Metro Cash & Carry

Closure of Pokrovskaya benefits large retailers

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After the fruit and vegetable warehouse Pokrovskaya in Biryulyovo was closed, “RBC Daily” has talked to those whose businesses are somehow influenced by what is going on in the Russian fruit and vegetable market: wholesalers, restaurant owners , suppliers, managers of still operating fruit and vegetable warehouses, etc.

It turned out that owners of small retail stores, non-chain restaurants and vegetable kiosks are those who have faced the major problems, as they were purchasing their goods directly in Biryulyovo. Right now they still can’t find an alternative source of supply for the same old price.

However, big retail market players are the winners in this situation. They have pointed out that there is an increase in demand, which is, in their opinion, due to the shift of the customers who used to purchase products in convenience stores near their homes and at the market. For example, METRO Cash & Carry say that they are observing a tendency of an increasing demand for fresh vegetables and fruits.

www.retailer.ru

 

METRO Cash & Carry logistics center opened in Aksai (Rostov region)

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On August 7, METRO Cash&Carry southern logistics center was opened in Aksai (Rostov region). That is a joint project of Metro Cash & Carry and logistics company STS Logistics.

This center allows local suppliers of fruits and vegetables to increase the supply of their products to METRO hypermarkets, and reduces time for transportation of products from the suppliers’ warehouses to hypermarkets.

South logistics center will consolidate orders and redistribute the products received from local suppliers to METRO Cash & Carry in the southern region of Russia.

«By the end of 2013, 75% of the fruits and vegetables in the hypermarkets METRO Cash&Carry in this region will be regional» – said Alexander Levchenko, Minister of Economic Development of the Rostov region.

Source: www.regnum.ru

Metro Cash & Carry earns €4.12bn in Russia in 2012

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Metro Cash & Carry, a German grocery retailer (and part of the Metro Group), reported sales in Russia of €4.12bn in fiscal 2012, against €3.42bn in 2011 (a 20.4% y-o-y increase).

During the last year the company opened six hypermarkets in the country, and by the end of 2012 Metro Cash & Carry operated 68 outlets.

What is more, another grocery brand in the group, Real, increased its sales in Russia from €722m in 2011 to €859m last year (19% y-o-y growth). However, Real chain is to be acquired by the French Auchan, and the deal is to be completed this year.

Source: www.russiaretail.com

Logistics key to retail expansion

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Thanks to relative political stability and strong oil and gas prices, Russia’s retail turnover more than quintupled from 2001 to 2011 and now exceeds US$600 billion annually. Data suggest that this sector is entering the steepest part of its growth curve. How will Russia’s retailers face the challenges of this critical period of expansion? Will foreign retailers manage to get a slice of this growing pie?

Russia’s enormous size and level of economic development mean that the retail market is currently divided among many players. While large retail chains dwarf the majority of competitors in market capitalization, their market share is relatively small. The X5 Retail Group, the largest food retailer, for example, controls only 5.6% of the market, and the top 10 food retailers comprise less than 20% of the market. This is in stark contrast to the developed markets of Western Europe, where leading food retailers hold a quarter of the market or more e.g., Tesco (30% market share) in the U.K. and Edeka (26% market share) in Germany.

This opportunity for consolidation is fueling a pitched battle among Russia’s retail chains to establish regional and national market share. Which chain prevails as top dog will depend on how well it can confront the logistical challenges of the country’s decaying infrastructure, responsibly manage expansion and successfully navigate an uncertain regulatory environment.

Russia’s road network stands at 610,000 miles, of which only 482,000 miles are paved. (In comparison, the U.S. has four million miles of roads, of which 2.7 million are paved.)

In addition, there is a lack of quality warehousing in the country. Colliers International reported that there are 81 million square feet of industrial space in all of Russia, while the Chicago market alone houses 537 million square feet, according to real estate service firm Newmark.

