How We Forked Russian Leroy Merlin on Kazakhstan
It was necessary to have time to adapt all IT systems before the end of the construction of the store.
In 2016, it was decided to open a store in Kazakhstan (in Almaty). In the logic of the Adeo group of companies (these are all Leroy Merlin stores around the world), for each new country, you need to create a separate business unit with its own infrastructure and all-all-all. For example, Ukraine is a separate unit of five stores with all its own divisions, services and IT processes.
In Kazakhstan, we decided (for the first time in the history of the development of the company) to fork the Russian infrastructure, actually expanding our systems to a new region. Why? Because procurement, supply chains, legal and financial services are centralized. The markets are close. The legislation is close, although it has its own peculiarities (each department revealed differences for itself with the help of colleagues from the legal department). This is a Eurasian Customs Union. We had 90 stores in Russia, and it was possible to purchase on conditions that suppliers in Kazakhstan simply won’t give, and there are not so many local producers. We have many debugged processes, working software and so on.
It remains only to slightly tighten a couple of IT systems. It’s a simple year and a half work, because not everything had to be rewritten, but very, very much. It began with the fact that, it turns out, it is necessary to sign additional agreements with 800 suppliers so that their products are correctly labeled and certified if necessary. So that in Kazakhstan they could be correctly taken into account, the price tag should be printed accordingly, and according to the law, the name of the goods must be in Kazakh and Russian.
This is where the surprises have just begun.
I’ll tell you about the biggest things - in principle, there are hundreds and thousands of small changes behind these processes, but you can imagine the scale yourself.
In Russia, we use the BOSS-Kadrovik, but in Kazakhstan it simply does not exist. But there is 1C ZUP KZ. And there they are ready to support him. Actually, there are no problems keeping personnel records in 1C. There is a difficult integration: we send data from 1C to BOSS-Kadrovik, and then to the parent company in France. There is an international directory that manages accounts. Each country has its own range, and for Russia it is one, and for Kazakhstan - another.
Kazakhstan was a continuation of Russia with us, but the logic of individual records had to be pulled to the logic of systems where there are different countries. Accordingly, all the same, data is centrally collected in the Russian Federation and on behalf of the two countries. General statistics on personnel (men and women, the percentage of absenteeism due to illness and so on) is submitted to France.
Everything would be fine if there were no Personal Data Act. I had to accumulate personal data on the territory of Kazakhstan (here 1C came in handy), and then send it to us and France (from us). Moreover, part of the data that does not exceed the amount of stored local data is leaving for us.
It would seem that at the planning stage everything was thought out, the lawyers gave comments, we checked the scheme several times - it works. But at the implementation stage, problems got in, because the test base was from Russian random names. And in the Kazakh language there are characters that are not in Russian. BOSS-HR on our side began to damage the names. I had to change the encoding to Unicode. If you think that it’s one time to get into the configuration file - and that’s it, then I can say that you have been very lucky in life.
That is, we had three large-scale alterations:
- Introduce a new instance of 1C and learn how to work with it, arrange on-site support and maintenance.
- Integrate Kazakh 1C with Russian BOSS-Kadrovik (in particular, taking into account the international features of the documentation for which the Kadrovik was not intended from the box).
- Separate data catalogs for countries and send them individually to France in the desired format for France.
In Kazakhstan, price tags and receipts must be printed. Strange as it may seem, they should contain the name of the goods in Kazakh. To print a check or price tag, you must have:
- Product in stock.
- Translation of the name of this product.
In order for the product to appear in the assortment, it must be properly shipped and properly taken into account. The first thing I had to do was learn how to sell. In Russia, the movement of goods between a warehouse and a store is simply movement within a group of companies. To move the goods to Kazakhstan, you need to sell it. Due to the transfer pricing rules of the Customs Union, it is necessary to sell it at a price not lower than the wholesale market price so as not to create unequal competition conditions for the retail market in Kazakhstan.
To sell goods from Russia to Kazakhstan, you need to do an export operation. To make foreign trade activities, you need to re-mark the product so that it has the necessary details for Kazakhstan. Among such details there are customs codes of TNVED.
To generally sell goods in another country, you must comply with the rules of labeling. And for this you need to at least write on the packaging all the relevant details in Kazakh. Even on the mop there should be a sticker with instructions (from one sentence), and if now it was only in Russian, now it was needed in two languages.
