Adaptaion of Leroy Merlin Concept to the Kazakhstani Market Solved by Crea' ture team -Araylim Abetayeva -Zhiger Kairatuly -Rassul Abdullayev -Pak Karina

1. Hyper solution for hyper market

2. The following strategy would help to gain the market leadership by 50% by 2022 and enter Top 5 employers
of Kazakhstani labor market.2
Purpose Solution EffectPremises Purpose Solution Result
Undeveloped DIY modern
trade market, low level of
competition
Growth tendency in
construction of new
households
Discounters are
becoming popular
among the consumers
Although the income is
growing consumers are
price sensitive
Development of new
strategy to enter the
Kazakhstani DIY
market
E-commerce Omni channel
strategy
EDLP Strategy (Russian
adaptation)
Service-oriented
marketing strategy
Location & branches
Leader of the market in
5 years
Leroy Merlin in Top 5 HR
Brands
Premises
Purpose
Solution
Result

3. Excellent Service
High Prices
Stroy cityStroy city
KurdasTastak
Kenzhehan
Sauran
Low Prices
Low Service
B) According to Perceptional Map there is opportunity niche for
business with excellent service and low prices which Leroy
Merlin could take.
D) Monthly earning in accordance to Minimum monthly wage is
increasing as well as the population of Almaty , thus we assume
that purchasing power is increasing as well.
a) Economic situation
b) Perceptional map
c) Production
d) Power of buyers
3
A) According to real estate exploitation, GDP and materials’
production growth, the niche of DIY market in Kazakhstan is
profitable from the economic point of view.
0
400
800
1200
1600
2010 2011 2012 2013 2014 2015 2016
0
50000
100000
150000
0
20 000
40 000
60 000
80 000
2010 2011 2012 2013 2014 2015 2016
Monthly earning used in consumption in Almaty,
tenge
Minimum Monthly wage , tenge
1,2
1,4
1,6
1,8
2013 2014 2015 2016
Population of Almaty, mln ppl
C) Leroy Merlin can cooperate with local companies which
produce dry mixes and paints, but import decor and electrical
goods from Russia and Turkey
Constriction materials Kazakhstani Market
Abroad Market
Dry mixes LLP "BIG-ELIT" , LLP KAZGER,
LLP «Cement factory «Semey»
Paints
LLP "Concern Bakarassov", LLP "Sagan
Colour", LLP «Alina Trade», LLP "SMASH LTD"
Decor
Fibradecor company (Russia),
companies in Turkey
Electrical goods JSC «Prosvet», Electron
company, JSC «TECHNO-AS"
Current Kazakhstani market situation have an entry opportunity for Leroy Merlin hypermarket in terms of
economic and demographic situation, reliable suppliers and perfect competition.
Source http://moluch.ru/archive/110/27023/
:

4. a) EDPL strategy
b) Segmentation
4 Kazakhstan lacks of DIY markets in the Self Service Format, where 12 DIY markets for 1.6 million of people.
Moreover, due to economic recession a buyer will more likely find a discounter rather than change the brand. We
propose EDLP and service oriented strategies to gain the market.
A) 58% of consumers will switch to discounter, 25% will likely
switch to another brand, 17% will likely to do both.91% is looking
at prices and 62% is looking for different types of promotion
Premises to go with EDLP strategy in Kazakhstan:
•Price sensitivity in choosing the market place
•Small share in DIY modern trade market gives an opportunity to
gain the market share from traditional trade market
B) Customer Segmentation by Life Cycle
Young families
25-34: renovation in their new apartments:
main categories: Renovation, Construction
materials.
Characteristics: high price sensitivity, low
income
Adult families
• 35-54 repeated renovation:
• main categories Renovation,
Construction materials, Interior.
• Characteristics: middle level of
income, high assortment
sensitivity37%
Families
• 55+: have a summer cottage:
• main categories: Renovation, Garden.
• Characteristics: middle level of income, high price and assortment
sensitivity
B2B
• Legal entities:
• Constriction brigades,
corporative tenders
• Main Categories: all
• Characteristics: Large
quantity, long term,
wholesale prices
30%
37%
20%
13%
C) Key concepts
Consumer insight Solution Effect
"Time is money"
Increased level of service: Every shelf will
have a button to call the consultant
Increased level of
satisfaction by means of
reducing waiting time
"Consumers go online"
Omni channel Strategy: every consumer
start the purchasing process online and
continues offline
Unique customer
experience
"Space optimization"
Store space optimization for every
member of the family: kids corner,
products by categories
Increased level of loyalty
D) Hypermarkets chain
in order to gain the biggest
part of DIY market share in 5
years Leroy Merlin is planning
to open 3 hypermarkets in the
most developing regions of
Almaty
•Ryskulov st.- Momoshuly st
•Tole Bi st- Rozybakiyev st
•Kuldja tract
Locations:
c) Key concepts
Source: Nielsen Central Asia;
d) Chain

