Retail

Magnit sets up transport arm in Hungary

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Russia’s biggest food retailer, Magnit, will set up a transport company in eastern Hungary creating around 1,500 jobs, Hungarian foreign affairs state secretary Peter Szijjarto was quoted as saying on Friday.

National news agency MTI reported Szijjarto as saying that Magnit’s road haulage arm will have a fleet of 1,000 trucks, which will transport foodstuff from European Union member states including Hungary to the retailer’s shops in Russia.

Magnit, earlier this year, overtook rival X5 as Russia’s No.1 grocery chain by revenue.

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Russian retail slips into stagnation

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Russian retail is slipping into a state close to stagnation. Sharp slowdown in business confidence index (BCI) bears evidence of it. BCI has dropped to +3% for the first time in 4.5 years of surveys. Some experts believe that we are witnessing major changes in the driving forces of the Russian economy. Its “artificial engines”, such as retail and financial sector, can’t stimulate the growth anymore.

In concerns of consumers’ demand, it stoped its growth in the last quarter of 2013 and that’s why there can be seen the shift of households from the spending model to the saving one. The situation has worsened by potential consumers’ high debt burden: arrear of Russian credit users by the end of 2013 is about 25% of their aggregate income. As consuming power decreased, retailers’ basic financial rates continued to drop. Experts are also predicting further economic downturn in the beginning of 2014.

Against the background of this economic downturn employment rate remained almost the same.
By statistics trading companies’ revenues in the end of 2013 have shown one of the worst results in past 4 years. In first quarter of 2014 about 20% of entrepreneurs are expecting a revenues decline.
Georgy Ostapkovich, the expert of the Center of conjuncture research, says this negative tendency of market condition cannot be overcome in short run.

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Land considers business in Altay Teritory

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The premium grocery retailer Land is negotiating on the lease of premises in the Plaza shopping centre in Barnaul. The outlet would operate as a Land franchise store. The retailer claims that it has signed a franchise agreement with a Barnaul partner.

Today, Land operates nine stores in St. Petersburg, and another, in Narodnogo Opolchenia Avenue in the city, has been opened on 12 December. The Barnaul launch will represent a totally new regional market for the network.

In 2012 the company’s annual revenues came to RUB 2.5bn (€55m). As PMR reported in November, in 2013 the company expects to boost its revenues by 28-30% year on year, to RUB 3.2bn (€71m), excluding VAT.

www.ceeretail.com

November sales rose by 28.7% for Russian retailer Magnit

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Russia’s biggest food retailer Magnit said on Tuesday its sales rose by 28.7 percent in November, year-on-year, to 50.2 billion roubles ($1.5 billion) after a rise of 27 percent in the previous month.

Magnit, which this year overtook rival X5 as Russia’s No.1 grocery chain by revenue, said the November result brought sales for the first 11 months of the year to 516 billion roubles, up 30 percent on the year.

The company opened 181 stores last month, bringing its total to 7,920. Fast expansion will help it grow revenues by 28-29 percent this year, while next year’s growth is likely to slow to 25-27 percent, the company has said.

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Magnit opens new distribution centre

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Magnit, Russia’s largest retailer by sales, has said that it will open a new distribution centre in Yaroslavl.

Located to the north-east of Moscow, Yaroslavl is a transportation hub connected to the rest of Russia via national and regional roads, railways and waterways.

Magnit’s new distribution facility is about 58,904 square metres in size. The company said that the new facility would “improve the quality of service in central regions”.

Magnit has focused on expanding its sales in Russia through a programme of aggressive store openings. In the first nine months of this year, to the end of September, Magnit increased its selling space by over 25%, opening 762 stores throughout Russia. As a result of this strategy, the company expects full-year sales to climb by 28-29%.

The group operates 20 distribution centres with a total capacity of around 542,031 square metres.

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Azbuka Vkusa will buy SVA Trading

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Moscow premium retailer “Azbuka Vkusa” will close a deal and buy the company “SVA Trading” (owned by Sergei Inozemtsev and his partners) in February 2014. Right now “SVA Trading” is a business owned by “SPAR”.

Early last week, “Azbuka Vkusa” has received an approval from the Federal Antimonopoly Service of Russia to purchase eight “SPAR” stores, a warehouse and manufacturing facilities. The total shopping floor space of the stores accounts for 10.1 thousand square meters. However, the company doesn’t hurry to make a purchase. “In December, during the peak season, the absorption of another business can be too much for the company,” – said a top-manager of the company.

Right now the deal value is undisclosed. Earlier it was stated that “SVA Trading” assets were worth $ 85-105 million.

“Azbuka Vkusa” plans to operate “SVA Trading” stores under its own brand within 3 months after the deal is closed.

In 2014 “Azbuka Vkusa” will expand its chain of stores by at least 20 new joints (including eight “SVA Trading” stores). The opening is planned to be conducted in Moscow, Moscow Region and St. Petersburg.

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Retailers are considering next year to be recessionary

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Retailers are considering next year 2014 to be recessionary and are ready that clients’ switching to economic segment. The situation is also sharpened by consequences of “demographic collapse” of 90s. Due to this there is a lack of consumers now. By experts’ opinion, in 2014 clients will be highly price oriented, part of them will chose discounters. Retailers are also predicting lots of takeovers and mergers.

