Energy And Ideas Are Crucial To Youthful Success Says The Boss Of Furniture Start-Up
- Oct. 02 2013 00:00
Retaining staff is a challenge says Augustin Celier, who has hired a French and Russian team with an average age of just 24. He co-founded a manufacturer and importer of mid-price furniture one year ago, with the ambition of shaking up the market.
The graduate in political sciences from Paris spotted a gap in the market, between self-assembled furniture and expensive imports. His answer was to begin manufacturing his own designs, selling them through a showroom in Elektrozavod, in eastern Moscow. He also imports mid-priced sofas from France.
His first challenge was to hire dynamic and energetic staff. He soon ran into the problem of retention, working hard to convince employees that this was not "just another job". Celier wants the company to gain a reputation for customer service, meeting high expectations on the part of consumers, while dealing with complicated logistics.
In addition, Celier's concept of a company with French values meant hiring several French-born Russian speakers. The business is Russian, however, and Russian staff is essential to working within the local business culture. Finding the right mix of people is hard enough but the Russian labor market is also characterized by high turnover. The company has had three sales managers in just over a year.
With some previous experience in Paris working as a fundraiser for a French furniture company, Celier had a grasp of the business: "I've always liked furniture and I knew I wanted to work in retail. The challenges involved, such as fabrication methods, difficult logistics and customer services, were a motivation for me".
We need dynamic and energetic employees wishing to take initiatives and committed to developing the company.
Celier found a Russian partner with whom to start the business, which he believes will become the next big seller in Russia's furniture landscape. His company Marc-Aurele, part of another company he founded, Udobno, designs furniture in Russia but has it manufactured by a third party in Romania. In addition it imports from France and operates its own showroom. It markets and sells furniture through the Internet.
Celier says the Russian market was lacking a provider specifically targeting the middle-market price range. "Stylish furniture at affordable prices is completely lacking in Russia today, despite increasing demand in Moscow and St Petersburg and other important cities, as proven by the significant volume of imported furniture from Europe at incredibly high prices."
Three main actors exist on the Russian market today. First, Ikea has taken a very significant market-share in large Russian cities beginning in the 2000s and is present in many suburban retail zones, positioning itself as the only quality, low-price offering. Second, Soviet manufacturers have been declining since the 1990s, but Russian production remains significant at the regional level and in particular in the sofa and kitchen sectors. Widespread brands such as 8marta or Stilnye Kuhni have taken the lead in this market. Third, Italian companies have conquered the luxury market and are catering to wealthy customers.
Marc-Aurele does not aim to become an alternative to these existing players but rather to position itself where there is an unmet need and to attract customers who are ready to spend reasonable money for the sake of having stylish home furnishings.
Celier believes that the Russian furniture market has a lot to offer, growing from $7 billion in 2007 to about $10 billion in 2008. According to World Furniture Online, the market suffered from the economic crisis in 2009 and fell to $8 billion in 2009, but it has since recovered to its pre-crisis level.
With a limited initial investment of under €100 000, Udobno achieved its first sales entirely through the Internet. The brand Marc-Aurele was created at the start of 2013 following a strategic realignment. Udobno began with a wide range of existing European brands, but Celier came to realize that a business model founded on its own brand and manufacturing would allow him to provide lower prices and attract the middle class customers he had originally targeted.
Marc-Aurele seeks to become a model provider of customer service in a field that involves difficult logistics and high consumer expectations. After experiencing quality problems with China-made furniture, Marc-Aurele moved most of its production from Asia to eastern Europe to ensure a better standard of quality and a lead time of only four weeks, meaning a shorter wait. "This situation is ideal for our start-up position as it allows us to order in low quantities, to get our furniture made and shipped to Moscow in a record time, and to benefit from European fabrication standards," Celier says.
Today, Marc-Aurele's staff is composed of young French and Russian co-workers, allowing the company to keep its French values and to be completely integrated in the Russian market. "It is important for us to have French, Russian-speaking people in the company because they understand better the kind of marketing image we want to convey to our clients. On the other hand, our business is Russian and we need locals to help us go through cultural barriers and different working methods as well as to orientate us on customer taste and needs."
When asked about recruiting, Celier says is not so easy to find the right fit for a start-up company. The Russian work market is so flexible and the turnover rate so high, that it is difficult to get people even to turn up for job interviews. Recruitment usually takes place through personal connections or using online agencies such as HeadHunter Group. So far, three different sales managers have worked consecutively in the company, making it difficult to maintain continuity.
Celier also speaks about cultural differences: "Some people can look at this job as any other standard job, when we need dynamic and energetic employees wishing to take initiatives and be committed to the development of the company on the long term." The best choice it seems so far, considering Marc-Aurele's start-up situation, is to hire young workers at the end of their studies: "Many young graduates have a lot of energy and ideas to give, and the fact that they have no previous experience makes it easier to train them from scratch." Indeed, the average worker's age in the company today is 24.
Marc-Aurele has reached the point where the Internet platform alone cannot develop sales. The company officially opened its first showroom in July 2013, in a former Soviet factory in Elektrozavod, now used as workspaces for professionals mostly engaged in photography and craft industries. "Opening a showroom in a former factory has been a challenging moment for us. After renovation works and the opening party, we were worried that customers would be turned off by the industrial and Soviet look of the building. Now we are pretty relieved that customers see it as an entertaining experiment, and that the conversion rate is close to 90 percent after visiting the showroom," Celier says.