War & Groceries - Part 2

Mundane (Adjective): ‘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, grab a bottle of wine to enjoy with your partner.

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Initial Shock

After the initial shock of the Russian invasion on February 24th the Ukrainian supermarket industry led by operators like Silpo, ATB, Varus and Novus did 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 intel, but not knowing for sure if they would make it back in one piece. As the situation evolved, 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 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. 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, stores were destroyed, depots were closed as key roads and regions fell under the control of the invaders. Silpo lost two of their 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 viscous fighting and the outcome teetered on the edge. Kherson was captured on 2nd March, the same day that Mariupol was besieged. We were universally horrified on 16th March when Mariupol theatre was bombed despite 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.

Ukrainium

But Ukrainians are resilient people, the toughest of the tough, and they took heart from the most mundane of places. The Silpo Supermarkets Facebook page had become a constant source of inspiration and national unity. And 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 2nd April when Russian forces withdrew. But 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. But they were also home to Dmytro Tsyhankov, the 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. 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 un-touched…….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 temporary 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, 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 27th 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 27th 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.

Silpo Facebook - 27th June

Day 124 brings more tragic news to Ukrainians. The 124th day of our people dying. People who just want to be free to live in their country, to go to work, to feed their families, to live life - even in these hellish conditions of war. Today, a Russian missile struck our family in Kremenchuk. Six Silpo employees are now in the hospital. We will help them and their families in every way possible and pray for their lives and their health. We believe in the professionalism of rescuers and doctors and, with hope, we are waiting for news from them.

Today, Kremenchuk and Kharkiv are places of pain for Ukrainians. Places of the dead and wounded. Places of ash and molten metal. Places of tears and sorrow. Everyone who died today from Russian shells are forever in our hearts. Our thoughts are with everyone who is injured and is currently fighting for their lives. We will bravely stand and be sure to restore every square meter of native land. Our spirit cannot be broken! Glory to the Nation. Death to our enemies.

?“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 11th 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 the 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 program 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 logistic networks, we are leveraging the strength of our regional producers. It supports these local economies, builds community cohesion and demonstrates a pride in Ukraine’s ability as a food and drink producer. On November 2nd 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.

Elena Suhailo, Mechanic Craft Brewery, Nikopol.

"I live in Nikopol, I produce craft beer and for me it is my life. With the start of the full-scale invasion we lost most of our customers and suppliers and on 31st August an enemy missile hit our office directly. And although we produce daily under enemy shelling, we never stop. We continue to pay taxes and help the army and people in hardship. I really want to grow my business further, so if I receive the grant, I plan to spend it on a?canning line. And through the mentor program I will choose a consultation on marketing from the experts in the field ".

?Price:?We are very price-focused, its 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 need external help – any supermarket CEOs who reads this article needs 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 distillery. And 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.”

?Written 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.