When you once again read the air freshener in the toilet, think about it. Look for the KZ language icon next to RU.
Goods - 35 thousand. Suppliers - approximately 800. We have signed with each an additional agreement to the agreement on the new labeling of goods. If you did not go through such a process, I will explain that it may well take a year, because each individual supplier needs to individually explain the certification and labeling requirements. And then after a week he calls back again to clarify how to do it right. Once again. And further. Sometimes the supplier called the employees of the Almaty store to agree on the translation on the label.
Someone labeled the party all without exception, someone looked at the type of order and, if the party was sent to Kazakhstan, then put additional stickers.
Additional stickers are, in particular, additional certification that the product passes according to the norms of Kazakhstan. Fortunately, some products according to certification standards were compatible with Russian standards, and showing one certificate made it easier to get another.
It didn’t work with everyone, so we organized a separate labeling process in our warehouse.
Fortunately, this is not necessary for our own goods not for sale (work clothes, for example).
Intellectual property issues arose: somewhere, trademarks were busy, and suppliers renamed goods for export. Also not the most obvious and not instant process. We tried to help as much as we could, but did not want to do all the work for our suppliers.
All export goods must be paid VAT. Then we learned how to manage currencies and different VAT rates. We learned how to print documents in order to send cars from the warehouse to cross the border.
Shipment of equipment for the store.
Not everything needs to be transported from Russia. It was necessary to adapt the procurement processes of both commodity and non-commodity assets. Somewhere it was more convenient to buy a uniform on the spot. Part of the IT equipment was purchased locally. A number of goods from the local market turned out to be cheaper than during transportation (even taking into account that in Russia the order was for 90 stores, but here - for one). Looking a little ahead: there was a local assortment that was simply not sold in the Russian Federation.
It took a separate contract for each supplier with a legal entity - Leroy Merlin Kazakhstan LLP.
About 35 more suppliers were added.
Adapting pricing processes
35 thousand goods needed to be recalculated taking into account overhead costs and transfer pricing requirements. And as part of our price policy. Previously, we considered only prices for goods by direct import to Russia, which were not very many.
Now almost all the products of the new store went through this process.
What is especially difficult - the cost of goods has changed. In particular, the selling price from Russia to Kazakhstan. In particular, imported goods from Europe or China - too. As a result, we agreed on new calculation rules.
It was important to take into account the transfer pricing requirement in them, so that the money does not intersect from country to country.
We just thought to roll the fork of the import calculation block with a couple of changes, but in the end it was a big project with a team of financiers, lawyers and even marketing.
In parallel, construction was going on, which imposed a time limit
We looked at the reports and were glad that we could scale the resources in our teams:
Tent / pavilion for a garden / garden.
Here is the trading floor and the box office line:
Almost before opening:
Adaptation of quality processes
As I said, certification and labeling of goods was required in accordance with the requirements of Kazakhstan. This caused a small cascade in the product accounting system, its establishment in the assortment and warehouse rules. It was important to separate the goods that could be sent to Kazakhstan from those that could not be sent yet. And these can be two parts of the same batch of lampshades. Just because of the different stickers on the boxes.
And it would be nice if these lampshades were not a separate nomenclature, but were taken into account as original ones, so that we would not re-stock the warehouse with the same goods.
Adaptation of supply chain processes
It was necessary to form shipping documents at the warehouse upon shipment to cross the border.
As a result, we needed a separate type of warehouse - a hub. Goods are taken from the supplier to a warehouse in the Russian Federation, and then shipped (read - sold) to Kazakhstan. It was necessary to separate the streams, so it was very convenient. Then the goods are sent to another country.
It was necessary to change several subsystems and warehouse processes. We are talking about the adaptation of accounting financial and warehouse systems.
Adaptation of accounting processes
Here it was necessary to re-sort all the processes. We are accustomed to working with Sberbank and Raiffeisenbank, there were honed processes with them.
Surprises began on such simple things as the collection process. In Russia, we make contactless collection everywhere - this is when there is a safe-gateway. On the one hand, money is put into it, on the other hand (from another room) they are taken out by collectors. And in Kazakhstan, there is simply no contactless process as a concept. In the local cultural code, it is imperative that people look at each other, even if they do it through armored glass. Another requirement of the bank is a bill of notes: you need to lay out the money for banknotes and coins and take into account their number. There is no such thing in the Russian Federation.
