Expansion with care

“You have to be cautious about expansion.” The man who says this is the joint owner of a chain of DIY stores with annual sales of € 320 mio at last count (2009) and a workforce of 6 000. The German builders’ merchant Andreas Funken is partnered by Nova Liniya in a joint venture company that today operates 17 mega-format stores in Ukraine. “Be cautious”: is that the right advice to achieve such expansion and, moreover, in a young and dynamic market that still continues to offer loads of development potential? Funken insists on the virtues of Germany’s small and medium-sized businesses. “We have financed everything with cash. We didn’t want to expand any more rapidly,” he confirms. So it is only logical that the company also owns all its stores. As a member of Hagebau, a German builders’ merchant and DIY retail cooperative, Andreas Funken operates a Hagebaumarkt store in Dortmund. He knows the international DIY business inside out now after 20 years. The decisive factor for Nova Liniya was that the right partners met up in the right place at the right point of time. It was pure chance: Funken became acquainted with Oleg Shandar, a young entrepreneur, in connection with a fund raising and relief operation for child victims of the Chernobyl catastrophe in Kiev. The two of them made a start with a floorspace of 200 m² in 1993, when they opened the first “DIY shop” in Kiev, the capital of Ukraine. In the meantime the stores are up to a hundred times bigger. Even eight years later they had already reached 7 000 m² with their first Nova Liniya store. This outlet is located not on the outskirts of the city but right in the middle of Kiev, in a district with 300 000 residents in the immediate vicinity. Today this store still boasts the highest level of sales per square metre throughout the entire chain. The year 2007 demanded a supreme effort, with the company pushing through four whole openings in just the twelve months – “all by our own efforts” Funken stresses. Yet there were and still are all kinds of problems. With staff, for example: new employees are actually hard-working – but they have no training in selling drills or paint brushes. This has to be remedied through attending courses in the firm’s own training company. The choice of locations is given careful consideration. Expansion started from the capital city Kiev and along the main trunk routes, first to the north and west of the country, then further to the south and east. In September 2010 came the…