Contemporary Problems of Social Work


The influence of retailers behavior on the economic security of regional manufatuers of socially significant products

Автор/Author: Maloletko A.N.

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Список литературы/References:

1. The National Security Strategy of the Russian Federation to 2020, approved by the Decree of the President of the Russian Federation 12.05.2009 № 537.

2. Russia has frozen the price of 20 socially important goods // Rossiyskaya Gazeta, March 4, 2015 [Electronic resource]. URL:

3. Galasso V. The political economy of social security: a survey // European Journal of Political Economy. Vol. 18, Issue 1, March 2002, pp. 1-29. doi:10.1016/S0176-2680(01)00066-0 

4. Garette B., Karnani A. Challenges in Marketing Socially Useful Goods to the Poor // HEC Paris – Strategy & Business Policy. University of Michigan, Stephen M. Ross School of Business. Feburary, 2010.

5. Goering G. Socially concerned firms and the provision of durable goods // Economic modeling. Vol 25, Issue 3, May 2008, pp. 575-583. doi:10.1016/j.econmod.2007.10.001

6. Ellaway A., Macintryre S. Shopping for food in socially contrasting localities British Food Journal, 2000. Vol. 102 Iss: 1, pp. 52 – 59. doi:10.1108/00070700010310632

7. Castaldo S., Perrini F., Misani N., Tencati A. The Missing Link Between Corporate Social Responsibility and Consumer Trust: The Case of Fair Trade Products // Journal of Business Ethics. January 2009, Volume 84, Issue 1, pp 1-15.

8. Carroll A. The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders // Business Horizons. Vol. 34, Issue 4, July–August 1991, Pages 39–48. doi:10.1016/0007-6813(91)90005-G

9. Sukharev O. Institutional Change, Efficiency and Structure of Economy. Lambert Academic Publishing, 2011.

10. Suleymanov A., Tsarev V. Trends in the development of competitive relations in the market of socially important goods // Creative Economy. – 2011. – № 12 (60). – pp. 31-38.

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14. Aleynikov A. Socio- political factors of business formation in modern Russia. Author. diss . Dr. polit. Sciences . Saint-Petersburg: SPGU , 2009. p. 5.

15. Federal Law of the Russian Federation № 381 On the basis state regulation of commercial activities in the Russian Federation dated 28.12.2009

16. Resolution of the Government of the Russian Federation № 530 List of certain types of socially important food products, for which the purchase of a certain amount of economic entities involved in commercial activities, the payment of compensation is not permitted dated 15.07.2010;

17. Resolution of the Government of the Russian Federation № 101 On the limiting values of the proceeds from the sale of goods (works, services) for each category of small and medium-sized businesses dated 02.09.2013

18. Firsov V. Measures to address the threats to economic security of the Russian Federation // Journal of RAPA under the President of the Russian Federation. – 2008. – № 2.

19. Bart A. Mechanism to ensure the economic security of Russia // Russian Entrepreneurship. – 2010. – № 11 Vol. 1 (170 ). – pp 4-9.

Содержание статьи/Article:

Introduction. The author of this article considers that the economic security of regional producers of socially important products is a part of the sub-system of economic security of the Russian Federation. The author took into account the conditions of supply of raw materials for the production of socially important products, lending the production of socially important products, the specificity of the trading activities of large retailers operating in the region and other factors.

A threat to economic security may cause of direct or indirect damage to the sustainable development of socially significant products manufacturers, as well as the damage to a decent standard of living and quality of the citizens in the region [1].

The possibility to damage to the sustainable development of socially significant products manufacturers, according to the author, arises from trade networks, decision-makers for the supply of the commercial network of socially important products by regional manufacturers by virtue of the set requirements for suppliers of products and pricing of products.

But in March 2015 the largest retail networks in Russia was adopted a moratorium on changing prices on 20 socially important products of prime necessity on two months [2]. This decision caused of new threats.