All the leaders in Russia’s retail sphere are rapidly modernizing their logistical operations. Retail chain Magnit is currently recognized as the cutting-edge logistics innovator. As a result, it is rapidly closing in on X5’s lead as Russia’s largest retailer in terms of revenues. Its profits more than doubled in the first half of 2012 compared to the previous year, while X5’s profits over the same period dropped 20.6%. X5 appears to be playing catch-up in logistics. During this period, its margins were hit by the high costs of opening a new distribution center and the set-up costs related to adopting a direct-import model.

Magnit’s main advantage over its competitors has been its effectiveness in bringing the supply chain completely in-house and cutting out the middle men who previously added costs and delays. Today, Magnit runs a fully independent supply chain, with over 3,900 of its own vehicles and a proprietary network of 15 distribution centers totaling close to 3.9 million square feet. It continues to expand this network, opening a new facility in late December 2012 to serve the Volga region and Ural region.

The Russian retail market is heavily saturated, and barriers to entry are high. The two foreign chains that have found success have one thing in common: They struck when the iron was hot. German retailer Metro and the French chain Auchan entered the Russian market in the early 2000s, before competitors became well-established. Of the top-10 leading food retailers, Metro and Auchan have been the only non-Russian firms to command a leading position in the retail sector.

Walmart is looking at a second attempt to access this market, having recently hired former X5 CEO Lev Khasis and appointing him senior vice president for international operations. Khasis was key in positioning X5 as the Russian market leader and grew the company to annual revenues of US$15 billion. He will likely be the strategic player for Walmart’s eventual entrance into the sector.

Source: www.freshplaza.com

Second Metro Cash&Carry in Voronezh

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Metro Group is planning to open the second Metro mall in Voronezh region.

The second Metro mall may be built by the frist quarter of 2014.

Oksana Tokareva, director of corporate and external communications of Metro Group, explained that in Russia the average investment into the building of a Metro Cash&Carry mall is about 20 billion euro.

Source: www.retailer.ru

Top Five

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The market share of the five largest companies in the food retail will grow from the current 18% to 30% in 2015, but the change of the leader is not expected, said Natalia Kolupaeva, Raiffeisen bank customer analyst.

“At the end of 2015 we will approach more or less the average Europe rate; the major players – top 5 companies – will get about 30% of the market. And these companies are already known today, the changes are not expected, besides the relocation of X5 Retail Group and “Magnit”, – she said during the telephone conference on the forecast for the development of the consumer market in Russia.

According to the analyst, other major companies – besides X5 Retail Group and “Magnit” – will be “Auchan”, Metro, and “Dixy”, which will continue their aggressive campaign to promote and expand their networks.

The limit of beer sales in retail outlets less than 50 square meters (from January 1, 2013) and the law in draft proposed by Public Health Department, according to which tobacco products will not be sold in small retail stores, will also favor the expansion of retail networks, excluding small stores from the food market.

However, according to the forecast, the annual growth rate of the food retail market will be reduced from 9% to 8% in the period from 2013 to 2016 as Raiffeisen bank analysts said.

Source: www.retailer.ru

Fresh Foods Russia 2012: Results

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The 3d Business Forum – Fresh Foods Russia 2012: Fresh products and ready-to-eat food  in modern retail networks – was held at Borodino hotel on 22-23d of November.

