New RDA CEO Andriy Lototskyi about business development and company plans for 2023


The new CEO of the consulting company Retail&Development Advisor about business development in the conditions of a full-scale war, trends in the retail and commercial real estate market, and the company's plans for 2023.

The company Retail&Development Advisor (RDA) is one of the leaders of the Ukrainian consulting market in the field of retail and commercial real estate. In the conditions when international consulting agencies reduced their presence in the country, it managed to increase its share by attracting new partners and introducing bold and innovative solutions for the Ukrainian market. Despite the outbreak of a full-scale war, the founders of the company managed to preserve the business and continue to work in the extremely difficult conditions prevailing in the industry.

Already at the beginning of this year, RDA carried out a reorganization of the management structure, introducing the position of general director. He became Andrii Lototskyi, known for his work in the management positions of leading Ukrainian retailers - Zoloty Vik, Union Group, Argo Retail and Allo. In an exclusive interview for RAU, he talked about why he decided to join the development of the consulting business, getting to know the team and the first steps in the company, the main trends in the market and the nearest development plans of RDA.

- You have devoted almost your entire career to retail, working in companies that are leaders in their segments. Why did you decide to change the field of work, what prompted you to do so?

- I have been interested in the field of consulting for a long time. Apart from operational and commercial management in retail, I liked the direction of company development the most. Thus, all the management experience gained in retail companies, I can apply in RDA. The company has a powerful team of specialists, which managed to be preserved despite the full-scale war. Thanks to this, RDA has the opportunity to effectively help with the development of many retailers. There is an opportunity to contribute to the fact that Ukrainian businesses become stronger and more successful, and that shopping centers and street retail have as little vacancy as possible and a high-quality pool of tenants attractive to the end consumer.

- You have been with the RDA company for two months. Have you had time to familiarize yourself with all the details of its activities?
- In general, yes. Of course, there were special operational processes that required a lot of attention during these first months. However, in such a business there are often circumstances in which standard processes do not work, so you need to be very flexible and quick in making decisions.
- What strengths and weaknesses of the company have you identified for yourself and how do you plan to work on their development?
- This year RDA celebrates 10 years since its foundation. During this period, the company implemented a large number of projects, became recognizable, took a direct part in the development of national and international retail networks. Including such well-known ones as Metro, New Yorker, LC Waikiki, Adidas, JYSK, Colin's, Vodafone, EVA, Allo, KOLO, Rozetka, Ukrzoloto, Zoloty Vik, Prostor, Luxoptyka, Eldorado, Intertop and others. So the strengths are definitely the team, reputation and experience.
Among the weak ones, in my opinion, one can single out insufficient coverage of the territory of the Ukrainian market. There are regions that need our attention. Therefore, we plan to intensify our activities in such regions, develop new projects and new directions.
– Tell us about the services that RDA provides to its clients. Which of these services will take the largest share of the company's revenue in 2022, and which do you think have the potential for growth?

- The RDA company provides a wide range of services. For retailers, these are consulting services for the development of networks, agency services in terms of location search, support in negotiations, legal support for lease relationships, professional analysis of the market as a whole (both regionally and for individual locations), the entire range of outsourcing services for the development of companies, consulting companies in terms of audit, creation and optimization of processes of development departments, etc. For owners of street retail premises, we search for quality tenants and manage real estate. And for developers, we can offer services for creating concepts for new shopping centers and reformatting existing ones, pre-brokerage, creation of financial models, full brokerage and assistance in real estate management.

If now brokerage and agency services in RDA are developed quite powerfully, then consulting services by integrating our specialists into company structures have good prospects for development. After all, getting a ready-made model of the development department with all accompanying documentation, setting up document flow, processes, training managers and their subsequent support is a great opportunity for companies to save a lot of time, resources and avoid mistakes that can be very expensive.

- There has been a war in the country for a year, many businesses have shrunk or stopped their work altogether. What is the current situation in the commercial real estate consulting market in general, and in the RDA company in particular?

