Head of National Footwear Union: ‘Mandatory labelling won’t influence footwear price’

Natalia Demidova on counterfeits, myths about astronomic costs and dishonest competition

The postponement of footwear labelling until 1 July has disappointed some representatives of the footwear industry who managed to get ready to work according to the programme. In an interview with Realnoe Vremya, head of the National Footwear Union claimed that the union wasn’t glad about the break, almost all large and medium-sized companies were ready to label their goods and added that sole traders were also on the list. She says it was enough to postpone the introduction of responsibility for the absence of electronic codes. This is why the union won’t let another postponement — the market has a lot of counterfeits, which “disrupts all this competition”.

ey“Half products in the market are illegal

Mrs Demidova, mandatory footwear labelling has been put off until summer, but has anybody managed to get ready by 1 March too? Is it mainly large businesses?

Yes, indeed, many managed to get ready for the work with mandatory footwear labelling. And it is not only big companies — our footwear industry doesn’t have large entities in general. It is both medium and small shoemakers who did got ready.

Everybody was very unhappy with the postponement until July because they are in the process and understand the idea of labelling, half products in the market are illegal, it is necessary to fight with it, this disrupts all competition, precisely an illegal good does.

How much have these entrepreneurs’ expenses on labelling cost? Is it big sums?

Of course, there are expenses, but they are quite comparable. The labelling won’t influence the price for a good. It won’t become possible to evaluate the expenses in percentages, anyway, everybody has different capabilities at the beginning. But almost everybody has already labelled goods with a linear barcode. Of course, the software has changed a bit, but a technology company provided it too. This is why labelling expenses are a bit exaggerated. A QR code is 50 kopeks.

Photo: facebook.com/groups/russian.shoes.business
Everybody was very unhappy with the postponement until July because they are in the process and understand the idea of labelling, the half products in the market are illegal, it is necessary to fight with it

I am familiar with sole traders who are ready to label their shoes. It is those who slowly got moving, always thought: “What if they cancel it, what if this doesn’t happen”. But sound people understand that it doesn’t apply to footwear only, this programme has been launched seriously and for long for different sectors. This is why people slow down.

“We offered not to introduce full responsibility

Manufacturers say that the system is running with failures.

Sure, we won’t hide that there are technical problems. They haven’t been solved yet, each time the sector has different and complex business processes, but all this is being arranged now. One should just get feedback from the programme’s operator. This is why we, the National Footwear Union, were already ready to support those companies, we claimed they didn’t need to postpone the start of mandatory labelling from 1 March but offered not to introduce full responsibility. We offered to put off the date of introduction of responsibility for no label. We are sticking to this opinion even now, and we won’t, of course, allow any postponement in the future.

I have a feeling that all large and medium companies are already ready to label because everybody was aware, afraid and concerned that it was quite a serious step. Yes, not all small companies have switched to it. We hosted the next conference on this issue on MosShoes exhibition on 13 March. There were fewer people than previously, it was due to the coronavirus. But this conference and previous conferences were apples and oranges. If at first the questions were asked: “Why is this needed?”, “What is this?”, secondly, they still asked them, now everybody is aware and asked only professional, specific questions. And a representative of the Development Centre for Advanced Technologies answered these questions in a very good and clever way.

Photo: facebook.com/groups/russian.shoes.business
Sure, we won’t hide that there are technical problems. They haven’t been solved yet, each time the sector has different and complex business processes, but all this is being arranged now

There were asked such questions that were interesting even for us, for instance, how to return a good. Now, at this stage, companies use the so-called exchange to make it easier: a client bought a pair of shoes and wants to exchange them the next day. There is no such concept as an exchange. It must be registered as a return and purchase of a new good. But companies got used to working according to that simplified scheme. I think now we will have to refuse it somehow.

