Retail

Ukraine’s Supermarkets Are Being Driven By Pride And Perseverance

By Steve Wynne-Jones
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Mundane (adj): ‘lacking interest or excitement; dull’

Think of the most boring, repetitive yet necessary tasks on your to-do list. Things like laundry, sitting in traffic jams, washing dishes, paying bills... or grocery shopping. In our normal lives, we do these mundane tasks on autopilot, without much thought and certainly without inspiration.

Now, imagine that your home country is under attack, that sirens are blaring and you’re running to a basement shelter with your kids. Imagine that your local supermarket has been destroyed by a cruise missile or that the shelves are empty because a foreign army has occupied your town and deliveries are blockaded. Imagine that you have been forced to leave your home because kamikaze drones are targeting your apartment block.

Imagine you are escaping your country with nothing more than the clothes on your back. You find yourself in a foreign land where you don’t understand the language and can’t read the alphabet. Your life has been turned upside down and those mundanities are a distant blurry memory of a previous life.

You’d give your right arm to pop down to the supermarket, chat to the guy on the till, hum along to the background music, and grab a bottle of wine to enjoy with your partner.

Initial Shock

Following the initial shock of the Russian invasion on February 24, the Ukrainian supermarket industry, led by operators like Silpo (part of Fozzy Group), ATB, Varus and Novus, undertook phenomenal work to keep the nation fed. It was a highly fluid situation.

Truck drivers would load at the central depot and set off with a delivery route based on the latest intelligence, but not knowing for sure if they would make it back in one piece. As the situation evolved, firstly drivers were in short supply, then there was a shortage of trucks and trailers as the Russian Federation targeted the supermarket’s central depots.

The retail industry was cooperating at a senior level with the Ukrainian Government to manage supply chains and make sure people could get what they needed. March, April and May were exceptionally dangerous as the frontline moved and supermarket chains resorted to using rail to transport food for the first time.

During these first few weeks, Ukraine lost about 20% of its territory and a similar percentage of its people. Huge numbers of Ukrainians became refugees in nearby European countries and millions more were internally displaced, so humanitarian aid was distributed to the areas where it was needed most.

Stores were looted in occupied areas, and many were destroyed, while depots were closed as key roads and regions fell under the control of the invaders. Silpo lost two of its Kyiv region depots to Russian missile attacks.

Russian forces reached the outskirts of Kyiv, commuter suburbs like Brovary, Bucha and Irpin. They cut the E40, the main road west from Kyiv, and the capital city looked like it might be encircled. There was vicious fighting and the outcome teetered on the edge. Kherson was captured on 2 March, the same day that Mariupol was besieged.

The world was universally horrified on 16 March, when a theatre in Mariupol was bombed despite it being marked as a safe haven, with ‘Children’ painted in Russian Cyrillic letters to warn approaching enemy bomber aircraft. Over 600 civilians were killed in this war crime.

These were some very dark days in Ukraine and there would be many more ahead.

Read More: Strength Over Adversity – Retailers Step Up To Support Ukraine

Ukrainium

But Ukrainians are resilient people – the toughest of the tough – and they took heart from what might have been historically been considered the most mundane of places. The Silpo Supermarkets Facebook page became a constant source of inspiration and national unity. Thanks to the combined spirit of Snake Island, the Ghost of Kyiv and the miracle of Saint Javelin, Ukraine eventually won the battle of Kyiv on 2 April when Russian forces withdrew.

The victory was tempered by the horror of what would be found in Kyiv’s north-west suburbs. Towns like Bucha and Irpin will always be remembered for Russian war crimes against Ukrainian civilians. Irpin is also home to Dmytro Tsyhankov, director of marketing and private label at Silpo Supermarkets:

“I escaped Irpin with my wife and children in the first days of the full-scale invasion," he explained. "The weeks afterwards were extremely hard for everyone, there were some very dark days. When we were able to return in April, we found that our house was completely untouched, but our family car had taken a direct hit from a shell explosion in the driveway.

"The Silpo head office team is largely dispersed now. Some are in Kyiv, more are working remotely around Ukraine, others are in EU countries. Ironically, the pandemic made us adapt to remote working, which helped prepare us for the war.

"Volume is down around 20% in line with population displacement and territorial losses, but like every other country we’re seeing inflation so the net result is that sales are flat year on year. At the lowest point, we were still operating in 80% of our 320 Silpo stores. Stores were lost in temporarily occupied areas, and some were destroyed or damaged in fighting, but this situation is improving all the time.

"In May and June we re-opened 21 Silpo stores in Chernihiv, Kyiv and Kharkiv. On 27 May we re-opened our stores in Bucha and Irpin. It was an emotional day because we remember the terrible crimes committed on our people there. But we must play a role in the healing process, re-building and returning to some kind of normality. Grocery shopping is about as normal as you can get so it was a big day for us.

"Since August, we have opened three new stores. These were in the 2022 H1 plan and largely completed anyway so it was an easy decision to move forward with them. In August we opened a store in Kyiv’s Left Bank district. The store design is themed for the popular ‘Stalker-2’ computer game which is based in the Chernobyl exclusion zone. In September we opened the ‘Japanese Cherry Blossom’ store in Uzhgorod, and then in October we opened the ‘Emotions’ themed store in Rivne. These new openings have been good for morale and motivation during this time. And it is so nice that three of our stores were shortlisted in the ‘ESM Europe’s Finest Store 2022’ awards.