- Of course, as in every industry, the market has narrowed considerably. International retailers that have suspended development or operations altogether are especially cautious. However, there are companies, and there are many of them, for whom the crisis is an opportunity to strengthen their positions and increase their market share. Such companies should be admired, because they, taking great risks, develop businesses, make their contribution to the development of the economy of Ukraine and the creation of new jobs.

For example, several Ukrainian fashion brands have started active development while international operators are not ready to take on the risks of investing in a warring country. There are quite active retailers in other segments as well. For the most part, these players have become more flexible, more active, and have optimized internal processes for quick and yet criterion-referenced decisions. And this is logical, because speed and high adaptability are often decisive when choosing an active development strategy. We saw similar examples in 2014-15. Such brands are able to become market leaders and No. 1 in their segments.

- Why did RDA manage to save the team and the business in this difficult time? In general, what changes did the nuances of management and personnel motivation undergo during the war? What came to the fore?

- I am deeply convinced that the success of any business primarily depends on the team, its professionalism, values ​​and ideas. Businesses whose teams are united by intangible values ​​are much more likely to survive and strengthen. In any crisis, leadership and empathy come to the forefront of management competencies. This means being honest with the team, no matter how difficult, while showing confidence, firmness and determination. It is important to be a support for your teams and a bit of a psychologist. It was such managers who helped RDA to get through this most difficult year in its life, and I will try to continue the similar managerial activities with dignity.

- What results did the company manage to achieve in 2022? What were the main deals? Can you give the performance indicators of the business in numbers?
- The main thing is that we were able to provide services to our customers and support them throughout 2022. After all, it was very important for them. For example, 20 stores of the MasterZoo chain were opened and relocated. In the new segment of office real estate for us, we concluded agreements for retailers Yves Rocher, KOLO and several other companies. In total, about 80 lease agreements were concluded for 2022.
- Tell us more about the current trends in the commercial real estate market? How significantly have rental prices fallen, how has vacancy grown, what has changed in terms of contracts?
- We can say that now pricing on the market is characterized by the absence of any system. Since the beginning of the large-scale invasion, depending on the regions and specific shopping malls, the rental price has been changed every month in virtually manual mode. There are malls that returned 100% of the pre-war rent level back in May, and there are those that still haven't come close to it. In some malls in the western regions, rental rates have even increased - by 10-40% in hryvnia equivalent and up to 10-15% in dollar terms. As for operating costs, they also fluctuated depending on regions and periods of the year.
The main factors that determined trends in rental rates include: the regional aspect, the migration of tenants from eastern regions to western regions, the competitive environment and ensuring the possibility of uninterrupted work. The same applies to vacant spaces. At the same time, developers, whose traffic depended more on international anchor tenants, suffered more. Currently, they have a greater vacancy than those who were maximally differentiated in the "magnets" of the target audience.
- How have the requests of retailers regarding the lease of retail space changed? What do retail players pay more attention to when choosing premises?

- As I already mentioned, there are companies in the country that use the crisis period to develop and seize better positions. At the same time, such companies have become more picky about premises, form selection criteria and segment traffic in more detail. In some cases, strong brands are ready to develop locally, but there is practically no willingness to invest in the development of locations. Sometimes they are ready to open stores only if there are premises prepared for their own requirements. It can also be noted that there have been compromise temporary solutions for the quick opening of pop-up format stores that are ready to rent premises with basic repairs and a contract term of one year.

- What are the key plans of RDA for 2023? What indicators do you plan to achieve, what projects are you going to develop and what services will you focus on in the first place?

- I am sure that 2023 will be a year of development for RDA. First of all, development in new for us areas of office and warehouse real estate. Accordingly, there is a need to expand the staff of managers. In retail trade, we plan to pay special attention to regional malls and street retail. Possible projects in collaboration with regional companies. The numbers, in my opinion, can now be very, very approximate given the short planning horizon and the impossibility of predicting the situation with military operations. However, we expect significant growth compared to last year.

Source: https://rau.ua/personalii