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. Last Updated: 07/27/2016

Putting the Right Foot Forward in Retail

MTPetrushov showing some of his stock of Dr. Martens boots, a poular imported brand.
For Andrei Petrushov, Russia's financial meltdown in 1998 could not have come at a better time. Just months earlier, he and a business partner had sunk $700,000 in start-up capital into Dr. & Alex, a snazzy footwear retail business aimed at Moscow's increasingly fashion-conscious youth.

The ruble devaluation that August hit many of his competitors hard. But because Petrushov had already invested in goods and barely started retailing, the crisis was something of a shot in the arm.

"We didn't have cash at the time, so it was painless for us. Of course, many of our competitors went bankrupt or left the market," Petrushov, 59, said with a smile.

The timing proved perfect, and Dr. & Alex came of age as the economy slowly recovered. As Muscovites' disposable incomes grew, the store began to develop a brisk business among teens and twenty-somethings eager for the latest in stylish footwear.

Dr. & Alex now has seven stores in Moscow and 13 franchise outlets around the country, including in Samara, Tver and Novgorod.

Marketing itself with the slogan "Footwear for the 21st Century," Dr. & Alex carved out a niche in retailing foreign footwear by signing agreements for exclusive rights to sell popular British brands such as Dr. Martens, Shelly's, Grinders and others.

"We had the means to invest in development, and we made a conscious decision to do that from the beginning," Petrushov said.

Turnover in 2001 amounted to $7.5 million, a steady year-on-year increase.

"In our first year, we sold 20,000 pairs of shoes," Petrushov said. "Now, we can already sell 100,000 pairs."

Turnover in 2002 is expected to exceed $10 million, and plans are afoot to open two new stores in Moscow, he said.

A biologist by training, Petrushov remade himself into an entrepreneur in 1994. "Frankly speaking, I'm not a businessman," he admitted. "But science, sadly, is not a practical career in this country anymore."

He proved a quick learner, though, and made a bundle hawking video games to Russian youths. A business acquaintance with experience selling teenage clothing and shoes later convinced him that there was a gap in that market that needed filling.

"There are definite prospects for growth," Petrushov said. "In the United States, Dr. Martens sells 10 million pairs a year. Now that's a lot of shoes. We can't match that, but it does suggest high sales potential."

Of course, shoes at Dr. & Alex do not come cheap, at an average of $100 a pair.

Dr. & Alex's main competitor, Camelot, sells its own Camelot brand shoes closely modeled on the popular name brands but at roughly half the price.

"Camelot's marketing campaign has been more active and aggressive, and they have a slightly stronger position on the market thanks to that. That's our weak spot," Petrushov said.

Advertising one brand also gives Camelot an advertising edge, Petrushov said, as Dr. & Alex must dedicate space to several different brands.

Dr. & Alex has tried to compensate by offering special "buy one pair, get one pair free" deals and expanding into the regions.

"Some stores in the regions only have turnover of $300,000 a year, which isn't much, but there is potential for the future," Petrushov said.

The company must also fulfill its obligations under various contracts with foreign brands, all of which require Dr. & Alex to sell a predetermined number of pairs per year. In 2001, it sold 50,000 pairs of Dr. Martens, Petrushov said, and it must increase that this year.

Petrushov said Russians are increasingly aware of the latest fashion trends, especially those in Western Europe. And as the middle class grows in Moscow and St. Petersburg, sales are expected to continue rising.

"Without a doubt, the market is improving and people are making enough money to start spending it on fashion items," he said.

But staying ahead of the curve in the industry requires staying on top of the trends. "Nobody knows for sure what's going to be popular next year, not even the major brands."