"It's not all plain sailing though. You might recall the Russian missile attack on the shopping centre in Kremenchuk on 27 June, which killed more than 20 people? We had a Silpo store in that centre, and six of our team were badly injured in the attack.

“But we also have good days. For example, in August, we were able to extract 20 of our Silpo team who had been stuck in occupied Kherson. Since August, our armed forces have re-captured territories east of Kharkiv beyond Kupyansk and now we have seen the liberation of Kherson city and region. Kherson is famous for its fruit so we were so deeply disappointed that we could not bring the famous Kherson watermelons to our guests this summer, but it has been worth the wait.

"During November, we reopened two stores in liberated Kherson after almost nine months of Russian occupation. During this time Russian forces looted most of our equipment. As always, they stole everything – a smokehouse for fish, weighing scales, and self-checkouts. Our Silpo stores have a limited assortment after reopening but we hope the situation will improve. Unfortunately, Kherson is still under artillery fire by Russian forces. But we continue to work and deliver products, because more than 100,000 Ukrainians live in the city. We plan to resume the work of baking fresh bread, cooking fresh meals and delivering fresh food to our stores.

"Since September 11, Russia has been attacking Ukraine’s energy infrastructure which has posed a new and significant challenge for us. Ukraine has faced eight large-scale missile attacks on the energy system since then. The large-scale missile attacks in December undermined energy capacity even more, and energy specialists had to implement new emergency power shutdowns throughout Ukraine.

"Facing a difficult situation with electricity, we have begun equipping our stores with diesel generators which will allow us to operate even in the absence of grid electricity. By the end of 2022, we will have equipped 60% of our Silpo stores with generators. By January ‘23, almost the entire store chain and our warehouses will have autonomous power, as well as Starlink units for constant Internet connection.

"Our outlook has changed since the spring and summer. In the early days of the war we lived in the moment, not knowing if we would see the next day. But now we are dealing with the current challenges and also looking forward. We’re focused on 3 P’s - Provenance, Price and Positivity.

"Provenance: Before the war, many shoppers placed a premium on imported products and brands. But now, Ukraine is fully united and we are proud of everything that is Ukrainian. This includes Ukraine’s regional and artisanal food and drink producers.

"We recently started a programme to support small local suppliers. In 1991, Ukraine had a population of 52 million people that were fed without modern supermarket chains or centralised distribution solutions. So, whilst Russia is doing its best to disrupt our modern logistics, we are leveraging the strength of our regional producers. It supports these economies, builds community cohesion and demonstrates a pride in Ukraine’s ability as a food and drink producer.

"On November 2 we launched our ‘Let’s Build the Future’ initiative, where we’re supporting small Ukrainian food and drink producers. The producers tell their stories, our guests can vote for their favourites and the five winners get a 50,000UAH investment and access to an expert business mentor.

"Price: We are very price-focused, it's essential as part of the war effort because so many Ukrainians have lost their jobs. They stay busy by volunteering and doing community work but money is tight. The humanitarian aid that was so appreciated in March and April has effectively dried up so many Ukrainians are depending on Silpo Gift Certificates which are purchased by the UN and supplied to needy families.

"We are working hard to maximise availability and manage inflation on the core KVI items and we’re actively growing promotional share of sales. We work with the UN and Red Cross – they supply the goods and we make sure it gets to where it’s needed most. The reality is we still external need help – any supermarket CEOs who read this article need to know that we still have acute shortages of hygiene products, long life foods, pretty much everything. Every pallet of aid we receive really makes a difference.

"Positivity: We’re looking forward to victory and to rebuilding our nation. We know we will not just survive, but we will thrive! We’re not on the brink of survival, in fact we’re open to doing more business with new suppliers, just as some Ukrainian suppliers are ready to explore exporting to the EU and beyond.

"We communicate with suppliers outside Ukraine through our weekly ‘Fozzy dispatches’ which keeps everyone informed of the real situation on the ground and helps avoid the rumours that evolve from an information vacuum. Finally, we’re looking forward to a positive Christmas. The key seasonal products will be available for Ukrainians to enjoy a moment of peace and comfort despite the war."

Closing The Circle

In autumn ’22 I found myself in a coffee shop in Tullamore, an Irish midland town, home to 14,000 locals and the famous Tullamore DEW Irish Whiskey. It is now also home to 300 Ukrainian refugees. I’m meeting Oksana and Viktoria to set up a project to co-deliver English language lessons for the new arrivals.

I have observed that Ukrainian refugees are initially wary, understandably, and they have no expectation that you will know anything about their home country. They are truly surprised that I know the cities of Ukraine and that I have been in Kyiv several times.

But when I tell them that I did work with the Silpo supermarket chain it stops them dead in their tracks. Tears come to Viktoria’s eyes as she remembers the simple pleasures of buying chocolate or freshly baked bread in a Silpo store. It represents a past life, a forgotten life, one turned upside down by Russia’s war. Grocery shopping, so mundane, yet so evocative. And when I tell Dmitry this story he pauses, and with pride he responds “well... we must be doing something right.”

© 2022 European Supermarket Magazine – your source for the latest retail news. Article by Malachy O’Connor (Partner at IPLC – International Private Label Consult) in conversation with Dmytro Tsyankov (Director of Marketing and Private Label) and Ivan Palchevskyi (Head of Press Office) at Silpo Supermarkets, Ukraine. Click subscribe to sign up to ESM: European Supermarket Magazine.

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