Methods and materials. The author asks at whose expense will be implemented this decision and whether it will affect the economic security of regional manufacturers, therefore the author attempts to explore the relationship some manufacturers has with retail network, that sold their products. To find solutions author present this.

The studies of the problems the inter-relations between socially important products manufacturers and services manufacturers in the systems of redistribution are made by V. Galasso [3], B. Garette & A. Karnani [4], G.Goering [5], A. Ellaway & S.Macintryre [6], S. Castaldo, F. Perrini, N. Misani, A. Tencati [8] and others.

Among Russian researches it worth to mention O. Sukharev [9], A. Suleymanov & V.Tsareva [10], V. Cheglova [11], L. Bragin, G.Ivanov & S. Orlov [12], G. Chernukhina & N. Nagapetiants [13] and others.

However, rightly pointed out A. Aleynikov, the majority of researches limits with some analysis of the relationships in business in the widest palette: from a few panoramic economic and sociological researches to a huge number of useful and empirical reviews and chronicles [14].

Although, the author investigates some requirements retail chains makes to suppliers of socially important products.

The author pointed out that federal law № 227 On the consumer basket in the whole of the Russian Federation dated 03.12.2012 establishes the list of socially important products for the main socio-demographic groups (Table 1).


Table 1 - The consumer basket for the main socio-demographic groups in Russia (2012-2017)


Unit of measure

The volume of consumption

(an average for one person per year )

working-age population



Bread products










Vegetables and melons















Meat products





Fish products





Milk & dairy products















Other products (salt, tea, spices)





Cited by the Federal Law of 03.12.2012 № 227 "On the consumer basket in the whole of the Russian Federation"

Results. According to paragraph 5 of Article 9 of the federal law of the Russian Federation № 381 On the basis state regulation of commercial activities in the Russian Federation dated 28.12.2009 retail company may not receive remunerate for the acquisition of socially significant food products specified in the list, which establishes the Government of the Russian Federation [15].

Some of these products include the following items with a shelf life of less than 10 days: chicken (whole chickens, chicken, broiler), pasteurized milk 2,5-3,2% fat , bread and bakery products from wheat flour, rye flour and a mixture of rye and wheat flour [16].

However, the author found that retail companies compensate this limitation at the expense of other sources.

To producers of products as suppliers, trading networks informally assigns some duties. For example, trading networks informally assigns the "entrance fee" (about $ 30,000 for the 2 position in the METRO Cash & Carry), the "retrobonus" (about 22 % of the proceeds from the sale of goods), the "fee" (about 5 %),  publish annual catalog goods ( 10 000 - $ 20 000 per year), the obligation make promotions (for example, "two products per the price of one").

And, in the latter case, retail companies is not motivated to increase in the sales volume. They are interested, above all, the ability of the manufacturers to participate in various promotions. After all, for each action "two per the price of one" i.e. offer of the 50 % discount for the product, a retail company will receive another 15%.

The producers or suppliers of socially important products can not refuse these conditions. They are forced to take them.

The manufacturers or suppliers of products after their products are placed on a shelf in a large retail chain, become members of the club. They will be members of undercover club of suppliers of retail chains.

The author is experience shows that, during the negotiations on the "input" to the commercial network, a manufacturer or a vendor will certainly be asked about where and in which concrete retail chains have represented his products. As a consequence, the experience of suppliers in setting relationship with sales networks is a positive signal for the decision makers to adopt of a new supplier in the trading network.

Another problem is the establishment by distribution networks trading margin in excess of 100% for products, produced by regional producers.

More over, retail companies set the minimum possible trade margin on imported products. As we see stakeholders are conducts tough competition for squeezing regional producers out the shelves of retailers.

It is possible to assume that the top management to retailers try to raise the selling price of products to regional producer prices to the level of imported products and does not give an opportunity to compete at the price of the products. They do it even for socially important products. After all, the beneficiaries of large retail chains, placed in Russia, are foreign citizens.

