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No Room for Complacency - NG2 Group

Those of you who are unfamiliar with NG2 (New Gate) Group S.A. (Joint-Stock Company) from Polkowice, Lower Silesia, will nevertheless recognise its flagship brands immediately. These brands, namely CCC, Boti and Quazi, have made Mr. Dariusz Miłek’s enterprise dominate the footwear market in Poland. The whole group has achieved this tremendous success thanks to its President and his unbelievable knack for business. An entrepreneur has to combine resolve with intuition. Mr. Miłek is lucky to be born with both.

Success Story


In 1991, when Mr. Dariusz Miłek gave up his promising career in bicycle racing and decided to try his hand at business, he started his enterprise modestly, selling shoes from a folding bed in the Lubin bazaar, Lower Silesia. An open-air market 20 years ago, this place is now converted into one of the most modern shopping centres in Poland. Developed due to Mr. Miłek’s sole initiative, the mall boasts 5 stories and the overall space of 80,000 sqm. Its attractions are on a par with those offered by Stary Browar Shopping Centre in Poznań, which should give you the picture of Mr. Miłek’s resourcefulness. The NG2 Group being a success story, its track record should be presented right from the beginning, though. Thanks to his first investment in a simple but firm street stall, Mr. Miłek could store the goods permanently at the market and no longer carried them home everyday. Shortly after, he put his money into revamped ship containers. These containers were soon rented out to retailers so that their owner could keep himself busy developing new ideas. He embarked upon the venture in wholesale. His new project took off in a flash and hence Mr. Miłek carried on doing business with nearly 60 wholesale companies. Finally, in 1996, the Żółta Stopa (Yellow Foot) came into being. This chain of franchised low-end footwear shops hit the jackpot immediately. The industry was facing an overproduction effect at the time. The market was saturated and nobody was doing a roaring trade as a result. Be that as it may, clients flocked into Żółta Stopa outlets. By the President of NG2 standards, this was not good enough, however. With a view to upgrading the profile of his activity, Mr. Miłek closed down Żółta Stopa while at it its peak in 1999 and came up with CCC Sp. z o. o. (LLC). This abbreviation stands for Cena Czyni Cuda, a catchy slogan reading Price Makes Miracles. This worked like a dream and the company won recognition all over Poland. The business started cooperating with more than 100 newly selected franchisees. In 2004, the group underwent the major restructuring of its ownership, thus converting CCC Sp. z o.o. into CCC S.A. and transferring 100 percent of the CCC Factory shares there, too. In November 2004, the mother company finally went public, conducting a successful offer of its securities, which, on 2nd December, were quoted for the first time on the Warsaw stock exchange. In 2005, CCC registered Boty Czech s.r.o. and subsequently entered the market in the Czech Republic. In the second half of 2006, the business set out to diversify its offer. Already in operation, the CCC brand was joined by Quazi and Boti. “Our household name CCC has much to offer for a wide variety of the clients who are keen on trendy shoes and accessories and happen to be cautious spenders, too. Boti is intended to offer the value-for-money stock suitable for the residents of medium-sized towns. Quasi is a chain of boutiques located in modern shopping centres; its variety of stylish cuts and designs caters for choosy buyers,” Mr. Miłek characterises each brand. This diversification spurred further changes. CCC S.A. has been recently converted into NG2 Group (New Gate Group), but Mr. Miłek remained its president and main shareholder. The three separate distribution channels working under one logo, this transformation will surely boost the company’s expansion.