5. a) Dynamics
b) Opportunities
c) Omni-channel
strategy
5
A) Dynamics of the market and number of customers shows the
prospects of e-commerce market.
B) E-commerce gives new opportunities to increase market share
of customers, number of frequency of visits and average bill as
well.
C) Omni-channel strategy would improve customer experience, sales, loyalty and business performance.
Turnover in e-commerce market
*compared with 2014
*
8 bln 312 mln tenge 11 bln 339 mln tenge
+36%2014
2015
30%
57%
13%
Current customers Potential customers Other
Customers of e-commerce market
Additional communication
channel with clients
Increase of customers
engagement
Creation of online sales channel
Increase in number of purchases
Increase frequency of online visits
Increase of average bill
1) Ekaterina thinks about
repairing her room
2) She opens Leroy Merlin
web site
3) Makes photo of her room
4) Chooses wallpaper
5) looks through the base of
foremen and choses one of
them (optional)
6) Goes to Leroy
Merlin hypermarket
7) Evaluates her
choice
8) Meets with the
foreman (optional)
9) Confirms & makes a
payment for the order
10) Happy
Ekaterina
LM.kz LM
Using e-commerce would increase sales of Leroy Merlin as well as improve customer experience and brand
awareness.

6. a) TOP 3 HR Brands
b) HR Strategy
c) Talent Acquisition
d) Talent Development
6 Kazakhstani labor market feels the economic recession as hard as other industries and currently HR market is
focusing on three global trends: Optimization of resources, rewards and recognition, talent development.
Following strategy will provide Leroy Merlin a leadership position within Top HR brands by 2020.
A) TOP 3 HR Brands 2015 and their projects:
BI Group
"We build the foundation of the future today":
BI-Intern, BI-Magistrant, BI-Bolashak, Corporate
university of BI Group
Borusan Machina
"Continuous Improvement Board": a tool for
improvement of everyday corporate and social
processes
Algeum Electric
"A schoolboy - a student - an employee": a
program aimed to raise a future professional
core in the energetics.
Gain 50% DIY market share within 5
years by means of acquisition of
qualified talented employees and their
everyday development.
B) Leroy Merlin HR Strategy
Recruitment criteria based on company values and TOP 10 skills 2020 according to WEF:
Organizational structure:
Control
GM
Board
of
Directors
CMO
CFO
HRM
Supply
Chain
HRBP
HR
Admin
Corporate
Internal
affairs manager
Recruitment
Manager
(outsourced)
1 year LM France or Russia MT, within 5 years
-> Local Board of directors
C) Talent Acquisition
1
2
3
45
6
7
8
Young talented employees:
Qualified talented employees:
•Short term project internship program for
students: feel the business process
•University lectures on Retailing in the
format of simulation
•Qualification improvement trainings
Optimized Recruitment process:
CV screening SHL test Phone Interview Assessment center Interview with LM
D) Talent Development - Raise a future leaders of the industry
Trainings
Rewards and
recognition
Mentorship
Involvement
programs
On-boarding program
(understanding of business
process,),
Soft skills development
(Top 10 skills of the future)
Hard skills (every month
professional trainings)
Personal
development plan,
monthly 1-2-1
meeting with line
managers on
achieving KPI, buddy
program
"Reward your
colleague program"
Sources: https://kapital.kz/business/46161/trendy-hr-rynka-v-2016-godu.html
https://www.weforum.org/agenda/2016/01/the-10-skills-you-need-to-thrive-in-the-fourth-industrial-revolution/ http://kz.hrbrand.ru/2015/projects-of-nominees/
• Quick bite of different
department,
• Three-days team strategy
development program
(each employee on every
level have an opportunity
to get involved in the
everyday operations
improvement process)

