Retail

Now there are ten Prismas in St. Petersburg

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16 August 2012 Finnish corporation SOK opened the tenth supermarket Prisma in St. Petersburg. A supermarket is situated in the building of a subway station “International” which now is under construction.

“The close location to the metro station and highways will be the undisputed advantage of this object, – commented Vesa Punnonen, president of SOK Retail Int. – Also, Prisma is located close to densely populated residential area with insufficient infrastructure of grocery stores. ”

“Until the end of January 2013, we plan to open four new supermarkets, three of them hypermarket format. In the future there will be a network of 20-30 supermarkets”- Vesa Punnonen added.

The chain of supermarkets and hypermarkets Prisma is owned by the Finnish Holding S-Group. In St. Petersburg Corporation SOK (part of the S-Group), besides retail supermarkets Prisma, owns three hotels – spa-hotel Sokos Hotel Palace Bridge, Sokos Hotel Vasilievsky and Sokos Hotel Olympic Garden.

Source: www.retailer.ru

Russia’s retail news August 2012

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In the beginning of August it was announced that 20 August Luc Koenot would become a new CIO of X5 Retail Group, before he was a SVP & CIO at the large Belgium retail company Delhaize Group.

Andrej Rogachev who was one of the founders of retail networks Pjaterochka and Karusel (now they are the parts of X5 Retail Group) is going to open a new discounter network Okey-Dokey in the USA. The first store will be opened 1 September in Miami. It is planned to open 8-12 discounters till the end of the year and 50 stores more in 2013. Agro-Trade International is going to develop the network; the investments into the project are estimated at about $500 million.

Finnish retail network Prisma is going to open 2 new supermarkets in St. Petersburg in August and in October, so the total amount of Prisma supermarkets will be 11 in St. Peterburg and Leningrad region. By January 2013 the company is going to open 3 supermarkets more.

Source: www.retailer.ru

WTO accession should lower prices for consumer

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It is hard to find more solid proof of capitalism’s victory in Russia than the upward trajectory of its consumer market. If the supremacy of manufacturing is no longer recognized as the core imperative for a healthy economy, Russia can claim to be one of the world’s most advanced countries. It has now become Europe’s largest consumer market – retail trade generates a quarter of gross domestic product. In the past 10 years, personal consumption has been stubbornly overtaking production, and the gap between domestic supply and demand is increasingly being filled by imports. By all estimates, whether or not Russia joins the World Trade Organization, this gap will remain; the question, however is how the WTO will affect its size.

Russia has already become a part of the global market without the membership. To see how it belongs to world economy in terms of satisfying consumer needs, it is only necessary to look at one of the best consumer market mirrors – retail hypermarkets.

The rapid development of organized retail trade in Russia is an economic phenomenon that by itself proves the wonders market forces can do when they are not overregulated by red tape. The increase of personal incomes beginning in the last 1990s combined with a growth in domestic fixed capital outlays resulted in an explosion of organized retail trade, starting in Moscow and St. Petersburg and then extending to the rest of the country. In the last 10 years, retail trade in Russia has attracted over $20 billion of direct foreign investment.

It’s likely that with Russia’s accession to the WTO, price and availability of these imported goods will improve, to the benefit of Russian consumers. On a recent trip to the market, Auchan customers seemed more concerned with the price and accessibility of their purchases than their provenance. Potatoes from the Ryazan region, not far from Moscow were cheaper than potatoes from Israel, Egypt or Saudi Arabia, but they were also packed in a less-convenient way, which kept them on the shelves longer. The Russian garlic was offered in kilogram packs each priced at 107 rubles while more popular Chinese garlic was sold in packages of three cloves in small knitted bags for 18 rubles. Perhaps WTO access will also allow Russian suppliers to benefit from the marketing tools employed by their foreign counterparts.

Source: www.freshplaza.com

“Dixy” revenue grew up by 89.5% for 6 months of 2012

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Total consolidated revenue of “Dixy” (including “Victoria” revenue since the acquisition of 15 June 2011) for 6 months of 2012 increased by 89.5% in rubles (77.1% in U.S. dollars) compared to the same period of the last year and amounted to 70.9 billion rubles ($ 2.3 billion), as the company representatives said.
Total revenue of “Dixy” for 6 months in 2012, based on pro-forma report  (including “Victoria” revenue from the beginning of 2011) grew up by 20.7% in rubles (12.8% in U.S. dollars), compared to the same period of the last year.

Magnit attracts higher sales

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Like-for-like sales increase 3.5 per cent during the opening half of the year

Russian retailer Magnit has revealed that its sales climbed by 3.5 per cent during the opening six months of 2012, when compared with the same period of 2011.

