In an interview with Forbes, the co-founder of the Epicenter group of companies, Oleksandr Gerega, spoke about the impact of the war on business, the development of a network of shopping and entertainment centers, the acquisition of Intersport-Poland assets, and commented on rumors about work in the occupied territories.
We collected the main theses of the interview.
The company did not stop work for a single day. When the invaders moved towards Kyiv at the beginning of the war, we evacuated part of our colleagues to Khmelnytskyi region, where we opened an IQ office in 2021.
In the early days of the war, it actually became our backup command post. Although already on March 2, we returned to Kyiv, started importing goods, “awakened” the suppliers.
And already on March 17, less than a month after the start of the war, our builders were also “awakened” to continue building two shopping centers in Kyiv and Lviv, which we started to implement even before the full-scale invasion. That is, they began to work even harder and harder.
These two years are a great challenge, which also opened up many new directions for development. For example, logistics and solar generation.
After the annexation of Crimea, our company lost control over shopping centers located on the peninsula. In fact, they were managed by the managers of individual shopping centers who remained in Crimea and cooperated with the occupation authorities.
Unfortunately, they used the experience and knowledge they acquired in our system. We do not know how the organization of business processes was legally carried out, since we did not participate in it.
However, we learned from the mass media that with the participation of the same persons, the shopping centers were nationalized and eventually appropriated by them.
Therefore, any accusations that we worked there or received any profits there are untrue.
The situation is similar with shopping centers in Donbas. After the occupation of parts of Donetsk and Luhansk regions, “Epicenter K” LLC completely lost control over its commercial facilities located in the occupied territories.
Neither our company nor its members have ever conducted economic activities in the specified territories and have no relation to the activities conducted there by our former managers.
We constantly change formats because the consumer needs it. We adapt them to different areas, cities, locations.
We can increase or decrease it somewhere, but conceptually we are not going to depart from this format. I think this is one of our best ideas that the consumer likes.
Our shop-in-shops are balanced, calculated and have a good assortment and can work separately, but first we want to test their effectiveness as much as possible in the “Epicenter” and then bring them to other shopping malls. Yes, we can go beyond the “Epicenter” now, but certainly not at the same pace as in 2020-2021.
Shopping and entertainment centers
“Epicentr” is developing in offline trade, online trade, marketplace. Now we have opened another food direction: food market and food courts. We believe that shopping and entertainment centers are also the future for “Epicenter”.
Because there is a cool “anchor” – it is the “Epicenter” itself. Of course, we have to gather a cool mass market tenant pool that exists in other countries. And we want to add something else that we have been working on for the past three years.
We always wanted to create something new, to start projects and solutions that did not exist before.
“Epicenter” is no longer about construction. He is about everything. Approximately 8.3% are building materials, 12% are decorative materials: wallpaper, paints, etc. I think that after the victory, when the reconstruction of the country begins, the share of construction materials can increase to 20%.
Our competitors are the entire consumer market. Why? We must understand that all retail trade is connected. It doesn’t matter what product it is. Especially since we sell everything: from metal to alcohol.
Even if some warehouse or monobrand makes a great promotion and consumers transfer their funds to them, we will compete with them for the client.
We have a certain bank of land, technology, human resource and storage capacity. And we produce a large amount of raw materials. But we are already working on turning these raw materials into real products.
We look at this market as a full-cycle market. We have now moved to the stage of starting production from raw materials to the final product. For example, biofuel, fodder, etc. But this is only the beginning.
When we implement the third stage of development of our agrarian business, it will be from 35% to 50%.
Production of construction and related materials is one of the directions in which our company’s strategy fully coincides with the strategy of the state leadership. We are working fruitfully in this direction and are really making a lot of efforts to make them appear in the “Epicentr” group of companies and on the Ukrainian market.
Polish assets of Intersport
The Polish market is one of the most promising markets in Europe for the next 10-20 years. We are entering Poland with a sports focus, because it is a promising market. Intersport in Poland previously did not have a stable owner.
These were different investors. And now we want to actually unite Intersport Poland and Intersport Ukraine into one whole. We will have the opportunity to accumulate a significant amount of merchandise.
We already purchase goods centrally for both Poland and Ukraine. And now we are a completely different player for international Intersport.
Everything that the company “Epicentr” accumulates in income and profit – we reinvest all these funds in our projects.
We now have a development plan for the next 10 years. We will grow depending on how society will transform. Epicenters should be at least 500 locations. I would like to achieve this result in the next 20 years.
If we don’t love the country we grew up in, if we don’t believe in it and invest in it, then who will? Neighbors will not love us like our own parents.