Okey

Russian Retail Market 2016

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In 2016, large retail chains grew: Russia’s largest retailers Magnit and X5 Retail Group each opened about 2,000 new stores. Some smaller chains, such as Novosibirsk grocery chain Avoska, Petersburg chain of farm products Girlanda and others, left the market.

A number of companies changed the top management. Alexander Barsukov was appointed a new CEO of Tander (Magnit). Sergei Belyakov replaced Elijah Yakubson as a new president of Dixi retailer, but then a few months later he was replaced by Pedro Manuel Pereira da Silva.

There are reports that Vernij retail chain is selling some of its stores. Although the company denies it, it turned out that a few shops were actually sold to X5 Retail Group.

Meanwhile, retailers explored new markets. For example, many federal companies were interested in opening stores in Grozny, and in February 2016 Lenta retailer opened the first supermarket in the Chechen Republic.

Globus announced that it was going to invest 9 billion rubles in the construction of a retail park near Moscow. Estimated construction period is 2015 – 2020.

Metro Cash&Carry presented a new concept of shops Fasol Express, located at gas stations. The company plans to double the amount of stores every year.

Finnish company Stockmann is leaving the Russian market and closing ten Lindex stores. According to company estimates, the losses amounted to about 78 million euros. Executive Director of the Stockmann was going to resign after the sale of the business in Russia.

In June, Igor Shekhterman, Executive Director of X5 Retail Group, told about the plans of chain development: two most important regions for X5 are Siberia, where it is planned to open 150 stores over the next two years, and South Russia . The first stores are located in Novosibirsk in the stores, previously belonged to Avoska, which was forced to withdraw from the market. The network consisted of 12 stores.

In order to start supplying products to new regions X5 will build new distribution centers. “We have opened 35 distribution centers so far, and we are planning to open around 27 more in five years” – said X5 Retail Group CEO.

In September, premium retail chain Azbuka Vkusa launched a project of biometric payments, now customers can pay by placing a finger on the scanner.

In September, Forbes magazine published the rating of the largest private companies in Russia. Magnit took the first place, followed by X5 Retail Group.

In late October, Kesko Food Russia Holding announced that it would sell 11 K-Ruoka stores in St. Petersburg and Leningrad region to Lenta retailer for 11 billion rubles.

Auchan announced that Atak stores would be rebranded into Auchan store in the next 1,5 year. Also, Auchan in Moscow intends to build the largest distribution center in Europe. The venue will strengthen the retailer’s position in the Central region. In 2017, Auchan plans to increase its investment by almost half – up to 30 billion rubles.

Okey owners, Dmitry Korzhev, Dmitry Troitsky and Boris Volchek, who owned 78.97% of the company, decided to sell their shares. Among the main buyers there are Auchan, Lenta and, according to unconfirmed reports, Magnit.

In December, one of the leading Russian retailer Dixie bought 12 stores from 7th Continent.

www.retail.ru

Retail chain Okey launched its online store

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Russian retail chain Okey launched its online store. Now, there is only one point to pick up orders in one of the hypermarkets near Moscow (in Putilkovo). In the future, the retailer plans to deliver orders directly to apartments or offices. Online store assortment is based on the assortment of Okey hypermarkets: food and non-food products.

X5 Retail Group launched online store E5.ru. However, the range of its online site was not based on the assortment in X5 stores and consisted mainly of non-food products. In the beginning of 2014, the assortment of E5.ru totaled 1.8 million non-food items, its share in the revenues of X5 Retail Group amounted to 0.3%. But late last year, X5 decided to close its online store.
Previously, Okey reported the increase in revenues by 8.9% up to 151.9 billion rubles in 2014.

www.vedomosti.ru

Retailers firm prices for socially important products

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Retail chain Metro Cash & Carry firmed prices for socially important goods – milk, bread, cereals and macaroni till mid-April. Previously, retail chain Dixy declared the price freeze until March 9. It concerned buckwheat, rice, millet, macaroni, sunflower oil and butter, flour, dumplings and frozen fish. In addition, the company maintains a minimum trading margin on some items like sugar, salt, cereals, oil, eggs.

Retail network “Okay” firmed prices for some socially important goods at the end of November last year.

www.echo.msk.ru

Retail development in 2015

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Most leading retail companies have already announced their plans for the current year. Magnit presented the most ambitious program of the development. Initially, the retailer planned to open 1,100 convenience stores, 80 hypermarkets and Magnit Semejnij stores and 300-350 cosmetic stores, now they are planning to launch 1,200, 90 and 800 stores respectively.