7. d) HR
a) Chain Development
b) Risk Matrix
7
Investment
=17,7
Payback back
period
years
A) Chain Development Plan:
2016- 2020
Supply Chain Department
Each department 5
year strategy
development
Supply Chain Planning
Sourcing and procurement
Supply chain execution
Marketing Department Analysis of the market
Assortment & Matrix Development based on the needs on customers
Omni-channel Development
Marketing communications strategy
Finance Department Financial Model Development
Implementation
HR Department Recruitment
Trainings development
Corporate Reputation Strategy Implementation
Business Development
Department
Construction of first store in 2016
Construction of 2 other stores in 2018-2019
Sales Operations
Department
CRM management system
Supply Chain management system
Channel Operations management
B) Risk Matrix
c) Assumption
C) Pay Back Period
Timely strategy plan execution with careful monitoring of risks would help to pay off within 17 years
EBIT
(taking 20% of revenue)
Tax(CIT- 20%)
Cash flow from
operating activities
from 1 factory
10 000 000 000
187 756 800234 696 000 46 939 200
563 270 400
17 780
Average number
of sales(per month)
* Average bill
=5 500 9 779 0000
Revenue in 1 month
in year from 3 markets
Cash Flow
/
Low HighMiddle
LowMiddleHigh
Probability
DegreeOfInfluence
Financial
Legal
Organizational
Reputational
Macro
environmental
1
2
3
4
5
14
52
3

8. Bachelor of Business Administration
Exchange semester in Corvinus University of
Budapest, Hungary
«Kazenergy» scholarship holder
Winner of «Damu» start-up project competition
Internship in Dostyk Hotel, Almaty
Office Assistant, Financial Aid Office, KIMEP
University
Volunteer of «AIESEC» International Student
Organization
Volunteer of «Y-PEER KAZAKHSTAN» International
peer education network
Crea’ture
Bachelor of Business Administration
President Scholarship holder
Marketing manager, Crystal Spring, Almaty,
Kazakhstan
2nd place ISPRO olympiad 2013, Jakarta, Indonesia
1st place International Math Olympiad 2014,
Moscow, Russia
3rd place Regional Geographic Olympiad 2014,
Astana, Kazakhstan
Bachelor in Economics and finance
Development Manager, Retail Consulting, Almaty,
PR Specialist, AGT Kazakhstan, Almaty
Digital Intern, Buzzon Digital Agency, Almaty
2nd place Changellenge Case Competition 2014
Organizer of Astana Economic Forum, Astana
Graduate, KIMEP University
Bachelor of Business Administration
Marketing & PR University, EUROBAK, Almaty
Internship in Microsoft, Almaty
Volunteer of «AIESEC» International Student
Organization
Internship in Kommest-omir, Almaty
We Create the Future

9. APPENDIX 1 The risks associated with implementation of the suggested strategy are evaluated and ranked by the probability
of occurrence and the expected influence to the business.
Unstable economic environment, inflation
Increasing taxes for imported goods
Challenging process of implementation
of innovative HR strategy
Outflow of loyal clients
Decrease of income of population,
outflow of clients to markets
Risk analysis
Low HighMiddle
LowMiddleHigh
Probability
DegreeOfInfluence
Financial
Legal
Organizational
Reputational
Macro
environmental
1
2
3
4
5
14
52
3

10. 2016- 2020
Supply Chain
Department
Each
department 5
year strategy
development
Marketing
Department
Finance
Department
HR Department
Business
Development
Department
Sales Operations
Department
Demand Planning and Forecasting
Supply Network Planning
Inventory Planning and Optimization
Logistics Planning
Warehouse Management System
Transportation Management System
Inventory Management System
Supplier Relationship Management
Supplier Integration
Contract Management
Financial Model Development
Implementation
Analysis of the market
Consumer Behavior Analysis
Assortment & Matrix Development based on the
needs on customers
Shelving & Merchandising Strategy Development
Omni-channel Development
Marketing communications strategy
Development of Web-site
Optimization of pre-delivery and delivery processes
Technical support
Test implementation & bug fixing
Recruitment
Trainings development
Corporate Reputation Strategy Implementation
Talent Development Programs Design
Talent Development Programs Implementation
Construction of first store in 2016
Construction of 2 other stores in 2018-2019
CRM management system
Supply Chain management system
Channel Operations management
APPENDIX 2
Chain development plan

11. Key features Strength Weakness
Location
12 months, Stroymart, Baumarkt, Salamt, Tastak,
Kenzhekhan Comfort, Kurdas-7
Price Kurdas-7, Kenzhekhan, Sauran, Tastak 12 months
Assortment 12 months, Salamat, Armada, Tastak Sauran, Stroymart
Infrastructure
12 months, Stroymart, Baumarkt, Salamt, Tastak,
Kenzhekhan Comfort, Kurdas-7
Brand Identity Comfort, Tastak, Kurdas-7, Salamat, 12 months Sauran
Service 12 months, Comfort, Stroymart, Armada,
Tastak, Sauran, Kenzhekhan, Kurdas-7, Baumarkt, Salamat,
StroyCity
E-commerce
12 months, Comfort, Stroymart, Baumarkt, Salamat,
Armada StroyCity, Kurdas-7, Kenzhekhan, Sauran, Tastak
APPENDIX 3
Competitive analysis