It took a separate payroll bank. There - VTB, but this is not the VTB that we have: it is a separate legal entity with its localization and its own characteristics. The same story was, for example, with Beeline: here we work on the Internet with them often, and there Beeline does not provide Internet services at all. So the bank did not match the API a bit.
The main changes are adaptation to the chart of accounts in Kazakhstan (mapping of accounts). Local bank in the process of collection and acquiring.
I needed my own customer base, located in the data center in Kazakhstan (requirement of the Law on personal data). After all of the above, I think I can say: “We just opened a data center and went on,” and this should not surprise you very much.
With the discovery and integration, there were difficulties in that when the data center was launched, it needed constant communication with the parent company, the “parent” IT department and security personnel. And with the Russian department, too. And this is a difference of two and three hours. When at 9 am French colleagues turn on their laptops, in Kazakhstan it is already 1 or 2 pm - it depends on the season. That is, the work went on in a peculiar way: everything external was moved for half a day, and the rest of the time, everything was cached the next day in the works.
By law, you need a site in a local second-level domain. It's just that simple when you already have a data center.
It is difficult that it had to be translated in a year. Those same 35 thousand products and more category pages and information pages. This is not a Russian copy - it is a full-fledged bilingual site. Fortunately, the front of a bilingual site after Europe was a standard “out of the box” thing.
We worked with translator contractors. They got along pretty quickly, almost in half a year.
Adaptation of IT infrastructure and services
A separate Active Directory with trusting relationships, a separate pool of email addresses with a national domain, a separate fill image with corporate standards, a separate procedure for issuing IT equipment (your balance), and your own guest Wi-Fi in the store.
The process was “a bit” complicated by the fact that our first AD was built 15 years ago, and we had to play archaeologists and reverse what was done there. As a result, raised from scratch.
Cash Solution Adaptation
The new bank gave us a new terminal and said that this hedgehog will live with us. In the sense, we had to choose a fiscal solution, and we need to choose not just like that, but from the national register of decisions. They simply could not bring their own from Russia. There were still requirements for the contents of the check, etc.
In general, we integrated the new terminal into the cash system. Not without dancing with a tambourine, of course. A happy outcome - these are the adapted sales forms that the seller passes to the customer for payment:
In my plan, this is called “Adaptation of systems and data integration between them, taking into account different currencies, different VAT rates, additional data in Kazakh. Common and individual system instances are used. ” Simpler - all of our subsystems should have been available for Kazakhstan. We either raised new instances in parallel or left the general ones, but somehow taught them how to manage currencies. Somewhere, they simply sawed the ruble sign, and everything became compatible. And somewhere they rewrote business logic from scratch.
Even these things had to be localized:
The commercial department spent quite a lot of time adapting the assortment. From what stood out clearly, carpets are much more widely represented. At the opening of the promotional zone, we were all made of carpets. Here its edge is visible:
By the way, at the same opening, we pinned a translation: since all the inscriptions inside the store must also be in Kazakh by law, we also sent them to translators. And if they saw the goods and knew what exactly this translation was for, then here came short cards, often representing a cut from different words, from which large blocks are then assembled. The same “instruments” for navigation were translated into words for musical instruments. It almost got to the opening. Without context, it turned out to be difficult.
They opened happily, with performances and fireworks, and all those features of the cultural code that suddenly slowed down earlier (like the fact that you need to meet in person before the conclusion of the contract necessarily) began to help. Because holidays are something very important. They came to us almost as a housewarming neighbor, perceiving the store as part of the city.
Here is a brief summary of the process chronology:
A year before, we began to give birth to a new unit in the Republic of South Africa - in Johannesburg (they kindly call it Yöbourg, which gives us completely different associations). They finished it a month later than Kazakhstan with all localizations, that is, there is something to compare.
Well, then we repeated the same march with the Republic of Belarus. Opening soon in Minsk. And this is not copy-paste, as many might think.
Of course, for the accuracy of the process, we should thank our analysts, enterprise architects, developers, testers, and specialists from all departments who had previously planned the necessary actions for adapting processes and systems. There were some surprises. We also had unplanned costs, but we managed to keep everything within the framework.