Detsky Mir expects to double its sales over the next four years by developing its omnichannel business model, with the share of online sales growing from 25% in 2020 to 45% by 2024 in the Children’s category. The Company’s goal is to consolidate its leadership in the children’s goods market. In 2021, Detsky Mir plans to further accelerate its business growth.
One of the Company’s top priorities is to grow the Detsky Mir marketplace (launched in October 2020) into a leading marketplace for the whole family, offering the best product assortment and prices. The Company aims to expand its product assortment to 1 m SKUs in 2021 and onwards to 2.4 m in the medium term.
The Company’s management reiterates its store opening guidance, with at least 230 stores in the Detsky Mir chain’s traditional format on the horizon in Russia, Kazakhstan and Belarus by 2023. The Group also plans to open 800 Detmir Pickup stores – our new compact store format – along with 500 Zoozavr pet supplies stores by 2024. The Company’s plans for 2021 include the launch of at least 70 new Detsky Mir stores, 100 Detmir Pickup points and 70 Zoozavr stores.
Detsky Mir also plans to digitize most of its existing stores: (1) bring all service zones into a single customer service center for online customers, (2) introduce separate warehousing space to store online orders, (3) adapt all the technological processes around order fulfillment and storage, including for prepaid and marketplace goods.
The upgraded stores will have advertising and point of sales materials that link with Detsky Mir’s website and digital services, as well as interactive terminals to provide shoppers access to the full product assortment of Detsky Mir’s marketplace, thus contributing to sales growth.
Detsky Mir also plans to expand its network of partner pickup points from 5,700 at 2020-end to 12,000 in 2021. The Company will continue to build out its logistics network to support the fast and cheap delivery of online orders. Between 2021 and 2022, Detsky Mir expects to launch four new distribution centers: three leased regional centers and one Company-owned, federal-level center. Another federal distribution center will open in 2024.
Detsky Mir is constantly improving its customer experience across all sales channels, with a medium-term target of achieving an overall NPS score of 70% and gaining user experience leadership over online peers. Furthermore, the Company will take a decision in 2021 on a full-scale launch of digital services and other non-children’s product categories.
The Group will continue to improve its operational efficiency to maintain its double-digit adjusted EBITDA margin(excluding the impact of IFRS 16 Leases) in the medium term.
Management consistently prioritizes regular dividends of 100% of net profit under Russian Accounting Standards (RAS). At the same time, Detsky Mir expects its financial year-end net debt/adjusted EBITDA ratio to stay below 2x throughout the entire forecast period.