Auchan plans to open 7-8 stores, investing 10 billion rubles into the development of business in Russia this year. Metro Cash & Carry is going to open the same amount of stores this year as they did the last year (in 2014 they opened seven stores). Neither Metro nor Auchan have not change the plan of developmet for the year.

Lenta is going to launch at least 10 hypermarkets during the first half of 2015 . This is more than in the first half of last year, when the company opened five hypermarkets and four supermarkets. Their plan to double the retail space in three years (from the end of 2013 to the end of 2016) remains in force.

Dixy did not report that their development plans would change this year. Last year, in November, Ilya Yakubson, Dixie president, spoke about the opening about 500 stores in 2015.

In the end of the last year, Tony Maher, head of Okey company, spoke of plans to open more than 12 hypermarkets and to launch new project – about 40 discounters “Da!” in 2015. The start was scheduled for the spring. For this projects the retailer was going to use debt funds in the amount of 8 billion rubles. Today, the retailer intends to continue developing, but at a pace that “would be sustainable for the business and does not require significant new credits at the current rates,” – as it was stated in the report on the results of 2014.

The only company who has not announced its development plans for the year is X5 Retail Group.

www.retailer.ru

Russian retail chains showing growth

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Global ratings agency Fitch Ratings has said that Russian food retail chains continue to demonstrate healthy sales growth, despite the food import ban imposed in August against the EU, US and certain other countries.

Most Russian food retailers analysed by Fitch Ratings have managed to adapt to the food import sanction by substituting the imported categories with food from other countries, keeping the mix of food products on the shelves little changed.

Based on financial results by Russia’s three large public food retailers – Magnit, X5 Retail Group, O’Key Group – operating margins are unaffected for now as retailers have been able to pass on the increased costs of some products to customers without altering the product mix materially.

Increasing prices for some food categories (fish, dairy products, fruits and vegetables) as a result of the food import ban are likely to cause customers to seek out lower price substitutes and, in turn, lower sales of non-essentials. These trends are also likely to be reinforced by the overall subdued consumer sentiment in Russia, Fitch said.

The latest quarterly results show LFL revenue growth ranging from nine per cent year-on-year for Lenta Group to 17 per cent year-on-year for Magnit, driven by strong average ticket and traffic growth. Larger store formats, such as hypermarkets and supermarkets, posted slower sales growth in September 2014 compared with smaller formats, as they witnessed some customers trading down to cheaper products and, in some chains, low or even negative traffic growth, Fitch Ratings said.

www.esmmagazine.com

Magnit and Lenta conquering Siberia

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Magnit and Lenta, along with a local chain, Holiday Klassik, will be the key retailers in the region in the future. Their market penetration in the region will grow faster than those like X5 and Auchan, while product availability on their shelves may become better thanks to the investment into distribution centres.

Russia’s leading market player Magnit, which has operated a distribution centre in Omsk since 2012, recently launched a 19,000 square metre leased distribution centre in Novosibirsk. Investment in logistics facilities clearly shows retailers’ focus on the store expansion in Siberia. Magnit opened its first store in Siberia in 2010 and expand the network to 120 by the end of 2013.

St Peterburg based Lenta opened its first hypermarket in Siberia in 2006 and since then it has opened 17 large outlets. In addition to that it opened a 37,500 sq m distribution centre in Novosibirsk last year. The retailer recently opened its first hypermarket in Krasnoyarsk and it is building its sixth store in Novosibirsk while a new store is planned for Novokuznetsk.

Auchan operates two Auchan hypermarkets and two Auchan City compact hypermarkets, X5 runs 25 small stores and one hypermarket while O’Key has five hypermarkets and one supermarket. In contrast to them Dixy Group and Rewe Group have not penetrated the region yet.

www.freshplaza.com

“Green” retailers

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Greenpeace made an annual rating called “Green supermarket” where Russian retailers are rated by the level of contribution in recycling problem solvation. First places were taken by “Auchan” and “Dixy”.

Experts were comparing and estimating 10 biggest supermarket networks – “Auchan”, “Dixy”, Х5 Retail Group, “Lenta”, “O’kay”, “Magnit”, “Holiday classic”, “Maria Ra”, “Sedmoy Continent” , and “Monyetka”. These retailers were estimated by 20 criteria such as receiving packaging for further recycling, reduction of packaging, a possibility of using own packaging for catchweight goods, a presence of goods with ecofriendly packaging.

