Вадим Добровольский

MAKE IT BEAUTIFUL: Sergey Klimenko, the founder of “Janser Group” holding, about the creative process, brand building and “test drives” of knee socks

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Sergey Klimenko from Kyiv had started his business journey in the mid-1990s with selling auto parts, but very quickly, he switched to tights and lingerie. It was a market niche. First, distribution, then – factories in Poland, Latvia, and Ukraine. In 2004, Sergey opened the first 75B lingerie store chain in Ukraine, which quickly became popular.

Today, the “Janser Group” structure includes eight enterprises and  four brand networks, which comprise 200 stores of different formats. It is the largest manufacturer and seller of lingerie and tights in the country. Sergey Klimenko achieved success in the “tights & socks” business thanks to three rules: make it beautiful, work consistently and strive for the goal.

Leadership Journey (LJ): A man engaged in the production of tights and lingerie — sounds unusual. How did this business appear in your life?

Sergey Klimenko (SK): It all started in 1994 when I, a young 22-year-old graduate of the Kyiv Auto Transport Institute, together with a Polish entrepreneur Jan Szymanski had founded a joint venture to sell spare parts for Ikarus buses. The company was named “Janser” – the first letters of the names of the founders. The business was successful. In the early 1990s, you could make money almost on anything. However, it did not last long. In a couple of years, the government had stopped to finance bus depots; and there were no private transporters yet. And when in Poland we got 40 machines for the production of polyamide tights as debt compensation, we quickly decided to develop this direction. Two years later, the Polish partners lost interest in this business and sold the factory. But I decided to continue. I kept the name of the company and started importing tights from Europe.

I kept the name of the company and started importing tights from Europe.

LJ: How successful was your solitary sailing in the hosiery business at first?

S.K.: From the very beginning, I relied on a simple truth: ask the consumers what they need, and give it to them quickly and efficiently. Do you need tights of large sizes? Here you are! Do you need tights with elastane? Please. But in the case of microfibre tights, there was no customer demand, but when we first saw this product, we realized that it would be a sales hit. And we were right. Such tights were perfect for our winters. In parallel, we began to develop trade in imported lingerie to compensate for the decline in sales in the summer. Key, Milavitsa, and VOVA were our first import brands.

LJ: What were the channels of distribution?

S.K.: At the beginning, we had to use the “Galantereytorg” network, which remained from Soviet times. But in department stores, tights and lingerie are only the accompanying merchandise. Therefore, we needed our own network of specialized stores. In 2001, the first “K Market” store opened, and three years later the “75B” network appeared with the name that speaks for itself. “75B” is the most popular bra size, sales leader. When creating the network, we tried to take into account all the nuances.

I believe it was the first lingerie stores network in the country, which did everything so that a woman would not leave without a purchase

I believe it was the first lingerie stores network in the country, which did everything so that a woman would not leave without a purchase. By that time, after having studied in Kyiv-Mohyla Business School, I began to use retail laws: merchandising, rules of communication with customers, the psychology of woman’s behavior, “cold” and “hot” zones in trading floors, special lighting. For example, we installed the so-called stopping mirrors. Passing by, a woman will not fail to look at herself in the mirror and she will certainly pay attention to the lingerie near.

LJ: At what stage did you switch from distribution to production and decide to launch factories in Ukraine?

S.K.: At a certain point, I had realized I knew this business better than the manufacturers. When, based on your knowledge of the market, sales, and marketing, you negotiate with a factory the article and size, make an order in advance, but the manufacturer moves away to another distributor in another country, it is frustrating. Dependence on manufacturers and the uncertainty of relationships with them did not allow running the business properly. The need to adapt the product to the local market was one more factor.

We created our first tights brand “Legs” in 1998, when default occurred in Russia, largely affecting Ukraine. At that time, the hryvnia exchange rate to the dollar for several months has more than doubled and, accordingly, imported goods have significantly increased in price. Imagine how I was sitting in Italy with representatives of the factory and was struggling to reduce the price. Why not deliver the goods without packaging, or why not limit the advertising and marketing cost. Your own manufacturing, the more so in your own country, makes is much easier to respond to market conditions and the changing economic situation. In other words, creating my brand had nothing to do with my ambitions – just a sober business calculation.

LJ: How were you looking for partners as a distributor and as a manufacturer?

