Russian retail market

Intertorg Closing its Supermarkets in St. Petersburg and Other Cities

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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

 

Russian Retailer Dixy to Launch Online Sales with Sberbank

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One of the largest Russian retailers Dixy Group will launch online grocery sales of its format Viktoria in the first half of 2020, the CEO of the group Igor Pletnev told Vedomosti. Pletnev did not specify which is the marketplace the sales will be hosted on.

Currently largest e-commerce marketplaces include Wilderberries, Ozon, Beru of Yandex.Market, AliExpress, Tmall, Goods developed by electronics retailer major M.Video-Eldorado, and others.

Dixy will team up with Sberbank´s delivery and logistics service SberLogistika in development of the delivery solutions.

This year Dixy Group merged with liquor store chains Bristol and Red & White, with annual revenues of about RUB800bn ($12bn) and over 13,000 retail points of sale creating the third biggest retailer in Russia after only X5 Retail Group and Magnit.

The merger was followed with an appointment of Pletnev, an ex-development director and strategic director for Pyterochka supermarket format of country’s largest retailer X5 Group. Reportedly, Dixy and X5 have separately settled a non-compete clause in Pletnev’s contract with X5, allowing him to take the CEO position with one of the largest competitors. The new post-merger holding is controlled by owners of Dixy, Bristol, and Red & White, namely Igor Kesaev (Forbes-estimated fortune of $3.2bn), Sergei Katsiev ($1.3bn), and Sergei Studennikov ($850mn). Kesaev and Katsiev hold 51% in DBKR and Studennikov the remaining 49%.

Russia’s largest retailer X5 Group also focuses on digital solutions and develops online sales of its supermarket format. O’kay retailer also runs an online supermarket, while Magnit, Lenta, and Metro are collaborating with express delivery services.

www.intellinews.com

Russia’s X5 Retail Group Opens Trade Office in Hong Kong

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Russia’s X5 Retail Group has opened its first overseas sales office in Hong Kong, the company said in a press release.

X5 is also considering opportunities to establish similar trade offices in Central Asia and South America.

“A permanent presence in Hong Kong, the business getaway to South-Eastern Asia, will enable X5’s procurement team to improve purchasing terms and build up the share of direct imports in a number of product categories, primarily fruit, vegetables, seafood and non-food goods,” the company said.

“In 2017-2018, X5 intends to establish direct imports from another six countries – Bosnia, Mexico, Namibia, Madagascar, New Zealand and Iran. The Company is open to cooperation with producers from other countries looking to tap into the Russian market and is ready to offer favorable procurement terms,” the company said.·

In 2017, the number of countries where X5 has direct relationships with suppliers reached 27. Direct imports already account for almost 50% of supplied fruit and berries. In the 18 months after the launch of the direct import programme, the total number of direct suppliers reached 200.

X5Retail Group is one of the leading Russian food retail companies. The company manages the stores of several retail chains: neighborhood stores under the Pyaterochka brand, supermarkets under the Perekrestok brand, hypermarkets under the Karusel brand, Express-Retail stores under various brands.

As of September 30, 2017, the company operated 11,326 stores.

Net profit of X5 under the international financial reporting standards for the 9 months of 2017 increased by 30.7% compared to the same period of the previous year, to 25.97 billion rubles ($439 mln). Revenue reached 933.3 billion rubles ($15.7 bln), which is 26.2% up year-on-year.

www.tass.com

Retailer “Lenta” opened its 200th hypermarket in Russia

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Retailer “Lenta” opened its 200th hypermarket in Russia, as it was stated in the company’s website.

The hypermarket is located in Astrakhan. This is the second “Lenta” store in the city and the ninth hypermarket opened by the company in Russia in 2017.

The retailer plans to expand its presence in the Southern Federal District, as Jan Dunning, CEO of Lenta, said.

www.retailer.ru

Luxury Goods Sales Growing in Russia

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Domestic demand for luxury in Russia is recovering. 62% of wealthy citizens said they increased the cost of luxury goods in the last year. The same trend can be seen in China and the UAE.

According to a Deloitte survey, covering 11 countries, 62% of buyers in Russia, China and the United Arab Emirates, countries that Deloitte refers to the developing markets of expensive goods, said about the growth of their spending on luxury goods in the last 12 months. In developed markets (in the European Union, the United States and Japan), the share of increased spending on luxury is much less – 49%.