Despite the growth, the figure represented a drop on the first quarter of 2012, when year-on-year sales growth came in at 4.12 per cent, Reuters reported.

Consolidated net sales soared by over 32 per cent to RR207.5bn (€5.1bn), with store openings boosting overall selling space by 31 per cent.

June sales alone increased by 33.8 per cent to RR36.4bn (€897m), the group said.

Source: www.fruitnet.com

US retailers missing out on huge market potential

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Walmart is very cautious about entry to Russia, but is potentially missing out on vast profits in a country that is home to a population of 140 million.

Walmart has possibly missed on 30% worth of growth that is currently being enjoyed by Russian retailers.

Consumers in Russian cities have basically embraced the western model or retail nowadays, but this is not yet the case in more remote areas.

This is not likely to change quickly as infrastructure is not in place for such an expansion. This is leading to intensified competition in the urban areas, which means that the longer companies like WalMart leave it to make their entry, the harder it will be to make an impact.

“Now there is more risk, but more return,” said Alexei Krivoshapko, director at Prosperity Capital Management, one of the biggest investors in Russian stocks with $4 billion under management. “Later there will be lower returns, more cash for entry, but less risk because it will be about buying a mature business.”

WalMart could also see competition from other foreign retailers if it tries to buy a local player in Russia, with accession to the World Trade Organization in 2012 making Russia’s import-heavy retail sector even more appealing for international players by simplifying the import process.

Source: Freshplaza

Moscow 3rd Most Attractive for Retailers in Europe

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The Russian capital ranked third in top 10 most attractive cross-border retail destinations in Europe, the Jones Lang LaSalle consulting company said on Wednesday.

The company’s experts analyzed the presence of 150 leading international retailers within 55 European markets and created an index. It reveals that Moscow attracts the third greatest number of international retailers after London and Paris.

“The sustainable growth of the disposable incomes of Moscow’s 15 million inhabitants has steadily boosted retail sales for the past three years. Moscow, still under development, now accounts for the third largest retail market in Europe and is the gate to a market of 140 million consumers,” Maxim Karbasnikoff, head of retail with Jones Lang LaSalle in Russia & the CIS, was quoted in a statement as saying.

Source: en.rian.ru

Rewe Group on expansion course in Russia

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With approval from the Russian competition authority, the Rewe Group is acquiring 12  “Citystores” of ENKA Group based in Istanbul. In so doing, the Rewe Group is driving forward its expansion strategy in foreign markets. “The acquisition in Russia underscores the strategic significance of foreign business for Rewe. In the meantime we are generating around one third of our turnover outside Germany’s borders. Eastern Europe is developing into a big attraction when it comes to foreign growth”, Alain Caparros, CEO of the Rewe Group, said.

The acquired locations in the greater metropolitan area of Moscow will be converted to the BILLA supermarket format in the coming months and be integrated into the existing distribution network. The company also plans to open around ten new BILLA stores by the end of the year, while continued investment will be made in the quality and modernization offensive.

“The Russian market is one of the growth markets for us, where we see great potential. Particularly as the greater metropolitan area of Moscow has high purchasing power”, explained Frank Hensel, CEO of Rewe International AG.

Source: www.freshplaza.com

Second tier retail chains are leaving the Russian market.

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Second tier retail chains are leaving the Russian market, Sergey Galitsky, Magnit CEO, said during the telephone conference. Meanwhile the competition among top three retail chains – X5 Retail Group, Magnit and Dixi – will keep escalating. Sergey Galitski confirmed their plans to raise gross revenues in 2012 at 25-30%, and EBITDA – at 7.5-8%. Magnit is one of Russia’s largest retail chains in terms of sales volume. As of 31 December 2011, the company operates 5,309 stores, including 93 hypermarkets and 210 drogery shops.

Source: www.retail.ru

Magnit eyes small competitors

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Fast-growing Russian food retailer Magnit is interested in acquiring smaller rivals as growing competition is set to leave less room for organic expansion, its CEO said on Friday.

“Competition is growing every day but we still have opportunities for more or less comfortable growth. What we see is the trend of replacement of second-tier chains and probably we all – (rivals) X5, Dixy and ourselves – are showing interest,” Sergei Galitskiy said.

Magnit has grown into Russia’s top food retailer by store count via organic expansion and also ranks second to X5 Retail Group in revenue terms.

Last year, it paid $32 million for a chain of some 14 stores in the Tambov region in central Russia, and plans to buy the remaining interest for $3.6 million this year, it said in audited full-year financial report on Friday.

Magnit and X5 control between them under 10% of the Russian food retail market which is widely expected to consolidate mainly at the expense of small regional chains and unorganized retail.

Source: www.freshplaza.com