Russian retail market

Russian retail: Ban extension will not change prices or assortment

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Extending the Russian food ban is not such a problem for local retailers, since for less than a year they was able to find a replacement for most banned products, according to a survey conducted by RIA Novosti.

In August 2014, Russia restricted imports of food products from the EU, USA, Canada, Norway and Australia. Meat products, fish, vegetables, fruits, dairy products were banned. In late June, the Russian government extended the ban until August 5, 2016, excluding from the list of oysters and mussels fry and banning import of all cheeses, tightening the rules for import of lactose-free dairy products.

General opinion of the retailers is that ban extension will not influence prices as the new network of suppliers has already built. Although other factors such as seasonality, currency volatility, inflation, regulatory changes may affect prices.

It can be noted that there is a larger assortment range of domestic products on the shelves. Maria Kurnosova, Director of External Communications of “Auchan” noted that the share of imported products is about 3%. In “Dixie”retail chain the share of domestic production is about 90%. The specific demand for imported goods remains, but this applies only to certain groups of products, such as alcohol or fruit.

www.ria.ru

Russian State Duma may prohibit retailers to charge suppliers for access to retail shelves

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The Committee on Economic Policy of the Russian State Duma recommended to the lower house to pass the bill prohibiting retailers to charge suppliers for access to retail shelves.

Victor Zvagel’skii, one of the authors of the bill, said, “now it is not possible to enter any retail chain without any payment”. In order to solve this problem, it is proposed to ban retailers to charge suppliers for the right to supply products. Previously, such relations are not regulated at the legislative level. The document assumes that the retail chains and suppliers will not be allowed to create discriminatory conditions and barriers.

www.fruit-inform.com

Retailer Prisma and Intertorg company to merge purchasing departments

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The company Prisma, owned by Finnish holding S-Group, and the company Intertorg in the North West region of Russia (retail chains Narodnaya 7Ya, Idea and Spar) are going to combine purchase departments. First of all, it concerns the essential commodities. Retailers believe that development plans on cooperation will keep the profitability of the business, as well as diversify the range of products.

www.retailer.ru

X5 retail group acquires 100% stake in Spar Retail from A&NN investments ltd

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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.

www.eprretailnews.com

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

Direct import may be banned for Russian food retailers

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Group of deputies and senators are developing draft of the bill, that may prevent Russian food retailers from direct imports from abroad. According to the creators, chains wrongfully prefer foreign suppliers to domestic ones, which creates damage to the Russian farmers. Direct import by retailers are executed by larger groups, which allows them to reduce prices on shelves. Analytics predict price increase, if the law comes to power. Spokesman for the initiative is Sergey Lisovsky, deputy chairman of the agri-food policy and environmental management committee at the Federation Council of the Russian Federation.

www.gazeta.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

X5 Retail Group’s revenue increased by 18.6%

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In 2014, one of the largest retailers in Russia, X5 Retail Group, increased its revenue by 18.6% up to 631.93$ billion rubles. In the fourth quarter of the last year, revenue growth was 20.8%. According to the company report, in October-December X5 retail networks “Pyaterochka”, “Karusel”, “Perekrestok”, “Express” and online retailer E5.RU gained 181.23 billion rubles.

“Pyaterochka” showed the highest revenue growth, it increased by a quarter – from 348.39 billion rubles up to 435.82 billion rubles. At the same time, in chains “Perekrestok” and “Karusel” the outflow of customers traffic could be seen.

The worst was the result of online retailer E5.RU – its revenue for the year fell by more than a third, from 1.431 billion rubles to 950 million rubles. And as X5 could not find a partner for this project or sell it, they had to close it in January 2015.

In 2014, the amount of an average receipt in X5 retail chains increased by 7.7% – from 317.6 rubles to 342.2 rubles. The number of purchases increased by 10.2% – up to 2.114 billion purchases.

Earlier, the retailer “Magnit” reported that in 2014 its ruble revenues increased by 31.61% and reached the level of 762.72 billion rubles.

X5 Retail Group operates several retail chains: discounter “Pyaterochka”, supermarkets  “Perekrestok”, hypermarkets “Karusel”, stores “Express” (“Perekrestok Express” and “Kopeika”).

On December 31, 2014 there were 5,483 stores, including 4,789 stores “Pyaterochka”, 403 supermarkets “Perekrestok”, 82 hypermarkets “Karusel” and 209 stores “Express”. In 2014, the number of discounters “Pyaterochka” increased by 907 stores (+ 23.4%), the number of supermarkets “Perekrestok” has increased by 13 stores (+ 3.3%) and the number of stores “Express” – by 20 stores (10,6%). In 2014, the X5 closed 46 stores “Pyaterochka”, 22 stores “Perekrestok”, two stores “Karusel” and 45 stores “Express”, the results of which were not  as good as it had been expected. Also, the company sold 12 supermarkets “Perekrestok” in Ukraine.

www.top.rbc.ru

Consumer market participants adopted a Memorandum on the temporary introduction of a number of rules of interaction between retailers and suppliers

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December 19 was held a session of the Working group (created earlier at the meeting of the Retail Companies Association Presidium and leading industry associations of food market) with the participation of representatives of trade networks and suppliers and producers organizations (National Meat Association, SOYUZMOLOKO, National Association of meat processors, Russian Union of baking industry, Fish Union, RusBrand, RusProdSoyuz, SPAP, Simple Company” and others.)

During the session were discussed the topical issues of the industry in the current economic conditions. Memorandum, which foresees the reduction of new prices consideration terms on all product categories by the trade networks and forwarding the response to the supplier within 14 days for the period from 22.12.2014 to 31.03.2015, was signed following the discussion.

These changes are necessary due to high volatility and difficult predictability of the ruble foreign exchange value dynamics.

I.Yakubson, Chairman of the ACORT Presidium comments:

“Retailers and producers are able to come to agreement and to demonstrate unanimity in a difficult economic situation for the second time in a short period.
Trade companies responded to the producers call to react to the challenges which circumstances put before them more flexibly without changing the retail’s mission in protection of the consumers interests, including low prices retention”.

The full text of memorandum can be downloaded here Memorandum

For the information:
The Retail Companies Association was established in 2001 upon the initiative of the market participants and in the interests of creating the necessary conditions for the formation and development of the civilized Russian retail market.
As an instrument of its members collective interests’ protection the Association allows to conduct a dialogue with state bodies, public associations, unions and associations with a maximum possible effectiveness.
Currently, the Association unites 37 largest retailers of Russia: Adamas, Azbuka Vkusa, Atack, Auchan, BILLA, Bosco di Ciliegi, Vester, Wikimart, GIPERGLOBUS, Globus Gourmet, Dixy, SELGROS, Euroset, Enter Svyaznoy, Lenta, Leroy Merlin, MAGAZIN 01, Magnet, Maria-RA, M.Video, Metro Cash & Carry, Media Markt, Obi, Obuv Rossii, O’key, Prisma, Republic, Spar, Sportmaster, Snow Queen, Tehnosila, Finn Flare, X5 Retail Group (Pyaterochka, Perekrestok, Karusel), Holiday Classic, Eldorado, Utkonos, Yuterra.

www.acort.ru