Fresh Foods Russia is the only business event in the country, bringing up to light the questions of quality and assortment of fresh products, purchase and storage, organizing of in-house manufacture, and also fresh and ultrafresh products as the main weapon in networks’ competition for the buyer.
More that 250 participants from 50 different cities and countries, including Ukraine, Belorussia, Moldavia, Italy, Spain and France discussed how to satisfy the growing demand and requirements of a consumer to the quality of fresh products, how to make the trading space look “tasty”, fresh and effective, how to provide marginality of sales, and make the supply chain steady during season  hesitations, and other up to date issues.
Traditionally, before the opening of the forum, a press-conference was held, on “Russian consumer in search of fresh and eco-products. The readiness of retail networks and producers to deliver quality and safety of fresh products, as well as their certificates”.
In discussion of the general vision of “fresh” and “eco” categories, Alexander Konovalov noted that today the notion of “eco products” is not yet legitimated, and a new law regarding organic agriculture is being developed in the Government. Alexander also added that by the results of 2012 the volumes of “eco” market will compose 100 mln $, only 15% of which is a share of Russian manufacturers.
In the session “Figures and facts” the leading analytic agencies presented their reports about the development of fresh food category. Among the main trends the experts noted an average growth of money which households spend on fresh categories and house brands. Sergey Yashko, vice General Director if GfK Rus, presented the following observations: almost 60% of all expense by the consumer are spent on fresh products; the share of fresh products purchase in traditional trade channel is higher then in contemporary channel: in traditional trade the consumer’s basket is shifted towards such categories as meat/fish and vegetables/fruit, and in contemporary channel – to dairy categories; 27% of all food shopping made by Russian families consist of fresh products exclusively, and the most actively developing is the segment of cooled/fresh fish (+28%). The main contribution to this growth was made by the traditional trade channel (+31%).
The opening of the Forum was a plenary session called “Where to get quality?!”, that took place in the big hall of “Borodino”. Market leaders: Belaya Dacha, Globus Gourmet, RusProdSoyuz, X5 Retail Group, Akort, Ecocluster – raised the problems of qualityof fresh products, and the possible ways of handling them through regulating the market and relations between suppliers and retailers, and development of logistics and systems of storage and manufacturing.
Speaking about quality, Nikolay Vlasov, vice president of RossAgroSurvey, expressed an opinion that the requirements to certification of products on the judicial level should be as light as possible, in order not to break the rules of competition. The networks in their turn should have an ability to certify the production additionally. Unfortunately, as notes Mr.Vlasov, the current  legislation does not imply any responsibility for giving untruthful information in this sphere, which makes the process of fight with unfair market members ever more difficult.
During the first plenary session, the companies shared their plans for the future, in particular, – Belaya Dacha will launch a plant in Saint-Petersburg, and plans to construct a manufacture in Rostov region – informs Victor Semenov, the founder of the company. Globus Gournet network is regarding proposals for opening new shops not just on the territory of Moscow and Saint-Petersburg, but also considers attractive such regions as: Ekaterinburg, Novosibirsk, Rostov-on-Don, Krasnodar and Sochi.
Among the main topics of the two days of the business-forum the delegates pointed out the following sessions: “Perspective technologies in supplies management (takeover, transhipment, quality control and logistics of fresh and ultrafresh; safety management for products); “Sales concepts of ready-to-eat food (Food-to-go bistros and other formats of trade organization inside the trading hall)”; “Fresh is not a mere gift – how to manage the marginality level”; “Staff that makes products tasty for consumers”; “Development of a private manufacture in a shop (system of kitchen-factory work)”.