According to analytical company «Romir» data, the rate of everyday buying activity in October 2013 decreased by 1% in comparison with September 2013. Nominal decline of the rate happened for the first time since 2008. In comparison with October 2012 the rate increased only by 1% in nominal terms, but in fact if taking into account the inflation the rate decreased by 5% in real terms.

In Tuesday Ministry of economic development and trade of the Russian Federation announced the estimate of basic macroeconomic rates for 2013-2015. Macroeconomic forecasts turned to be not so shiny: growth was about 1.4% instead of planned 1.8%, industrial output increased only by 0.1%, and investment rate grew up only by 0.2% instead of planned 2.5%.

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Norway chilled salmon became more expensive

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$7.65 per 1 kilogram is the highest price in 10 years for this season, said the Association of produce and trade companies of fish market. In comparison with last year’s same period Norway chilled salmon price increased by 60%. Norway suppliers refer to tough weather conditions – due to them the price of transportation highly increased. As result the price to consumer grew up respectively.

The Association of fish market says that the same factor will also influence the price in future. “In other words, Norwegians will be able to sell fish at a price that does not have any market explanation. That means they can set any price”, – the Association says. Also the Association thinks that the situation worsened due to the lack of competition – now Norwegians are the only suppliers of salmon. Last year Polish companies could compete with them, but in the beginning of 2013 all big fish farming companies fell under Norway companies’ control.

According to Russian the Federal Fisheries Agency’s predictions, in 2013 the salmon market is 400,000 tons, 150,000 tons of which is Norway salmon. According to Norway Fish Committee, during period January-October 2013 the supply of fish and seafood from Norway to Russia decreased by 17.3% – till 224,700 tons. In monetary terms the import increased by 6.1% – till €630 million. Imports of Norway salmon decreased by 18.2% – till 87,000 tons while the average price of supplies increased by 37.8% – till €4.65 per kilogram. Imports of trout shrank by 14.1% – till 21,900 tons while costs increased by 37.8% – till €4.97 per kilogram.

Alexandr Savelyev, the representative of the Russian Federal Fisheries Agency, interprets the situation as an “outrage”. “In Russia the price on farmed fish is 4-6 times higher than price on wild fish. It is the only country with a situation like that”, – he says. According to the information of the Federal Fisheries Agency, prime cost of Norway salmon is 50 Rubles per kilogram, Russian salmon – 80 Rubles per kilogram.

Timur Mitulov, the head of informational fishery agency, considers the matter is not only the weather: “Russian Far East yield of salmon decreased by 12-13%, meanwhile Japan and USA demand strengthened”.

Meanwhile representatives of X5 Retail Group and “Sedmoy Kontinent” say, that during the last 3 months they haven’t noticed any price increases on the part of suppliers who sell Norway chilled salmon.

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Potato prices are 1.5 times higher

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Retail prices for potato are higher by almost 1.5 times in contrast with last year.

The retail price of fresh potatoes in Moscow stores and vegetable markets broke all records of last year. In mid-November, residents of the capital and its suburbs are buying potatoes for approximately 27-35 rubles per kilogram. Minimum prices are suggested by retail chains “Auchan”, “Dixie” and “Pyatyorochka”, where you can find native potatoes 18-22 rubles per kilogram. The quality and vendibility of vegetables in grocery discounters cannot be called even satisfactory.

High prices of potatoes this season arise from several factors: the rainy weather in the harvest season, a poor harvest national average, and imposed ban on imports for phytosanitary reasons.

Every year in Russia, according to the Agriculture Ministry of Russian Federation, it is grown about 30 million tons of potatoes, 25 million tons of which belong to private households and are not intended for sale. The remaining 5-5.5 million tons are not enough for the commodity turnover and industrial processing. According to the Federal Customs Service of Russian Federation, the country still imports about 400,000 tons of potatoes a year. The main importers for Russia are the producers of the Netherlands and Germany.

 

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Auchan plans to open new stores in Russia

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The retailer Auchan plans to open 10-14 new hypermarkets in Russia next year, the general director of Auchan Russia, Jean-Pierre Germain, said during a press conference in Moscow on November,18.

Agreements have already been signed concerning the building of 3 ‘classic’ Auchan hypermarkets, 3 Auchan City hypermarkets, and 4 Our Rainbow (Nasha Raduga) stores, Germain said.

A company’s priority is continual development and the opening of 10 new hypermarkets per year, Auchan Russia President Francois Colombie said.

Auchan will grow its chain by 23 new stores in all, this year, factoring in the Real hypermarkets it has acquired. In late November 2012 the French company announced it was buying the Real hypermarkets from Germany’s Metro Group. The deal was worth 1.1 billion Euro and involved outlets in Russia, Poland, Romania, and Ukraine. The rebranding of all 16 Real hypermarkets in Russia has been completed.

The French company has been a presence in Russia since 2002. It now has 53 Auchan hypermarkets, 18 Auchan City hypermarkets, 4 Our Rainbow hypermarkets, and 4 Auchan Garden (Auchan Sad) stores.

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