Few of the shoppers wheeling their shopping carts around the EuroMart in Kyiv’s Syrets district realize it, but the building was, in Soviet times, a tank-repair factory.
With the dismantling of the Soviet Union’s war machine, and fewer tanks in Ukraine in need of repair, the space sat idle until last year when two American businessmen reckoned they’d found the perfect use for the space.
Today the former tank workshop is home to EuroMart, a cash-and-carry supermarket that is quickly growing into a national chain.
EuroMart’s story started in 1997. After five years in the food business in Poland, two Americans, David Kania and Robert Davis, saw promising business in the east. Now Kania and Davis are president and vice-president of EuroMart.
‘We got to know the market here very well,’ Davis said. ‘We’d been exporting food products to Ukraine since 1995.’
In November 1997, Davis and Kania opened Ukraine’s first cash-and-carry supermarket, offering products at both retail and wholesale prices. Though the shop’s location on Kyiv’s left bank was far from perfect, it quickly became a favorite with local customers and Kyiv’s ex-patriate community, Davis said.
EuroMart’s second store, which opened last March, is also located out of the way. But Davis claims that doesn’t impede business.
‘McDonald’s is the kind of place you walk by and you think, ‘Let’s eat there,” Davis said. ‘We’re not that kind of place.’
He estimates the second store gets 25,000 customers weekly. Many of those are trade customers, who buy foodstuffs and other products in large quantities for their cafes, restaurants and shops. Another large portion of the store’s customers shop for office supplies, buying in bulk anything from coffee to toilet paper. The store plans to expand its customer base, adding fresh meat, chicken and fish products in two months.
The secret of EuroMart’s success, Davis says, is variety. EuroMart stocks over 9,000 types of product – from whole smoked pigs and Australian wines to detergents and motor oil.
And while one generally expects any store with Western ownership to drastically inflate prices, Davis says that isn’t the case with EuroMart. According to Davis, EuroMart’s prices are 15-30 percent lower than at other Kyiv stores.
Enabling such affordability, EuroMart recently made the dramatic shift from imported goods to local products. The 1998 financial crisis forced that change. As the value of the hryvna slumped, foreign-made products became unaffordable to many Ukrainians. EuroMart responded by replacing expensive foreign-made products with cheaper local goods.
‘The Russian crisis worked better than any government’s duties to restrict imports,’ Davis said.
EuroMart’s markups are usually 7 percent on wholesale and 15 percent on retail goods. Cigarettes and alcohol, both major sources of turnover, are marked up only 2 or 3 percent. Davis declined to give specific sales, turnover and profit figures, saying only that EuroMart’s sales have grown steadily.
With a computerized stock control center and some 500 employees, EuroMart’s shops resemble typical wholesale and retail supermarkets in the West. Well, almost.
Newcomers to Ukraine are often struck by the complex systems of payment employed in ex-Soviet stores, with customers often having to wait in three separate lines before they can finally leave with their purchases.
The Soviet payment system seems to have infected even new stores, and EuroMart is no exception. Customers first have to wait in line to have their goods checked out and a bill printed, then they line up again to pay at a bank booth, and then they line up a third time to have the contents of their shopping cart checked against the items that appear on their bill.
Though the last procedure isn’t uncommon in wholesale superstores in the West, the whole process is cumbersome, and EuroMart plans to trim it soon, Davis said. Instead of waiting in three lines, customers will be able to handle everything at one check-out desk.
Having established themselves in the capital, Kania and Davis are now looking to build a presence throughout Ukraine. Last December, they opened EuroMart stores in Kharkiv and in Dnipropetrovsk – a city Davis described as a much wealthier than most other cities in the country. Next, the network plans to spread to Zaporizhya, and it plans to launch another four stores around Ukraine by the end of this year, according to Davis.
EuroMart doesn’t face much competition, especially outside of the capital, Davis said.
But that could change soon. Billa, an international supermarket chain, opened its first in the former Soviet Union store in Kyiv’s Kharkivsky district on Feb. 3. With some 2,000 square meters in trading space and 7,500 types of products on its shelves, Billa targets middle-income Ukrainians, according to Yury Orlov, a manager at Billa. And Billa has plans to open two more superstores in Kyiv in the near future.
There remains some question as to whether Billa, which is purely a retail store, will provide direct competition to Euromart, which is first and foremost a wholesale market. Billa’s Orlov says his store will indeed prove a draw to many of EuroMart’s customers.
Davis disputes that. EuroMart’s customers possess something you can’t take away, he says: loyalty.