S.K.: Everything, just like in ordinary life; your contact base is growing as you are more and more immersed in what you do. Exhibitions, various specialized events, and even occasional meetings. Sometimes it came to funny cases. For example, in the late 1990s, when we had neither Internet nor mobile phones, an agent from an Italian factory, impressed with our work with various brands, came to Ukraine to establish contact with us and with our help go to the Ukrainian market. He came to Kyiv Central Department Store and asked the salesperson of tights, “Can you give me the phone of these tights supplier?” And gave 10 dollars. In a few days, our first meeting took place.

LJ: How wide is the geography of your partners?

S.K.: Now I can already say that in this business I know, if not all people, then very many people. Over the years of work, I made acquaintance with top managers of manufacturers of tights and lingerie from around the world: Ukraine, Poland, Belarus, France, Italy … Having become a manufacturer, we expanded the circle of contacts. For example, we have six suppliers from four countries for some types of bras. At one of the exhibitions, we decided to hang out the flags of the countries with which we cooperate. They happened to be as many as 22.

LJ: How many factories do you have in Ukraine and what is the segment distribution in your business diagram?

S.K.: We now became larger factories by reducing the number of factories from three to two located in Kharkiv and Kyiv. For several years now, we have a ratio of 70% of lingerie manufacturing, 30% of tights manufacturing. In lingerie in its turn, the women direction dominates, which accounts for over 80%.

In MANUFACTURING, 70% is lingerie, 30% — tights

LJ: At one time, you were among the owners of a lingerie factory in Poland. Is it still part of the company?

S.K.: Not anymore. After failures in several partnership projects with parity of 50/50, I refused from such cooperation. My position is clear: in a business partnership, from the very beginning, you should know who the master in the house is, i.e., who dominates and makes strategic decisions. Currently, it is a great luxury to have manufacturing sites in Europe. For example, none of the French manufacturers of lingerie has factories in France. All were transferred to China or Southeast Asia. Moreover, only the names remained, since many French brands with a hundred-year history now belong to Chinese investors. For the past 15 years, I have been actively urging European companies not to transfer manufacturing to Asia, but to focus on optimizing business processes. This strategy works with Italian manufacturers. In regular meetings of our and Italian designers, we easily find a common language. As a result, we are doing a common thing — we create beauty. They specialize in laces and fabrics, and we specialize in finished products.

Currently, it is a great luxury to have manufacturing sites in Europe

LJ: In your stores, do you sell only your products or imported products as well?

S.K.: Our lingerie product accounts for approximately 85%. I believe you should do what you do best. With full responsibility, I can say we are experts in bras. At first glance, swimwear is a similar product, but actually, it is very different. Therefore, to use your manufacturing potential efficiently, you need intentionally to limit the assortment and in no case lower the quality bar. For example, it is much easier and more profitable for me to place orders for knitted underwear manufacturing in factories outside Ukraine — in Albania or Serbia, for example.

The lingerie we manufacture make up about 85% OF SALES IN OUR STORES.

LJ: How many seamstresses is working in your factories now?

S.K.: Now we employ 300 seamstresses.

LJ: And who are the designers of the lingerie – Ukrainian specialists or invited foreigners?

S.K.: The creative process cannot be limited to a geographic area, so we cooperate with both Ukrainian and foreign designers. Only at first glance, it seems that lingerie fashion is static. In fact, there are also trends there. For example, a few years ago, no one has heard of bralettes, but now they are very popular. As a manufacturer, we need to respond to all new developments in a timely manner, and for this, we need qualified designers. Not only designers. A new design brings change in construction and materials. Everything is interconnected. For example, the parameters of the lace are directly dependent on the design. That is why, every six months, together with the designers, we carry out a kind of brainstorming to create new models.

A few years ago, no one has heard of bralettes, but now they are very popular.

LJ: How many designers do you have?

S.K.: A team devising and creating underwear, consists of eight people, they are all from Ukraine. In addition, as necessary, we attract designers from Europe.

LJ: Can you single out the period when you really became an expert in the manufacturing of women’s lingerie?

S.K.: I started with tights and I can talk about them for hours — there are so many nuances in the production of this seemingly simplest product that the uninitiated person’s head can spin. Tights are my first love. It is impossible to create the best lingerie in the country without love either. Therefore, I have fallen in love a second time. There is no other way. You should completely surrender to your work, or … No, there is no alternative. Better not to do this business at all. For example, take foam rubber used in bras. I need to know all the details of its production. Over the years I have been working in this business, I have visited more than a dozen factories producing foam rubber for women’s lingerie around the world.

