Anton Titov, a large Russian manufacturer and seller of footwear, Obuv Rossii, enters the children’s goods market. The group received a Universal license to manufacture up to 100 thousand pairs of shoes per year under the brands Minions, Jurassic World, Trolls, Spirit. The children’s footwear market in Russia is consolidated, and up to 60% of sales are accounted for by private brands (PL) of the chains.
Obuv Rossii will be engaged in the production of children’s shoes, its representative told Kommersant. To do this, the company acquired a license from Universal Studios Ltd. for the right to produce and sell footwear under the brands “Minions”, “Jurassic World”, “Trolls”, “Spirit” in Russia and the CIS countries for a period of two and a half years. It is planned to produce up to 100 thousand pairs per year. The product will be designed for children 3-14 years old, now collections are being developed for the summer and autumn seasons of this year. Obuv Rossii focuses on the average price range. Distribution is planned to be organized through its own trading platform Westfalika, as well as through a number of third-party sites. As noted by the general director of Obuv Rossii, Sergei Yung, the project will allow the company to enter a new market for children’s goods. Investment in the project has not been disclosed. Russian Universal Studios did not answer Kommersant’s questions.
Obuv Rossii is part of the OR Group; production is concentrated in the Novosibirsk region. Manufactures footwear under the brands S-TEP, all.go, Pioneer of Arctic Travel. Capacities – 500 thousand pairs per year. The OR Group also operates a chain of over 800 Westfalika stores. In 2020, the group’s revenue was 10.8 billion rubles, net profit – 600 million rubles, EBITDA – 2.3 billion rubles, follows from the company’s reporting. At the end of 2020, 50% of the parent structure was owned by the founder Anton Titov, free-float – 48%. Capitalization of the company on the Moscow Stock Exchange on Monday evening – 2.65 billion rubles.
Antonina Tsitsulina, President of the Association of Children’s Goods Industry Enterprises, clarifies that the production of children’s shoes, in contrast to adults, is regulated more strictly. But shoes for children and adolescents are subject to VAT at a preferential rate of 10%, she adds. Mr. Jung said Universal had audited the company and issued a manufacturing permit prior to the partnership. Zakhar Nazarenko, the general director of the Megalicense licensing agency, says that other manufacturers of clothing and footwear work under the Universal license. Among them are Zenden, Tvoe, Keddo, Modis, etc. Among global companies, Crocs has the right to manufacture footwear under the Universal brands. Ms. Tsitsulina adds that the largest licensee in the segment is Crossway, which produces footwear under the brands “Tsarevna”, “Three Cats”, etc.
The Daughter-Sonny children’s goods chain tested the work as a licensee, but refused it due to royalties affecting the final price, says a company spokesman. According to Mr. Nazarenko’s estimates, the commission is in the range of 12-14% of the wholesale price per pair. According to Ms. Tsitsulina, the price of deductions varies between 6-20%, depending on the popularity of the franchise and the agreed volumes. “Our research shows that the brand does not matter when choosing children’s shoes. The most important criteria are ergonomics and price “, – say in” Daughters-sons “. Now this network produces up to 2.5 million pairs of children’s shoes a year under its own brands.
As Antonina Tsitsulina notes, specialized retail chains are really actively developing private labels. For example, the share of private labels and direct imports from Detsky Mir in the category reaches 60%, she knows. Detsky Mir declined to comment. Wildberries say that sales of licensed products are higher in the category due to high brand awareness.
According to Zakhar Nazarenko, the demand for brands that Obuv Rossii plans to use strongly depends on the release of films. The strongest brand in the portfolio is Minions, but there are a lot of such products on the market, which hardly makes it easier for the manufacturer, he points out. Antonina Tsitsulina notes that given the consolidation of the children’s footwear market and the high share of private labels, licensed goods for Obuv Rossii are the only opportunity to get on the shelf of traditional specialized networks.