Challenges and Features of the Functioning of Ukrainian Distribution in the Conditions of the russian-Ukrainian War

Abstract

The paper is devoted to the analysis and characterization of the state of the distribution business in wartime conditions; in particular, the trends in its development, due to the influence of external factors of the current dynamic and force majeure external environment.

Methods. To achieve the stated goal of the study, the following methods were used: a systemic method - to identify and isolate participants and procedures of individual aspects of the sales process according to the distribution model; critical analysis of scientific and industry sources - to identify relevant factors and factors of the functioning of distribution companies and their partners, identified by other researchers, in the specific market conditions of the recent period, and, especially, in the conditions of the russian-Ukrainian war; systematization and generalization - to identify key distribution players in the Ukrainian market; the method of analysis and synthesis - to identify the most relevant indicators of the sales process according to the distribution model and, in fact, the state and features of the functioning of the distributors themselves under the influence of the identified determinants; graphic method – for the visual presentation of the state of individual stakeholders of the sales process in modern conditions and in dynamics; methods of abstraction, analysis and generalization – for the explanation and logical interpretation of current trends in sales processes and intermediary structures.

The information base of this study is industry and international statistical portals, data from the State Statistics Committee of Ukraine, statistical reporting materials of distribution and retail companies of Ukraine, scientific publications in professional journals and conference materials and analytical publications of other periodicals, results of own research.

Results. The distribution sales model today is undergoing dynamic changes. Both simple and so-called strange attractors work. First of all, distributors suffer from the strengthening of market power and aggressive marketing of retail chains. Quite tough cooperative games take place. Technical and technological changes caused by the new technological order also do not allow us to rest; in particular, the digitalization of sales contacts and the requirements for the introduction of electronic document flow between stakeholders of the supply chain require distributors to make significant technical and technological and, as a result, organizational and social improvements and development. COVID-19 is a force majeure that has introduced radical changes to the algorithms of some of the main business processes of sales organizations in general and intermediary trade in particular.

These challenges have put distribution on the verge of survival. Not all companies in this type of activity have survived. Distributors are forced to adapt to bifurcated changes in the external environment and introduce new strategies: in particular, niche and scaling strategies. There is even a new term that describes the comprehensive investment strategy of advanced distribution companies - “full-cycle distribution”.

The war added commercial hassle for the participants of the supply chain. Some factors turned out to be incredibly sensitive. Analysis of literary sources and our own research allowed us to identify the following main challenges for Ukrainian distribution in the conditions of the russian-Ukrainian war: migration waves; logistical complications; economic instability; the situation of producers of goods; state regulation of import operations; market power of retail.

Conclusions. Despite the turbulence of processes in the sales systems and additional disturbances caused by the full-scale invasion of russian aggressors, Ukrainian distribution managed to cope with the challenges. Consumers almost did not feel the shortage of goods; especially products of the FMCG sector. The deterioration of sales indicators and the financial condition of distributors was quickly leveled and compensated for by optimizing processes, reviewing commercial agreements, variability of suppliers, etc. Moreover, the war, oddly enough, in the first year psychologically, and actually, shifted market power from retail to the field of distributors. The dominance of retail chains was leveled by the struggle between them for intermediary suppliers. Retail chains were forced to reduce their commercial ambitions and rather strict requirements, which were characteristic of the war due to the formation of such a paradoxical market structure in sales at that time as monopolistic competition.