Two Russian chains of the discounter segment are currently entering the Uzbekistan retail market: Svetofor and Dobrocen. This means that the “supermarketization” of Uzbekistan continues. Despite the fact that the chains did not make official announcements about entering the market, both Svetofor and Dobrocen started looking for employees in a number of cities of Uzbekistan, posting vacancies on job portals. A number of foreign, international, and local companies have recently entered the food retail market of Uzbekistan, including French Carrefour, Magnum Cash & Carry from Kazakhstan, Havas, Asia.uz and Baraka Market. Almost all of existing chains announce ambitious expansion plans and many new store openings. It means that the chain retail market in Uzbekistan is experiencing a real boom. (more…)
Russian retail
Russia: Online Purchases Tripled
According to a study by Russian Standard Bank, in H1 of 2020, the number of Russian online purchases has tripled compared to the same period last year.
“The first six months of this year showed that Russians easily replaced traditional shopping in stores with online shopping. An analysis of transactions with cards of all banks in the Internet acquiring network of Russian Standard Bank showed that their number, compared to the same period in 2019, increased three times, and the total turnover – 2.3 times. At the same time, the total average check for online purchases decreased by 22% and amounted to 1,673 rubles,” the bank’s representatives said.
Most often, Russians made purchases in clothing stores (the average check was 2,273 rubles) and in supermarkets (the average check was 2,267 rubles). After the quarantine restrictions were lifted, spending on online shopping began to grow again. In June, the average check increased by 8% compared to April and returned to the numbers of January 2020.
Changes in Russian Retail Due to the Covid-19
Russian retailers have been rocked for the past six weeks as epidemic fears were mounting among the population. Even before the shutdown of many offline outlets—which was ordered in Moscow on March 31—online demand surged across a host of products.
Conservation-type food products became in strong demand in late February, with market leader Utkonos reporting a 60% sales spike in comparison with the same period of last year.
E-commerce companies also reported a rush, sometimes fleeting, on many other food items as well as on refrigerators and other home essentials.
In the first “non-working week” (as the authorities call the lockdown), from March 30 to April 5, Russians’ consumption habits changed drastically. The number of online orders at cafes and restaurants increased by 78% in comparison with the last week of February, according to Yandex.Checkout, the online payment arm of Yandex.
Delivery activities are being transformed by the epidemic. In March, restaurants and cafés massively switched to online orders, forcing Delivery Club, a market leader, to simplify its integration procedures.
X5 Retail, a leading Russian food retailer, has begun installing self-checkout machines across its Pyaterochka proximity stores. Tested successfully in August and September last year, these self-checkouts are now already installed at 369 stores. The plan for 2020 is to have a total of 12,000 units operating. “Through mass implementation of self-service technologies, [we] seek to minimize contact between customers and store personnel,” the company stated.
Intertorg Closing its Supermarkets in St. Petersburg and Other Cities
In St. Petersburg and the Leningrad region, some of Spar and Semija supermarkets were closed. The management of the retailer decided to close 37 unprofitable stores, 20 stores in St. Petersburg, 11 in the Leningrad region, 3 in Murmansk and 3 the Murmanks region and in Petrozavodsk. In summer and autumn, the stores in Cherepovets, Velikij Novgorod and other smaller cities were closed.
At the beginning of October 2019, Intertorg managed 249 supermarkets Semija, 8 supermarkets Idea, as well as 184 supermarkets and 11 hypermarkets of the international brand Spar, which Intertorg is developing under franchising.
The volume of claims against Trading House Intertorg doubled in a month – up to 1.8 billion rubles.
The retailer problems can provoke a massive default of medium and small distributors.
www.fontanka.ru, www.ftimes.ru
French Auchan Invests $356mln in Russian Market This Year
In 2017, Auchan Retail, a French company, plans to invest more than 20 billion rubles ($356 million) in the Russian market, the General Director for a hypermarket format of the Russian branch of the retailer, Oleg Alkhamov, told reporters.
“This year we invest more than 20 billion rubles, which is aimed at opening new stores and upgrading IT systems, and, of course, these are investments in rebranding of our supermarkets” Oleg Alkhamov said.
According to him, this year, Auchan will open 4 hypermarkets and 20 supermarkets in Russia, however, this is not the final data.
“We will look at what the market could offer, we always consider proposals from developers who invite us into their trade centers,” the company’s representative added.
Last year the company opened 10 hypermarkets in Russia.
“It’s not slowing down, it is these actual contracts that exist,” he said.
Currently, there are 102 Auchan hypermarkets in Russia.
Lenta Announces the Opening of 11 New Stores Previously Operating under the K-Ruoka Brand
Lenta, (LSE, MOEX: LNTA) one of the largest retail chains in Russia, is pleased to announce the opening of 11 new stores acquired during the purchase of the Kesko food retail business in Russia (“KFR”), previously operating under the K-Ruoka brand.
