Dealer spotlight: Relef-Center

Relef-Center provides an insight into how it's done in the often opaque and difficult Russian market.


At the risk of stereotyping, think of Russia and you think of scale. Landscapes, natural resources, cities, national oligarchs, large international corporations, all of them are imposing and vast. 

As such, anybody wanting to break the ‘small regional player’ barrier needs to think big. And that’s exactly what multichannel OP operator Relef-Center has done. 

Founded in 1999 by current Owner/CEO Alexey Platonov at the incredibly young age of 21, the growth of the company mirrors the rise and rise of the Russian economy in the 2000s. Revenue growth has been nothing but spectacular and while the global economic meltdown of 2008 was clearly felt at Relef too, it still managed to grow, with revenues picking up again substantially in 2010, estimated to reach $278 million by the end of 2012. 

Relef-Center is headquartered in Ryazan, the capital of Ryazan Oblast, about 200km southeast of Moscow. Within the great expanse of Russia Ryazan is in the far west, but still offers a reasonably convenient gateway to the farther flung reaches of the country. With a population of about 525,000, the city’s major industries are electronics and oil refining – growing sectors that offer a healthy lifeline to OP companies, particularly from a B2B point of view.

Distribution focus

The company now considers itself a nationwide operator, at least in terms of distribution, which accounts for about 85% of its overall business. The remaining 15% is made up of its B2B business (10% – largely concentrated where its main sales and distribution facilities are in five major cities) and its 27 retail stores throughout the country (5%).

To be able to stake such a claim in the world’s largest country, it’s important to have a wide array of touch points and logistics centres, says Sales & Marketing Director Pavel Golubev. “Distribution is a very difficult business in Russia and needs a lot of financial support, human as well as other resources. To be successful in wholesale in Russia, it’s important to own and – even more importantly – efficiently run a network of logistics centres and offices throughout all territories.”

Out of Russia’s 86 regions, Relef delivers to 77, from its 15,000 sq m (150,000 sq ft) warehouse in Ryazan, plus a further 10,000 sq m of warehouse space divided between its various facilities in the regions. 

In fact, demand has been exceeding capacity so much that the company last November began to build a new logistics centre in Ryazan which is expected to be completed in Q1 of 2014. Further expansions are also planned for some of its regional facilities. As a result of Relef’s cross-channel focus, there’s the inevitable overlap of customer and/or supplier relationships, a phenomenon not at all unusual in the Russian market. In terms of distribution, for example, its typical clients are small regional wholesalers (of which there are many in Russia), retailers and OP resellers that deliver to the end consumer (B2B or B2C). 

On the B2B front, Relef serves large private and government-run organisations as well as medium-sized companies. Its retail network, meanwhile, targets the end-consumer and small businesses in equal measure. Golubev says: “We consider our retail network to be our marketing platform. We can test new products there and we also use the stores to increase our market share in regions where our exposure is currently low.”

Overall, Relef-Center is estimated to have a market share of 9% in the country and is among the top three operators of its kind. The competition is wide and varied, local as well as national. In B2B terms, the biggest player in the market by far is Komus, which for Relef is interesting since it’s both a supplier from a distribution point of view (mainly office papers) and a competitor in the B2B sense.

On the wholesale front, there are the aforementioned hundreds of small regional players – both competitors and customers – plus a handful of national companies including Samson, FARM, Gruppa Tovarishey and ITI. 

Changing market

Gradual though it may be, the market in Russia is changing and, acutely aware of this, Relef is changing with it. Says Golubev: “The concept of an office products company in Russia is perhaps a bit different to other countries. Historically, a typical OP company is one that sells stationery and office papers. There may be some other categories such as calculators, but mostly its stationery and papers.”

But now, he adds, “many companies in Russia are starting to realise that it’s important to transform from merely an office business to a model of servicing offices in a more complex way. Some companies, including wholesalers, are now introducing a whole range of goods for the office, not just stationery and office papers. We believe this trend offers high potential for future growth. Last year, we started to expand our assortment matrix on 2,000 SKUs of office-related products such as furniture, food, household and office appliances, for example, and this is going to continue.”

In retail terms, Golubev admits, back-to-school remains a very important part of its business, adding that its stores are the biggest sellers of school writing books and other school material in Russia. 

Another trend in the country is the ever increasing penetration of A brands. Some of the large international vendors such as Esselte, 3M, Pilot, Stabilo, Faber-Castell and Pentel already have considerable exposure in the country and with consumers becoming more and more demanding with regards to product quality, this is only going to grow, putting some national players at a disadvantage. 

Ahead of the curve

In the meantime, Relef has its own strategy for circumventing any problems as best as possible. Golubev says: “Our policy is to make distribution deals with producers and vendors that allow all participants in the market to earn money. 

“Secondly, we’ve started to produce our own private label products to increase profitability as well as the uniqueness of our portfolio. The combination gives us added revenues as well as a small increase in profitability every year.”

As a general rule, Relef is trying to do just that little bit better than its competitors in everything it does to gain an advantage – whether it’s a wide assortment, high-quality logistics operations, high fill rates, good financial back-up or evolving marketing tools (increasingly web shops and online catalogues, for example, which are becoming more and more important). 

And it seems to work. With almost 30% growth in just the last 12 months at a time when the market as a whole has only grown in the single digits, it must be doing something right.