IV. Ukrainian Doors Market History
STAGNATION.
The years 2014-2015-2016 became the years of the door stagnation. During these years, the redistribution of the market also took place. In 2014, Praktiker (Praktiker Bau- und Heimwerkermärkte Holding AG) left Ukraine together with OBI (OBI GmbH & Co. Deutschland KG) after 5 years of work in Ukraine. This, most likely, was their reaction to the publicized information that Epicenter DIY Trade Network is buying Nova Line DIY Trade Network.
Thus, they (Praktiker and OBI) effectively admitted that they lost the competition to the more aggressive Epicenter. Judging by the fact that the largest DIY operator in the world, Leroy Merlin, had 3 stores then and now has 3 in Kyiv plus 1 in Odesa, it can be said that Leroy Merlin has also admitted its defeat in Ukraine.
For a long time, everyone talked about the fact that the French would buy Epicenter DIY Trade Network, but this did not happen. People who know say that appetites for the Epicenter network price were excessive, and also that there were problems with the legality of land plots and the building of some markets of the Epicenter or/and New Line Trade Network.
All these events led to the fact that Epicenter Trade Network remained almost a monopoly in the market of retail trade of building materials.
In turn, correspondingly this led to his harsh behavior with suppliers who had nowhere else to go. Therefore, these suppliers were mercilessly required for constant promotions, discounts, purchase prices, deliveries, annual bonuses, quarterly bonuses, etc.
To give you a better understanding of the scope, I will give you the following figure: at the time of the takeover of New Line Trade Network (rate 8.5 UAH/USD), Epicenter Trade Network itself was selling doors and accessories for them in the amount of 3M dollars per month in Ukraine.
Further events developed very rapidly: Epicenter Trade Network, after decline the hryvnia, did not want to re-calculate the unpaid balances in its warehouse. This did not suit New Style (biggest local door manufacturer), and they decided to sue and leave the Epicenter.
In the expert opinion, it was a bluff at the beginning, but later, when no one in the Epicenter staff was scared, they still started to pack their things. At that time worked manager (due to the preparation of this article) reported that the share of Epicenter Network in sales of New Style door manufacturer company, was about 25%, and the share of New Style doors in Epicenter Trade Network was about 50%.
Thus, both victims agreed to look for methods that compensate for their losses: Epicenter invested in Kharkiv (Omis Company) to somehow increase the production of similar doors, and New Style went headlong into the wholesale channel. This is the main reason why New Style doors were sold in five stores on one street.
We can say that the "battle of the titans" ended in draw Omis took New Style's share in Epicenter Trade Network and established itself as a national manufacturer, while New Style almost compensated for itself in sales through distributors. They don't like to discuss the fact that both could be done, but anyway...
In the opinion of the main expert, it was a strategic mistake that cost a lot (hundreds of millions). The issue is not only and not entirely about money, the problem is popularization, or rather its lack in the DIY channel in Ukraine now. We don't take Leroy Merlin into account, rather DE-popularization took place there then and now.
As for technologies in this difficult time - it was nothing revolutionary, but there were evolutionary directions of development that grew in the future and took an important share of the market already now in the third decade of the 2000s (starting from 2019,2020,... and beyond). We mean that mass lacquering of doors, wrapping by polypropylene film, gloss and matte surface experiments, colored painted glass and others were born.
Such modern global technologies as the use of CPL, HPL, and PET have not yet gained mass distribution in Ukraine. For mass production, the purchase of additional equipment is required.
END OF PART IV