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Mir Couldn't Make Peace with Newport Trading
// Retailer Files Suit Against Logistics Company
Retail Sale
Yesterday, Moscow Arbitration Court examined the lawsuit, filed by Mir against Newport Trading. The reason for the lawsuit was disagreements in estimation of damage suffered by Mir because of the logistics company’s loss of household appliances. This is the first case when a large Russian retailer went on a conflict with one of its partners. At the same time market participants and experts think that the case brought to light one of the main problems of retail sale in Russia – its development is stalled because of improper logistics.
Mir trade network was founded in 1993. It has more than 30 stores in Moscow, St. Petersburg, and other large cities. In 2004 the company’s turnover was $300 million.
Newport Trading has been working in Russia under the brand of Britich logistics company Tablogix since 1995. The company specializes in storage, distribution and delivery of products. The company’s clients include Mars, Lebedyansky, Nestle, etc.
Newport Trading prefers not to comment on the conflict. Mir is also rather reserved in its comments regarding the lawsuit. “The company was not able to keep our products in sound condition and provide their timely shipment to the regional stores,” Mir public relations director Elizaveta Totunova says. It is only known that the conflict had started in fall of last year, when the retailer discovered absence of large amount of household appliances. Mir estimated the damage by 5 million 138 thousand rubles, however Newport Trading disagreed with that figure, and suggested to compensate about 500 thousand rubles. After that Mir decided to file a suit against the company.
Logistic services market participants emphasize that until this case such conflicts had never been taken to court. “Of course there are cases of damage suffered by fault of logistics operators,” National Logistics Company marketing department director Alexander Fedotov says. “But such issues are usually resolved on work level, not court. The operator carries full responsibility for the client’s freight, which is the essence of their services. Usually the damages are paid by the insurance company.”
Retail market players also mentioned periodic conflicts and dissatisfaction with logistic companies. “Many retailers encounter a problem of finding good outsourcing, because the quality and services of contractors are behind the development of retail sale,” M.Video spokeswoman Nadezhda Kiseleva thinks. “Usually we are dissatisfied with the services of the current operators,” Kopeika general director Sergey Lomakin says. “No developer can offer us as many establishments as we need. Same is with transportation. We have our own park of 50 specialized vehicles, while the companies, which specialize in these services have less vehicles, while their services cost twice as much.”
Analysts think that the conflict between Mir and Newport Trading is evidence of the fact that on current stage of market development retailers have started to pay closer attention to logistics. “Proper logistics is essential for the sale companies to work. Even small failures in logistic chain has a negative effect on the sales chain,” Prospekt analytical department director Natalya Odintsova thinks. “Most likely, Mir simply exhausted the opportunities of regulating the conflict, so it was willing to take to court.”
Yesterday, at the request of Newport Trading, the reading of the lawsuit was postponed to the middle of May.
Kommersant will be following further events.
Dmitry Kryazhev
All the Article in Russian as of Apr. 13, 2005
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Photo: Alexey Kudenko