NG2 in Facts and Figures


Its share in Polish footwear retail estimated at 12 percent, the NG2 Group is the brand leader of the market and one of the biggest shoe manufacturers in Poland. As regards retail outlets, the group boasts their number being a few times bigger than its major competitors. Financial market analysts estimate that this year the company’s sales should top the figure of 1 bln PLN and its net profit should equal around 11 percent of its annual turnover. “We leave ourselves no room for complacency, however,” stresses Mr. Miłek. “A huge success for our competitors, for us it is merely a stage on the path to our long-term objectives. That is why we aim at the largest possible share in the market and go out of our way to generate profit and increase efficiency,” he adds. As per late March 2010, NG2 Group owns a chain of 699 shops including: 262 CCC shops, 40 CCC shops in the Czech Republic, 48 own Quazi boutiques and 223 own Boti shops, 61 CCC franchise shops and 65 franchise Boti shops. The company provides jobs for more than 5,500 people, including: 4,200 in retail, 500 in logistics, 500 in manufacturing (the factory in Polkowice) and 300 in management. The company boasts logistic facilities such as modern warehouses (the overall space of 44,000 sqm) and office buildings (4,400 sqm). CCC, Quazi and Boti supply their products to a wide range of buyers, including the demanding customers of trendy boutiques, medium segment clients keen on good value for money and those less well-off searching for quality bargains. The company’s offer includes more than 67 registered trademark names such as Lasocki, Jennifer&Jennifer and Clara Barson. NG2 Group is well aware of the fact that the success in the footwear segment of the market is largely dependent on classy, stylish and trendy design. “We will pull out all the stops to satisfy our clients. This is our recipe for success,” says Mr. Miłek. This would not be possible if it was not for the hard work of dedicated professionals employed at the Department of Production and Design. They come up with innovative ideas, set new trends and then keep an eye on the manufacturing process. The designers prepare two collections every year, the spring-summer and autumn-winter one. They also try to be on top of what is in vogue at the moment and regularly take part in international footwear fashion shows held in Milan, Garda, Düsseldorf and Barcelona.

Sustainable Growth


The key to success? “Reliability and perseverance,” answers Mr. Miłek. “When the economy was seemingly booming, we did not fall for costly acquisitions. We have a mind of our own, hence the idea of sustainable growth and the focus on the domestic market. Our strategy was duly appreciated by Polish investors, who awarded us the prize of Najlepiej Zarządzana Spółka Giełdowa (The Best Managed Company on the Warsaw Stock Market) in 2008,” he adds. The main points of this strategy are as follows. First and foremost, to strengthen the company’s market rating. In order to achieve this, the business competes for attractively located retail premises; keeps expanding in those regions where it still has to strive for recognition; and promotes itself by means of classic advertising and sports sponsorship. Secondly, to develop new branches. Ultimately, the NG2 group is going to have 300 own and 100 franchised shops under the CCC logo, together with another 70 outlets in the Czech Republic. Quasi is to be extended up to 100 shops. The business has particularly high hopes for the Boti brand, which should grow up to 500 shops, 400 of which will belong directly to NG2. Thirdly, to foster further growth and enhance profitability. Fourthly, to make NG2 shares appreciate in value. “We would like to be perceived as a highly profitable and yet growing enterprise. We have also proven resilient to economic slowdown,” emphasises Mr. Miłek. Last but not least, to cooperate closely with their Far East business partners. “As soon as we noticed the potential of Chinese footwear producers, we went into partnership with those who offered the best reproducible quality and affordable pricing,” he elaborates. Currently 75 percent of its offer is made up of the goods imported from China and India. The raw materials come from the Near East, Spain and Italy. This long-term strategy draws vastly upon the concept of sustainable growth. Thus, the business takes particular care to create new jobs and reduce its negative impact on the environment. It also plays a vital role in the local Polkowice community as the sponsor of the MTB (CCC Polsat Polkowice) and basketball (CCC Polkowice) teams. The company supports charities, including the local branch of the Association for Children with Special Needs in Polkowice, the Children’s Home in Ścinawa, the Healthcare Centre Hospice in Lubin and the Special Training and Educational Centre in Szklary Górne.

Look to Your Laurels


The truly impressive collection of the company’s awards and certificates includes the following:

- Ernst & Young, the Polish edition of the Enterpreneur of the Year 2007 Award in Services; Mr. Miłek also represented Poland at its world gala in Monaco; 
- The Best Managed Company in 2008, awarded by “Gazeta Giełdy Parkiet” magazine;
- CEE Retail Award 2008, Retailer of the Year;
- World Finance 100 – NG2 honoured with such worldwide leaders as Apple, Google, Exxon Mobile, Axa, Lenovo, Cisco, UPS, Merck, ABB, Roche;
- several Business Gazelles granted by “Puls Biznesu” daily, the Top Manager 2005 for Mr. Dariusz Miłek; the Orzeł received from “Rzeczpospolita” daily, the Consumer Laurels awarded by “Przegląd Gospodarczy” daily.

Written by Bartosz Sowiński 

 

 

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