Of course, something will change too, but it is a matter of habit, everybody will get used, and it will be fine. All this will work. This won’t take obviously six months or a year. The procedure won’t change for the buyer, though in general he or she will have to file a claim in case of return of a purchase, and then the document is sent to a shop. If this happened in another way, it was a violation.

“The labelling procedure will cast light on significant part of the previous illegal activity too”

Experts forecast that some players will leave the market because of the new requirements. What do you think?

Where can they go? Will they become illegal? It means they will get problems. Where will they go? Might they deal with their products. If they go underground, they will be caught, and something worse will happen. If people sold shoes and did it well, they won’t start selling soaps or perfumes.

Do you disagree with the claims that the introduction of labelling severely hits the business? Do you think these people are not sincere?

They aren’t, of course. For instance, sole traders who label only stock or shopping points that are about to close. They need to label the stock they have now. You must admit that sole traders don’t have huge stock. If only, of course, it is sole traders just to keep up appearances, actually, it is a point in the market that is the final link in the chain of a Chinese mogul, then it, of course, has some warehouses. But then other questions arise: why does the sole trader have such huge stock? Where are the documents on the previous import? Why does he label a lot of stock? When did he manage to import them? You know, the labelling procedure will cast light on significant part of the previous illegal activity, though not all. We hope such moments will be detected.

Photo: facebook.com/groups/russian.shoes.business
The labelling procedure will cast light on significant part of the previous illegal activity, though not all. We hope such moments will be detected

But we will go back to legal sole traders. Where does a sole trader stores big stock? He doesn’t have so much stock, usually, it is sensible women who clearly know how much they need to order, how much to bring, how much is sold, they know it by experience. So they do have some stock — they need to label it, and then it has nothing to do with them. They buy already labelled shoes from a wholesale chain, that’s to say, they don’t deal with it. Their task is to withdraw this with the help of online tills, register it. You buy labelled shoes and withdrew them. They [sole traders] are interested in such moments as a return and stock labelling. All these elements will be considered. Of course, it happens not only to them but to everybody.

This is why all moments of this business process will be tested. It will be clear how to work with it, one shouldn’t get nervous. When we began, we were said: “Oh, what’s that? It is so tough, our Aunt Masha still writes everything down in a notebook”. I agree that there can be such people, but we can’t look at them. And we often have to hear: “Oh, we won’t get it”, though I think that it is just invented fears. We should start the fight, then we will hope.

“There can’t be any exceptions here. As soon as there are exceptions, everybody will be based at home at once”

Does it mean that you really consider the labelling an effective way to fight counterfeits? Does it exclude that other measures aren’t needed?

Nobody will ever say that it completely excludes other measures. But as we are said by Russia’s consumer protection watchdog Rospotrebnadzor and the customs, it is quite an effective tool that can help detect counterfeits not when they cross the border but at sales points and take measures without a long investigation and consideration because every step will be tracked.

What do you think of exceptions in the labelling programme? Because manufacturers are different: somebody makes orthopaedic shoes, somebody does ballet shoes, and there are self-employed people who make shoes at home.

I am certainly against, there can’t be any exceptions here. As soon as there are exceptions, for instance, for representatives of folk crafts or home-based makers, I assure you that everybody will be based at home at once, deal with special shoes and so on. They will go underground, I mean they will pretend they did.

Photo: facebook.com/groups/russian.shoes.business
We often have to hear: “Oh, we won’t get it”, though I think that it is just invented fears. We should start the fight, then we will hope

I am saying once again that the labelling procedure itself isn’t complicated. It is easy to learn. An accountant can service several companies. The same can be introduced in this sphere, so one specialist will help to service several small shoemakers and label them at once. One shouldn’t hire such a specialist as a staff member — this can be costly, while it won’t be a problem for ten companies (they can even be from different spheres).

I can say that those shoemakers who joined this activity are at an advantage over the rest — now they can consult somebody in this sphere and even make money on it. Many have evaluated that it will have one hundred per cent coverage and be in demand.

By Vasilya Shirshova
Analytics Tatarstan