10 hypermarkets and one supermarket are opening today in Saint-Petersburg and the Leningrad region, now operating under the Lenta brand.
The total selling space of new Lenta stores is 40,0231sq.m, of which 39,657 sq.m is owned and 2,366 sq.m is rented. In terms of size and layout, the stores are compatible with existing Lenta compact and supercompact hypermarket formats, and all of the store locations are strategically complementary to Lenta’s existing stores in Saint-Petersburg and the Leningrad region. All stores are opened 24 hours, 7 days a week.
These new openings bring the total number of Lenta stores to 180 hypermarkets in 77 cities across Russia and 44 supermarkets in Moscow and St. Petersburg.
Lenta is the largest hypermarket chain in Russia (in terms of selling space) and the country’s fifth largest retail chain (in terms of 2015 sales). The Company was founded in 1993 in St. Petersburg. Lenta operates 180 hypermarkets in 77 cities across Russia and 44 supermarkets in Moscow and St. Petersburg, with a total of approximately 1,089,165 sq.m of selling space. The average Lenta hypermarket store has selling space of approximately 5,800 sq.m. The average Lenta supermarket store has selling space of approximately 1,000 sq.m. The Company operates seven owned distribution centres.
The Company’s price-led hypermarket formats are differentiated in terms of their promotion and pricing strategies as well as their local product assortment. The Company employed approximately 34,134 people as of 30 June 20162.
X5 retail group acquires 100% stake in Spar Retail from A&NN investments ltd
X5 Retail Group, a leading Russian food retailer, and A&NN Investments ltd, one of biggest privately-owned investment groupings, announce the acquisition by X5 Retail Group of 100% stake in SPAR Retail, owned by A&NN Investments Ltd. SPAR Retail operates 26 stores (previously – under the “SPAR” brand) in Moscow (11), Moscow Region (7) and Vladimir (8). The transaction has been approved by the Russian Federal Antimonopoly Service.
The average selling space of the acquired stores ranges from 400 sq m to 1,600 sq m. The majority of the acquired stores will be integrated into the “Perekrestok” supermarket format, with only a few stores to be rebranded as “Pyaterochka”.
The Company currently operates 1,300 Pyaterochka proximity stores and over 200 Perekrestok supermarkets in Moscow and the Moscow Region as well as 12 Pyaterochka stores in Vladimir.
Organic growth remains the key growth priority for X5. At the same time, the Company does not rule out the possibility of opportunistic local acquisitions to the extent they add value to the business, are in line with the Company’s strategy and its management and financial capacities and do not negatively impact X5’s on-going operations.
Russian retail chains showing growth
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.
Metro could restart Russia IPO preparations in September
German retailer Metro could restart preparations in September for the stock market listing of a quarter of its Russian cash-and-carry wholesale operation that it postponed due to the Ukraine crisis, sources close to the matter said.
Company and financial sources said relaunching the initial public offering – which had been expected to fetch at least 1 billion euros – would depend on developments in Ukraine and the level of the Russian rouble.
Metro, which wants to use the proceeds to invest in the fast-growing Russian business and other emerging markets and pay down debt, decided in March to delay the stock market listing due to market turmoil over Ukraine.
Metro declined to comment but Chief Executive Olaf Koch has said in the past the planned IPO had been well received by investors and should still proceed if the turmoil on Russian markets abated.
Metro is Russia’s fourth-biggest retailer behind X5, Magnit and French chain Auchan. Its Russian unit made a quarter of Metro’s group operating profit in 2013 with sales of about $5 billion, some 9 percent of Metro’s total.
Perekrestok To Drastically Change Appearance
The network of chain stores Perekrestok is getting a new look, as reported by Vedomosti, quoting Janusz Lella, the general director of the company.
Lella said, according to the publication, that the need to change the way the company appeals to consumers came about because of its low financial performance.
In the future, Perekrestok is looking at changing the use of its staff, changing its logo and revising its pricing policy.
“The supermarkets are changing their logo and color scheme, reorganizing their assortment, it will be newly organized as well as the retail space in the stores, in addition to a revised personnel policy,” he said.
During the first quarter of this year, the network reached a revenue of 28.7 billion rubles ( about $833 million ), and the group of companies reached 144 billion rubles ( about $4,18 billion ). Perekrestok’s growth performance was at 4.4 percent.
“We deliver suppliers more. The growth of the purchase amount is due to buying more goods, therefore sometimes even lowering prices gives rise to an average bill,” he said.
From January to March of this year, the average customer check at Perekrestok amounted to 433.8 rubles ( about $13 ).