It is appropriate to point out that the author knows cases of getting some retail chains operating in Russia, the recommendations from foreign partners to provide certain benefits to foreign suppliers when placing products and providing the information for compensation incurred by costs associated with the high cost of implementation.

It can be illustrated by the price of some import bread products  sold in major retail chains in the Moscow region .

So , the price per a baguette bread weighing 150 grams , made from  imported frozen semi-finished product is a little more than $ 1 per unit.

In the recalculation for the price of 1 kg of bread products price will be  $ 7 per 1 kg. It is hard to imagine, seven US dollars per 1 kg of bread! But the cost of a similar regional product  is about 2 - 2.5 $ per 1 kg.

Thus, coming back to the question posed about a moratorium on changes in prices for socially important products, it is appropriate to assume that the entire burden of implementing the decision lies primarily in the regional producers, that predominantly play the role of the providers of socially important products for retailers.

In these circumstances, the level of economic security of regional manufacturers producers of socially important products is significantly reduced.

However, danger to regional socially important products manufacturers arise not only in commercial networks.

At the beginning of 2015 the majority of Russian banks increased the rate on loans from 16% to 24 % and they are reduced the loan term from 2 years to 1 year. Suppliers of raw materials became to demand full pre-payment or some other of them reduced a period for subsequent payment at 30 days.

Under these conditions, substantial cash gap becomes a significant threat to economic security of regional manufacturers. The mechanism of emergence of cash gap begins from the following.

Suppose supplier delivers to the trading network  produced products. Then under Part 7 of Article 9 of the federal law of the Russian Federation № 381 On the basis state regulation of commercial activities in the Russian Federation dated 28.12.2009  products for which the expiry date is set more than thirty days shall be paid not later than forty-five days from the date of acceptance of such products by business entity engaged in commercial activity [15].

This condition is included in the contract of food delivery of and, as a rule, is used by trade networks fully. In other words, a manufacturer will be able to receive payment for produced and delivered by them socially important products only after 45 days. On the other hand, suppliers of raw materials demand payment for the delivered raw material in a period not exceeding 30 days. In this way, a cash gap of 15 days emerges.

When a period to pay for raw materials became smaller, then a period of cash gap became bigger. In the case of advance payment of raw materials, the cash gap increasing  on another number of days equal to the period from the date of prepayment until the day of delivery of raw materials.

For many regional manufacturers, whose turnover does not exceed $ 1.5 million per year, and who therefore are related as small business [17], as their revenue does not exceed 400 million rubles (about 7 million US dollars) a year, the cash gap today has increased from $ 170 000 to $ 250 000 and exceed the threshold of 17%. At the same time, the profitability of companies manufacturing socially significant products rarely exceeds 15 %.

In these circumstances , the level of economic security of regional producers of socially important products falls below the threshold . There is a threat to the existence of the business.

Discussion. In order to avoid a number of threats for trade networks it is possible to propose the following:

it is needed to introduce mandatory quotas for retail company  for placing products of regional producers;

trade networks should be required to show  input price at the price tag on socially significant products;

it is necessary to amend the legislation governing the trading activities of the deferred payment for delivered food products;

it is required the establishment of regional trade networks.

More over, while agreeing with V. Firsov [18] and A. Bart [19] it is possible to distinguish the following steps to prevent threats to economic security in order to improve the economic security of regional manufacturers of socially important products:

it is needed to begin objective monitoring of the relationship between retailers and regional manufacturers of socially important products;

it is needed to establish threshold proportion for socially important products produced by regional manufacturers;

it is needed to carry out by the activities of the authorities of the Russian Federation to detect and to prevent internal and external threats to economic security.

Conclusion. Thus, the proposed hypothesis consists in the fact that the behavior of retailers has a significant impact t on economic security of regional manufacturers of socially important goods.

Ключевые слова/Tags1: retail, manufacturers, suppliers, socially important products, economic security, threats