The study involved 1,300 respondents who consider themselves wealthier than their country’s citizens on average and who have made at least one purchase of luxury goods in categories such as clothes and shoes, bags and accessories, cosmetics and perfumes, jewelry and watches for the past six months.

“Consumers in emerging markets continue to stimulate the growth of the luxury market,” Deloitte analysts conclude.

The Russian luxury goods market, which resumed its growth in 2016, continues to grow, also because of increase in the tourist flow, including from China. In addition, the Russian market of premium products was positively affected by the fact that retail companies held back or even cut prices. In 2016 the ruble strengthened, and the companies reduced the prices for luxury goods by more than 11% in Russia.

If in 2015 the Russian luxury goods market showed a decline for the first time in five years (by 9%, to 227.2 billion rubles), then in 2016 it resumed growth – it amounted to 1%, to 229.6 billion rubles.

www.retailer.ru

French Auchan Invests $356mln in Russian Market This Year

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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.

www.russianconstruction.com

X5 Retail Net Profits up 57.3%

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Russian food retailer X5 Retail Group’s revenues rose by 27.8% to RUB1,033,667 mln in 2016 – the fastest growth rate since 2011. Adjusted EBITDA rose by 33.8% to RUB79,519 mln and net profits of RUB22,291 mln were up 57.3% on last time.

Like-for-like sales increased by 7.7% with an improvement across all three of the company’s major formats. The company added a record 2,167 new stores in 2016 compared with 1,537 new stores in 2015. Pyaterochka was the main driver of growth: net retail sales rose by 32.5% y-o-y (9.1% growth in LFL sales and 23.4% growth from a 37.4% y-o-y increase in selling space).

Chief executive Igor Shekhterman said: “We have achieved all of the targets set out by the supervisory board and company management in 2016. We are creating value for stakeholders as the fastest-growing public player in Russia’s food retail market, building a stable and sustainable business that aims to benefit consumers, employees, partners and investors over the long term. As of Q4 2016, X5 is Russia’s #1 food retailer, with a market share of 8.0% for 2016. Revenue grew by 27.8% year-on-year and exceeded RUB 1 trillion, driven by a 7.7% increase in like-for-like (LFL) sales and a 20.1% contribution from a 29.1% rise in selling space. In 2016, we also demonstrated our ability to deliver efficient and sustainable expansion, with the adjusted EBITDA margin improving to 7.7%, up from 7.3% in 2015”.

“Looking ahead to 2017, while we do not expect meaningful positive macroeconomic developments in Russia in the medium term, significant growth opportunities still exist in the food retail sector.  We remain confident about X5’s potential to deliver sustainable growth as Russia’s leading food retailer, driven by market expansion and market penetration. We are now focused on achieving our target market share of 15% by the end of 2020, which will require continued strong performance during the coming years. Our focus will remain on organic growth while maintaining margins as we develop all three of our major formats.”

www.stockmarketwire.com

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

Lenta Announces the Opening of 11 New Stores Previously Operating under the K-Ruoka Brand

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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.

www.eprretailnews.com

Steady demand for pears in Russia

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According to major Russian retailer, the Dixy Group, pears are one of the most favoured fruits in Russia, enjoying stable sales throughout the year.

The peak season for pears starts at the beginning of spring with the start of supplies from the Southern Hemisphere. The main varieties during that time period are the Vermont and the Packham.

“Before the embargo, Belgium and Holland had been the main supplier for pears. However, we were lucky that we also had contracts with suppliers outside of the EU, once the embargo hit, so we were able to quickly rearrange distribution with a minimal amount of disruption.” said a representative from the retail chain.

The main pear supplier has become Serbia during January-April, in addition to supplies coming from South Africa, Argentina and Chile from April to September.

Despite suffering frost damage in the spring, the retailer said that they had not noticed any supply issues from Serbia and that the prices are at the same level as last year.

“The green pear varieties remain the favourite amongst consumers, and we currently have the Williams and Chinese pear in our assortment.”

As soon as the Russian embargo was introduced back in 2014, Russian suppliers immediately started to develop this category, actively investing in new growing areas and creating their own supply chain, but the production is still not to the level to be able to cover the demands of the major retail chains.

www.freshplaza.com