The second day of the program was opened by the commercial negotiations of supplies between purchase leaders of retail networks and manufacturers in categories “Fruit/vegetables”, “Dairy”, “Meat/fish/poultry”, “Bread and Bakery”, and also between suppliers of equipment and products for private manufacture, and Heads of Self-produced food Departments in retail networks. The participants of negotiations were: Dixi, Spar Central Russia, Metro Cash&Carry, Vernyi, X5 retail Group, Hyper Globus, TZS System, Bakhetle, O’KAY, Myasnov, Titan, Continent of Taste, Food House, Proviant, Partner-Market, Anix, Palace row, Krasnyi Yar, Makarovskyi, Holiday Classic, Smak, Rost, Horizon, Comandor, Slata, Spar Middle Volga, Lentorg, Gulliver, Karavay, Lama, Molniya (SPAR Chelyabinsk), Guarant of Taste, Soyuz, Svetlyachok, Yelisey, KAK RAZ, Taste House, Telex, Radezh, Intertorg (National Family, Idea, Spar), Kulinarium, RegionMart System (Polyana, Chibis), Samberi, Ukrainian Retail, South Central Prod.
A special Surprize for the Forum delegates were business-trainings: how to control oneself, how to control one’s negative feelings, how the mood influences one’s relations and subordinates – these are the skills that the members could learn at the personal growth workshops. Timur Yadgarov , Head of Leadership Board in High School of BBCG and Vyacheslav Frolov, founder and director of “Business theatre” at MAAT studio school, shared their practice and psychological skills of self-presentation, necessary in the hard job of top-managenent.
Fresh Food Russia 2012 Forum was closed with the speech of special guest Tom Wolf, a world-famous food designer and chief cook, one of the most famous food designers in the world, and founder of  London catering company Blue Food Productions, organizing creative fourchets for celebrities and world premieres, such as “Pirates of the Carribean” and “Alice in Wonderland”. Progressive thinking, new solutions for restaurant areas in supermarkets, and a creative approach to food raised acute interest among the retailers. But few members of the market are now ready to implement such brave ideas in Russian retail yet.

Source: www.fruitnews.ru

Meeting of Rosselkhoznadzor officials and Russian retailers

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November 12, 2012: Rosselkhoznadzor organized a regular meeting dedicated to the “safety of plant products supplied to retail chains” with the representatives of organizations engaged in the sale of plant products.

The meeting was dedicated to discussing ways to improve the safety of plant products supplied to retailers. Among the participants were senior officials of Rosselkhoznadzor, representatives of X5 Retail Group LLC, Real Hypermarket LLC, Metro Cash & Carry LLC, Lenta, Okay, Belaya Dacha Trading JSC, National Agricultural Union.

The representatives of trade organizations acknowledged the need to develop a unified form to accompany the incoming plant products as it moves through Russia and the Customs Union. The meeting agreed on the need of development and short-term harmonization of such document.
The meeting resulted in a protocol on “Security of plant products supplied to retailers”

Source: www.fruitnews.ru

Court upholds Metro debt recovery

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The Ninth Commercial Court of Appeals has confirmed the lawfulness of the court decision to recover 27.1 million rubles ($850,860) in debt from Metro Cash & Carry.

Earlier, Metro Cash & Carry filed an appeal against the Moscow Commercial Courts January 25 decision partially satisfying Icebit’s lawsuit to recover the initially claimed 75 million rubles ($2.35 million) from the company.

The court found that Icebit supplied goods to the defendant from 2009 to 2011 amounting to 82.4 million rubles ($2.58 million).

The defendant’s receipt of the goods is confirmed in the consignment notes, according to the court. The parties do not dispute the nature or the amount of the supplies.

The defendant has already transferred 43.9 million rubles ($1.37 million) to the plaintiff. The court decision reads that the rendered services and the cost of the returned goods subject to recovery amount to 27.1 million rubles ($850,860). The defendant confirmed its debt of 27.1 million rubles. However, as for the other claims in the case, it considers the lawsuit to be groundless.

It also asked the court to refuse to demand interest from the company.

Metro Cash & Carry said the plaintiff has not provided evidence that it sent invoices to it.

Source: www.freshplaza.com

Federal Retail Chains Dominate the Market

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Aggressive expansion policy of the largest retailers has reached its aim: 5 largest chains account for 70% of retail areas augmentation in 2010.

The INFOLine analytical agency reports, that 2010 Russia’s ninety largest retail chains added ca. 1m sq.m of new sales areas, of which 55% fell on two largest market players – Magnit and X5 Retail Group. 2009 they had a 48.2% share in the total volume of newly opened sales areas. Top five food retailers, including Auchan, Metro Cash & Carry and Okey, accounted for 72.3% of the areas augmentation). The rest 27.7% were shared among 47 other retail chains.

Source: www.fruitnews.ru