“Auchan” took the first place due to the opening recycling centers in St. Petersburg and the possibility of buying catchweight goods. “Dixy” was also pointed out because of the presence of recycling centers in Moscow and the sale of original non-disposable bags.

“O’kay”, “Sedmoy Continent”, and “Monyetka” are turned to be at the end of the rating list.

“Unfortunately, even leaders of our list are far from being “green” retailers. However, most of them are changing their policy: refusing from free plastic bags, letting do weighting of fruit and vegetables without packaging, and even opening recycling centers. Directors of stores understand that such actions are attracting attention of new clients and making their stores more competitive on the market,” – Rashid Alimov, a coordinator of “Greenpeace Toxic Program”, said.

www.retailer.ru

X5 revenue growth accelerates amid Russian retail slowdown

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X5 Retail Group NV posted the strongest quarterly sales growth in two years as it closed the gap on competitors including OAO Magnit and O’Key Group SA.

Fourth-quarter sales rose 12 percent to 150 billion rubles ($4.4 billion), benefiting from an improved product assortment and promotional activity, the Moscow-based grocer said today in a statement. That compares with growth of 6.6 percent in the previous three months.

The increase in sales beat the 8 percent estimate of VTB Capital, sending the shares up as much as 7.1 percent.

“This is surprising given that Magnit, O’Key and M.video reported a slowdown in fourth-quarter sales, citing weakening consumer spending,” VTB Capital analyst Ivan Kushch said.

While X5’s accelerating sales bucked the trend, the overall growth rate is still the weakest of its main rivals, according to Kushch. “We need to see if the company’s turnaround is sustainable,” he said. “Fourth-quarter growth was largely driven by promotional price declines, which may have hurt profits.”

Magnit, Russia’s biggest retailer, said this month that revenue rose almost 23 percent from a year earlier in December, less than November’s 29 percent growth. O’Key also reported weaker growth, while electronics retailer M.video said same-store sales declined in the fourth quarter.

X5 Retail shares rose 4.8 percent to $18.50 at 8:24 a.m. in London, where the stock has its main listing.

www.freshplaza.com

Okey Group opens 4th hypermarket in Moscow region

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Okey Group S.A., one of the leading Russian food retailers, announces the opening of its 4th hypermarket in Moscow region.

The new hypermarket is located outside of the city boundaries in a new commercial center. Total space of the hypermarket is 10,600 sq.m.. The trading area of the hypermarket is 6,900 sq.m.. The store offers customers more than 34,000 SKUs, with non-food items accounting for approximately 65% of the total. The store has 370 employees.

This is the Company’s 53rd hypermarket, and 84th store overall, including supermarkets, with aggregate trading space exceeding 434,000 sq.m.

Okey is one of the largest retail chains in Russia. Its primary retail format is the modern Western European hypermarket under the Okey brand, complemented by “Okey – Express” supermarkets.

The Company opened its first hypermarket in St. Petersburg in 2002 and has demonstrated continuous growth ever since. As at 30 June 2012, Okey operated 75 stores in 18 cities across Russia: 45 hypermarkets with an aggregate selling space of approximately 329,000 square meters and 30 supermarkets with an aggregate selling space of approximately 39,000 square meters. As of 30 June 2012 Okey employed more than 20,000 people.

In accordance with the unaudited consolidated financial statements for 1H 2012, Okey’s revenue was RUR 54,122 million, like-for-like revenue growth rate was 7.9% and its EBITDA margin was 6.8%.

Source: www.okmarket.ru

 

X5 Retail Group buys Togliatti network “Mindal” (“Almond”)

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X5 Retail Group has announced this month the possible purchase of a regional network of grocery stores “Mindal” (“Almond”).

At the moment, the negotiations with the owner of Togliatti supermarkets are held, and the transaction for 600 million rubles can be concluded as early as in spring this year.

Currently, Togliatti is already included in the coverage of X5 Retail Group: the city has several discounters already – “Pyaterochka +” and two “Perekrestok” stores.

A few months earlier the trade press published information about purchase of  “Mindal” by retailer “Okay”, and named almost the same amount of transaction, 30 million USD. But last autumn, the network refused the purchase, citing the fact that “Mindal” has got only a hypermarket store, and this segment is not a priority for “Okay”.

Source: www.fruitnews.ru