Tights are my first love

Only by knowing in detail all the production processes, one can understand the essence of the product, successfully produce and sell it. That is why I do not have related businesses now. Being the best – and this is the only postulate acceptable to me – can only be achieved in a specific direction.

LJ: In other words, in business, you choose directions that you can control, and you can only control a business you know well.

S.K.: If you want to have a restaurant, you have to be there every day. If you have a factory of lingerie or pantyhose, you should know all the nuances of their production and marketing. In the short term, you can simultaneously achieve success in several areas of business, but when the game goes on, you will have to choose where to focus your efforts.

LJ: How much attention do you pay to quality?

S.K.: You need to love not only the product but those people for whom it is produced. Before the start of production of every new model, we make an experimental batch that goes through several stages of testing: experimental wear, washing, adjustments … Often, I myself check the strength of our products. For example, when they tell me that in our knee socks the elastic band is weak, I wear the socks in the office to check. From time to time, you can see me in the office in socks of different colors: a gray on one leg, a red on the other. This is the way I test new models in the office.

When they tell me that in our knee socks the elastic band is weak, I wear the socks in the office to check

For example, some models of bras are created for at least a year. As the owner of the company, I would like to speed up the process and quickly launch a new product, but I understand that a rush can “kill” the entire project. Only a comprehensive control gives the result.

LJ: What is the company’s strategy for the near future?

S.K.: I pay a lot of attention to strategic planning, considering it to be one of the most important components of the success of any business. I have learned this in the Kyiv-Mohyla Business School. However, now I have come to understand that a long-term strategy should be adjusted and structured so as not to hurt the current business.

It is difficult to predict which trends will dominate in five years

It is difficult to predict which trends will dominate in five years. For example, take the tights. Since the 2000s, women tend to use the classic business style in everyday life and at work less and less. Jeans have replaced strict suits; the sporty style has become popular. All this is had influenced negatively both the manufacturers of tights and shoes with heels. These changes are not a matter of fashion; it is a transformation of consumer consciousness. Therefore, it is impossible to conduct business, following a rigid strategy. You need to be flexible and react with lightning speed to the emerging trends and change the assortment according to them introducing new product lines.

Since the 2000s, women tend to use the classic business style in everyday life and at work less and less

LJ: Does this mean that in the future the direction of the company may change?

S.K.: The issue of business consistency is a top priority. To remain successful, you need to constantly adjust business processes in accordance with changes in the market situation. For example, at one time in our segment, we were the first in Ukraine to establish a distribution system, and this worked successfully in 2000–2008. Then the crisis happened. Distributors were keeping low and thinking not of sales growth, but of saving their earnings. And we are again the first in Ukraine to implement the Cash & Carry system in the underwear trade. We have opened seven wholesale centers throughout the country. This strategy was successful in 2009–2017. In 2018, we closed all wholesale centers and invested in the B2B platform, by transferring all orders, payments, and shipments online. Change is always painful, but without it, a business cannot develop.

Change is always painful, but without it, a business cannot develop

Today, in the Ukrainian business, the desire to move into the premium segment is becoming more pronounced. Undoubtedly, it is very tempting but dangerous at the same time. I will give a simple example. Some lines of cotton socks we produce in Italy. In parallel, we produce other socks, made from the same yarn and on the same equipment. There is only one small difference: the Gucci logo is on the package. Socks of this brand are sold for 129 euros per pair, and ours cost 3-4 euros. Can we sell our socks for at least 50 euros? I could shout that our socks are no worse than Gucci, and in some ways even better, but the laws of marketing are cruel: no one will pay so much for our socks. To do this, you need a history of the brand, which you cannot buy, an experience that takes time and effort, and, of course, talents — designers, technologists, and marketers.

I could shout that our socks are no worse than Gucci, and in some ways even better. But the laws of marketing are cruel: no one will pay so much for our socks.

“Janser Group” is at the beginning of this path, despite the fact that we have been engaged in tights and underwear for 25 years. Is it a lot or a little? A rhetoric question, but I know for sure that we are knowingly stuffing cones and conquering new peaks. All successes and mistakes are ours. And hundreds of thousands of satisfied customers are the best reward for work. No matter how pathetic it sounds, doing business solely for the sake of money is hopeless; you need higher goals and values.

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