of low prices for all goods, while hyper- and supermarkets – for separate groups that fall within the scope of special offers only. It turns out that the current chilling economic situation offers unexpectedly to the format, in which Gennadiy Butkevych’s chain operates, a good chance for further development. These are the discount stores, such as ATB, that may benefit from the current situation now.

In this situation, ATB-Market aspires not to miss this chance for development. Owing to stringent requirements to efficiency introduced by Gennadiy Butkevych at the enterprise, they managed to preserve guarantees and social programs for employees of the trade chain, and even to increase the bonus part of salaries. Total number of employees grew by more than several thousand persons. As of the end of the previous year, their number exceeded 40 thousand. Moreover, Gennadiy Butkevych set the course for geographic expansion of the chain. According to research conducted by GT Partners Ukraine, ATB retail store chain gains the lead on development, having launched 47 new discount stores year to date. They plan to open another 100 new stores. And this is when their number has reached 885 stores in 10 regions of the country as of today. Development to western and southern regions of Ukraine is the priority. “Work in discount format requires continuous search of optimum solutions in everything: recycling, introduction of energy-saving technologies, rational utilisation of C&E materials, human resource management, etc.,” Boris Markov, General Director of ATB-Market, shares the corporate know-how.

If they manage to fulfil the development plans and reach the key economic indicators set for the company by Gennadiy Butkevych for 2017, then total personnel of ATB-Market will exceed 55 thousand persons by the end of the year, and the company will transfer more than UAH 6 billion of charges and taxes to special funds and budgets of different levels.

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