Российский Перевод (Russian Translation)

What do you get when you mix a dashing entrepreneur from the Isle of Man, a rent to own consultant from Texas, and a Russian "go-to-guy" named Igor? You get the seeds of a new industry in the land of black caviar and kvas. After two years of corresponding via email, and no small amount of begging, RTO Online is proud to present the story of "Vivat Prokat" (Wow Rent to Own).

How do you take an established retail concept and make it work in a new and alien market? This was the question that intrigued entrepreneur Ian Woodcock, and drove him to introduce rent to own to the people of Moscow. Ian told RTO Online "The sheer tornado of an economy in Moscow and the demographics there offer an amazing opportunity to capitalize on opportunities in the consumer sector."

Ian gained valuable insight into the Russian way of life as founding director of what is now Sterilox Technologies, a company formed in 1994 in cooperation with Russian scientists. Woodcock, a persuasive communicator and inspirational team leader, used his entrepreneurial drive and energy to build an experienced team of like-minded business partners based in Moscow and around the world to succeed in his quest to bring rent to own to Russia. "We've built up a good solid reputation of being able to execute and deliver in Russia," Ian said, "we have some very talented people on the ground there." (see photo at right)

Ian's company Vivat Prokat (pronounced "Bo-Bott Pro-Kotch"), loosely translated, means "Wow! Rent to Own", concentrates on the high-density urban apartment zones where the average Russian citizen lives. The first two Vivat Prokat shops were opened in April and June 2003 and have to date exceeded projections. By avoiding expensive real estate in downtown Moscow and concentrating on where the potential customers live and shop, Vivat Prokat is meeting its goals of providing affordable rent to own goods to the working people of Moscow.

(Translation: goddess of the lease agreement)
Ian ensured operations would run smoothly by bringing over a veteran of the American RTO industry, Cathy Holladay of Plano, Texas. Cathy arrived before the first store was open and developed and organized the processes, systems, and practices required for Vivat to hit its goals.

Cathy told RTO Online, "We decided to run a manual system since there was no software written in Russian. luckily, being one of the "early bird's" to the rental business, I was able to remember how everything was done before our friend the "computer" came along." Vivat is working up a software program to be written locally. There are thousands of incredibly bright and talented artists, scientists, and software developers who work for a fraction of U.S. pay. $250 a month is pretty good pay for a store manager.

After a first "get-a-feel-for-Russia" trip, Cathy returned to the US and began work on all the training manuals and other printed material necessary to run a rent to own. "I communicated with Igor in Russia through emails and phone calls", Cathy said. She created the documents in Texas and Igor had them translated and put into print by the time she returned to Moscow. "This was was more difficult than one would imagine," said Cathy, "the Russian language doesn't use a lot of our everyday words. For example, the term "traffic sheet" doesn't have the same meaning in Russia as it would in the US."

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Store Front

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Map of Russia

"There were many obstacles," Cathy added, "trying to adapt American forms and procedures to a business culture that had no experience with retail concepts such as "customer service" was a daunting task." Business concepts in Russia differ greatly from the US. "I had a hard time convincing the staff that you could actually walk up to a customer and start a sales spiel. I was delighted to see them attacking the customer at the door once we introduced spiffs." Convincing employees to hand out flyers on the street and talk to people was also difficult. Russians tend to be distrustful of people who approach them on the street.

Some Russian attitudes have their advantages. When discussing collection procedures, Cathy was told over and over that collections would not be a problem in Russia.  "I tried to tell them "just wait and see," Cathy said. But a year later she reveals, "so far I'm eating my words. We've only had one past due customer in almost a year!"

Acquiring even simple items like folders and paper clips was a challenge. Because the state controlled everything for so long, there was little demand for simple office supplies and no mass merchandising chains cover the landscape as in America.  "Getting a receipt book translated into Russian using the Cyrillic alphabet and then getting it printed in duplicate required the same degree of international cooperation and diplomacy as a joint US-Russian Moonshot" said Cathy. But in the end, everything got done and the local staff turned out to be excited about selling. They'd never heard of things like commissions or spiffs but, like salesman all over the world, quickly took to them with great enthusiasm.

While in Moscow, Cathy's buddy, translator, chauffeur, and sometimes bodyguard was Igor Bogorodov (left), a former Russian Navy submarine commander and Ian's go-to-guy in Moscow. "Igor was by far the most accommodating and professional person I met" said Cathy. "He taught me as much about Russia and it's people as I taught him about rent to own. He booked endless hours trying to figure out what this American women wanted him to do. In Russia, it's no simple task trying to get a rental agreement printed with extra copies much less add carbon paper, but with true Russian spirit, Igor always found a way."

Initially, Russian consumers viewed the rent to own concept with a considerable degree of suspicion. Older Russians associate renting with the type of service that the old Communist government made available during the country’s frequent shortages of consumer goods. In those days, consumer electronics were kept in stock for years and rented out hundreds of times. On the other extreme, young Russians tend to associate the term "rent" with video rental.

To help counter these perceptions, Vivat Prokat has a dedicated training schedule centered on a comprehensive sales and customer service for staff and management. While such training is standard for any American rent to own company, attention to service and quality are relatively unknown in Moscow – a city that hasn’t totally abandoned its "Wait in line" bureaucratic mindset when it comes to serving customers. The helpfulness and knowledge of Vivat Prokat’s staff allows them to stand out from other retailers.

The rapid expansion of the middle classes in Moscow has seen spending power increase dramatically over the last decade and Russian consumers want the same brands that are available in the United States and Europe - and they want them now.

The population as a whole has not yet embraced the idea of saving with the same enthusiasm they have shown for buying goods on credit. Vivat Prokat, like most typical American RTO companies, aims primarily at the 25 – 45 year old worker who wants the latest television, DVD player, dishwasher, washing machine etc. but doesn’t have the cash to purchase outright.

Credit facilities in Russia are still very limited. Russian Standard bank was the first to offer credit and remains the nation’s leading consumer lender today. However, credit terms are very stringent and interest rates are high, therefore making rent to own an attractive proposition for the average Russian. Following considerable feedback from customers – another new concept for Russian consumers - Prokat is considering adding sports equipment and wireless computers. It has also linked up with a mobile phone company which it is currently consolidating.

In a deal similar to Dells recently announced arrangement with Aaron Rents, Vivat is negotiating with one of the largest credit card issuers in Russia. Once negotiations are complete, Vivat would pre qualify consumers in order for the new applicant to build up a credit rating.

Ian and his team are anxious not to expand too quickly without fully understanding the various nuances and characteristics of the Eastern European urban market, but they expect to have four more stores open by the end of 2005.
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Many thanks to Ian Woodcock, Jenny Foy, Cathy Holladay, Bud Holladay, and Neon Beetle (a Moscow based design studio) for contributing to this article. If you would like to contact anyone mentioned in this story, please email vivat@rtoonline.com and RTO Online will forward as appropriate.